Many people start betting without even knowing how betting odds work. Hence, the question ‘How do odds work? and ‘how betting odds are calculated’ come into picture. Understanding odds and how betting odds are calculated is extremely important to you in case you are planning to become a successful bettor. It is the initial step that paves way to a successful (and profitable) betting adventure. This is why a lot of professional bookmakers say that it’s mandatory for the bettors to know how odds work and how betting odds are calculated.
Among the betting population, 40% of the bettors are seasonal who only bet for fun. They consider casual betting as one of the sporting events for recreation. In either case, the betting odds are important because they indicate how likely it is for an event to take place, and the potential profit you stand to make from a bet, which is why you need to know how betting odds are calculated.
What You’ll Learn
- It is important to know how betting odds are calculated in order to have a clear understanding of odds
- Less likely events tend to have higher odds with larger rewards, while more likely events have lower risks and lower rewards.
- Your winnings depend on your wagering amount and betting odds.
- Betting odds are seen in various formats – as they are seen as fractions and sometimes as decimals as well.
Your Essential Guide to How Betting Odds Are Calculated
Bookmakers present the betting odds either in decimal format, fractional format or American format. Even though they look different, they mean the same thing. All the odds are often represented through the probability of things happening. So, how betting odds are calculated by bookmakers who measure the probability and put it against the risk to give the betting odds. Betting is also assessing the probability or a chance happening so that the bookmakers can use the odds which translate the implied chances into usable forms through betting offers.
By understanding how betting odds are calculated and going through these odds, you can choose between the betting offers. Understanding of betting odds and how betting odds are calculated will help you in comparing the odds between bookmakers. However, if you think that betting is just about understanding the odds, you’re wrong. Betting is generally a bigger picture with a lot of elements that you should learn, as well. To expand your understanding of odds, you also should know the basics of probability. With good knowledge about the probability calculations and comparison of odds provided by the bookmaker, you can begin taking decisions about what type of bet you should make, what you should be betting on, when you should be betting and how much stakes you should either make or take.
Decimal & Fractional Odds – The Differences
Decimal and Fractional odds seem confusing at first if you are not familiar with betting, betting types, and betting terms. As mentioned above, betting odds are used to present the favour of a result, while it helps you in understanding how much you can win as well. The odds are usually written in fractional format (say 2/1) or decimal format (say 2.0). Betting odds can also be applied to any betting market that has an outcome and is mostly calculated in sports betting markets, entertainment markets or political markets. These odds also measure the result probabilities like the results of a game, the winners of a reality TV show or if a particular party is getting a majority in an election or not.
Popular Odds Types to Know
Apart from knowing how betting odds are calculated, it is important to know the types of odds. Betting Odds are commonly identified in three different formats – Long, Short and Even.
- Even odds: When a particular result has equal odds of it to happen or not, then it is given the even odds. The even odds are usually represented as 1/1 in fractional format or 2.0 in decimal format. The winnings of a bet with even odds would be the same as the stake. For example, if your stake is £1, your winning is also £1. If your stake is £10, your winning is £10, and you will get a total return of £20.
- Long Odds: If something is less likely to happen, they are known as long odds. The long odds represent the potential to win than you can win with even odds. At the same time, the risk of losing is also higher with even odds. For example, if there are 10/1 long odds, you can win £10 for £1 as your stake. The winnings in long odds clearly exceed the stake. Similarly, a winning bet of £10 would give you £100 with 10/1 odds giving you £110 in total.
- Short odds: If something has a higher probability of happening, it will have short odds. While short odds will give you positive results, the winnings are smaller on these bets. Therefore, a player has to stake a higher amount for bigger returns. For example, if you have 1/10 short odds, you will win £1 for £10 you stake and get around £11 as a return.
A Quick Look at Probabilities & Margins
Once you understand how betting odds are calculated, you can examine the probabilities in a more detailed manner, helping increase your chances of winning you bets by finding the best odds. Once the probability is calculated, you can turn the number into odds through a simple and straightforward process. Decimal odds – one of the three main formats is mainly used by most of the bettors. As a bettor, you can use the simple equation to arrive at the decimal odds through the toss choice.
1 / probability for your result: The decimal odds for a coin landing on heads is 1, and it should be divided by the probability of its occurrence (which is 0.5) – giving you the decimal odds of 2.0. Through this process, you can simply take the betting odds and reverse engineer them with an inverse equation to turn the probability into odds.
1/decimal odds = probability: By taking the needed knowledge and working out the probability for the toss, you can get the aggregate of the implied probability for both the results in the toss, which is 100%. (0.5/1+0.5/1)*100 without surprises as an event will have odds say 1 (100/100). You can perform the same calculation for odds and compare them with a given bookmaker to produce odds that are greater than 100%.
Calculating a Bookmaker’s margin:
In simple language, the odds do not actually reflect the likelihood of the results that are concerned with the event. The amount by which the probability actually diverges from the 100% odds is the bookmaker margin – the amount that has been added by the bookmaker to the specific market. Bookmarker margin is an important element in reading the odds as it tells you a lot of information about the bookmaker. A value-seeking bettor uses this information and highlights the actual cost of the bet with respect to a bookmaker. By using the probability and the shared bookmaker origin, it would be easier for a bettor to place intelligent bets. Calculating odds is difficult, so you don’t actually have to do it all by yourself. You can find a quick way to analyze these margins using our Margin Calculator tool as well.
Using Odds to calculate your payout:
Calculating betting odds will open a new world to bettors as they can calculate the value of the payout. Based on the betting value and the odds, one can decide if a bet is safe to make or not.
Your stake X decimal odds: So if you are making a €10 bet with 2.0 betting odds, your returns include 2.0x €10 = €20. By calculating the probability and understanding the odds, you can evolve as a bettor. You will know your frequency for an event, start modelling the odds, compare the bookmakers and choose the best bookmaker to make a specific bet. When the two betting types diverge, you can turn this into favour by generating the profit, which is the main aim for the bettor. Now that you have known the whole process of calculating the betting odds, you can take advantage of low margins and make informed decisions in betting.
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Calculating Odds – Summary
The concept of odds may be confusing, but at Gambling Guy, we guide you through the entire process of betting, in an easy to understand way, helping you hone your betting skills. With Gambling Guy, you can develop your own betting strategies like Greyhound Betting Strategy, Value Bet Strategy, Football betting strategy, Cricket betting strategy, Golf Betting Strategy and Inplay Tennis Betting strategy etc with the help of our betting tips and increase the chances of winning your bets. Betting Odds represent the probability of a particular event to happen so that you can know how much you will win with any specific bet.