From reading betting odds to being able to convert between formats and using them to work out implied probability, our guide explains how betting odds work.
If you’re new to betting, a simplified explanation into how betting odds work and how to read betting odds is likely the first thing you’ll need; once you’ve got your head around betting odds and how they work, you can start to figure out how likely an outcome is to happen and begin calculating your potential winnings.
Despite often looking daunting to begin with, betting odds are easy to understand with the application of some simple maths. To help, we’ve created this guide full of all the information you need to know…
What are betting odds?
Betting odds are used by bookmakers as a way of presenting the likelihood of a specific outcome in an event. They are based on the expected probability of an event, which are then displayed as the relevant odds. These odds can take on various formats:
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Fractional odds (i.e. 2/1)
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American/moneyline odds (positive or negative, i.e. +200)
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Percentage probability (i.e. 40%)
As well as presenting probability, betting odds also help a customer calculate their potential winnings from a bet.
Betting markets can often provide you with multiple different outcomes in any given event.
How are betting odds calculated?
Betting odds are calculated by bookmakers, such as the team here at Betway, with specific odds determined according to the probability of an event. Let’s take football betting, for example – specifically a game between England and Spain.
You will be presented with a choice of a home win, draw, or an away win. Each of these three outcomes will be given a value based on their probability:
· England win: 2/1 (fractional) or 3.00 (decimal) or +200 (American odds)
· Draw: 3/1 (fractional) or 4.00 (decimal) or +300 (American odds)
· Spain win: 5/4 (fractional) or 2.25 (decimal) or +125 (American odds)
It’s worth noting that each type of odds displays the same information, just in a different way. The most important thing to bear in mind is the higher the odds, the less likely an outcome is to happen in the bookmaker’s eyes. An unlikely outcome is going to have a bigger potential payout, due to its uncertainty.
From the odds listed above, the perceived likeliest outcome is for Spain to win, followed by England winning. Then a draw is the least expected outcome, which is why it has the higher odds (i.e. 3/1 is higher than 2/1).
However, betting odds aren’t exclusive to sport, and can apply to anything with a set outcome – such as TV, music, and politics.
How do betting odds work?
Simply put, betting odds display the probability of an outcome and are typically represented in a fractional or decimal form. That representation then tells us how much you could potentially win if that particular outcome were to happen.
How to read betting odds
It’s one thing to know what odds are, but another to understand how to read betting odds with ease! Reading on, we’ve explained betting odds when presented as fraction, decimal, and moneyline bets.
Fractional odds explained
Fractional odds tell us about potential winnings in relation to your stake. The number on the left-hand side of the fraction represents the potential profit if you stake the number on the right-hand side. For example, a £1 bet on Team A to win at 2/1 will return £3 if successful. Of those returns, £2 is profit, and the remaining £1 is the bettor’s stake.
Here are some other examples:
· 10/1: £10 profit for every £1 staked.
· 5/2: £5 profit for every £2 staked.
· 4/11: £4 profit for every £11 staked.
When the number on the left-hand side is smaller than the number on the right-hand side, the bet is referred to as odds-on. When the opposite is true, it is odds-against, while odds of 1/1 are referred to as evens.
Decimal odds explained
Decimal odds, meanwhile, tell us about our potential winnings inclusive of our stake. All that’s needed to work out the total returns is to multiply the stake by the odds.
For example, a £1 bet on Team A to win at 3.00 will return £3 if successful. Like the fractional odds bet above, £2 of those returns are profit and £1 is the bettor’s stake.
Here are some other examples:
· 10.00: £1 bet would return £10 inclusive of stake.
· 2.50: £4 bet would return £10 inclusive of stake.
· 1.50: £2 bet would return £3 inclusive of stake.
The equivalent of 1/1 odds in a decimal is 2.00.
American betting odds explained
Aside from fractions or decimals, there are other formats in which betting odds can be presented, including American betting odds, also known as moneyline or US odds. Whilst rarely used by bookmakers from the UK, it’s still well-worth being aware of how these betting odds work.
To put it simply, the probability is shown as either a positive or negative number which is then set against the reference point of 100. A plus sign would suggest that the bet is perceived to be less likely to win, thus the positive odds, whilst a minus sign would imply that what you’re betting on is expected to do well.
If it’s positive odds, this shows how much profit you’d on a £100 bet. For example, if the odds are +200 then you’d win £200 for every £100 you bet. So, if you win then you’d get your £100 bet back along with £200 in profit.
Alternatively, negative odds indicate how much you’d need to bet in order to win £100 in profit. For instance, with odds of -150, you’d need to bet £150 and win in order to receive back your original £150 and £100 in profit.
Converting betting odds
We’ve explored how to understand betting odds, but what about converting the different formats?
How to convert fractional to decimal odds
Generally, you are unlikely to need to manually convert fractional odds to decimals. Instead, you will be able to select your preference on the Betway website. But here is how it’s done:
To calculate 6/1 as a decimal, we divide the number on the left-hand side by the number on the right-hand side and add one.
So, in the case of 6/1 odds: 6÷1=6 and 6+1=7.00.
Here are some other examples:
· 10/1: 10÷1=10 and 10+1=11.00
· 6/4: 6÷4=1.5 and 1.5+1=2.50
· 2/5: 2÷5=0.4 and 0.4+1=1.40
How to convert decimal to fractional odds
Much like the above, you can easily select your odds preference on the Betway website; but as you may still be curious about how to convert decimal to fractional odds, we thought we’d still take the time to explain the steps involved:
Start by subtracting 1 from the decimal odds, and then convert this decimal to a fraction. Once you’ve completed the first step, it’s just about simplifying the fraction to its lowest form.
Putting this into practice, if we start with decimal odds of 2.50, we then subtract 1 which would equal 1.50. As a fraction, this would 150/100. We can then simplify this by dividing the entire fraction by its greatest common divisor, which in this case is 50; this then goes down to 3/2.
Here are some other examples:
· 3.75-1=2.75 and 2.75=275/100 and 275/200÷25=11/4
· 5.00-1=4.00 and 4.00=400/100 and 400/100÷100=4/1
· 1.80-1=0.80 and 0.80=80/100 and 80/100÷20=4/5
How to convert decimal and fractional odds to implied probability
We can also use other formats of betting odds to work out the implied probability of an outcome in percentage form. To calculate probability from fractional odds, we need to divide the number on the right-hand side of the fraction by the sum of both numbers.
So, odds of 9/1 would give an implied probability of 10%. That is because 9+1=10, and 1÷10=0.1. Expressed as a percentage, 0.1 equals 10%.
Here are some other examples:
· 5/1: 5+1=6, 1÷6=0.167 (16.7%)
· 6/4: 6+4=10, 4÷10=0.4 (40%)
· 2/5: 2+5=7, 5÷7=0.71 (71%)
It’s a little simpler to calculate probability from decimal odds. We just divide the number one by the decimal odds. So, odds of 10.00 would give an implied probability of 10%. That is because 1÷10=0.1, and expressed as a percentage, 0.1 equals 10%.
Here are some other examples:
· 6.00: 1÷6= 1÷6=0.167 (16.7%)
· 2.50: 1÷2.50=0.4 (40%)
· 1.40: 1÷1.40=0.71 (71%)
Hopefully our guide has given you a comprehensive overview of how betting odds work (as well as how to read betting odds with confidence, and how to use them). Alternatively, if you want immediate and accurate answers as to what a potential bet could return, be sure to give our betting calculator a go. Good luck with your future sports betting and more!