Whether you’re a beginner or advanced gambler, chances are, you’ve had to stop once or twice to try to work out what certain betting odds mean for your bet – and therefore, your chances of winning. And, chances are, you’ve been confounded by the fact that betting odds are expressed differently in different parts of the world.
We get it – it’s confusing! So we sat down and put together this handy guide to help you work out your odds of winning a bet, no matter where in the world you find yourself, or with whom you find yourself betting.
Let’s start with the easy stuff: odds indicate the likelihood of a certain outcome. When you bet on sporting events, each team has certain odds that are given by a sportsbook platform. These odds indicate the likelihood of the team in question to win the event in question. When it comes to the betting line between two teams, the team with better odds is known as the favorite, while the team with lower odds is known as the underdog.
Contents
An introduction to betting odds
Betting odds might seem confusing to begin with but you need to understand what they represent to be successful in betting. Betting odds can be explained by breaking them down into the following:
- What odds represent
- How to convert odds back to raw chance/probability
- How to calculate your potential winnings before placing your bet
- What the margin implied by the odds is – that is the bookmaker’s edge, or implied cost of placing a bet.
If the odds for both teams are even, or 1-to-1, both teams have an equal chance of winning. If Team A is accredited 2-to-1 odds, it signifies that Team B is twice as likely to win. If Team A is accredited 10-to-1 odds, it signifies that Team B is 10x as likely to win.
There’s no need to feel intimidated if you are fairly new to betting, it’s much simpler than you might think. Though there are several odds formats available at Cloudbet we’ll stick to decimal odds as they are the easiest to understand and are also the most popular.
What betting odds represent
Say Alexander Zverev is playing Roger Federer at Wimbledon and their head-to-head stats looked like this:
Alexander Zverev – 4 wins
Roger Federer – 6 wins
Total head-to-head matches – 10
So they’ve played 10 times, with Federer winning 6 and Zverev 4; from these basic stats we can make the following statements:
Roger Federer won 6/10 – from this we can say on average his chance of beating Alexander Zverev is 60% which represents a probability (p) of 0.6.
Zverev has 4/10 – from this we can say on average his chance of beating Federer 40%, or a probability (p) of 0.4.
0.4 + 0.6 = 1.0 – which in terms of probability (p) = 1, which is certainty.
One of the two players will definitely win, which seems a bit obvious but is actually important to understand.
Probability answers the question – how likely is something to happen – while betting odds are simply answering the question – how often will that event happen. So let’s turn the probability of the next hypothetical match between Federer and Zverev into odds based simply on their known previous encounters.
The importance of implied probability
Implied probability is a significant parameter in different transactions, including sports betting events. It’s a conversion of conventional odds into a percentage.
However, it also considers the house edge and excludes it to convey “true odds” on a certain event. It is possible to convert any sort of odds, such as sides, moneylines, futures and totals into implied probability, with a simple calculation.
The implied probability can be explained using a classic coin toss as an example.
Let’s say that you and your friend are flipping a coin. You both receive an even-money payout (+100) on a selected side, heads or tails, and you place $100 per flip.
Every time the coin hits heads, you take $100. Every time the coin hits tails, your friend takes $100. The implied probability of every coin side is $100/$200, or 50%.
You take the initial amount staked and include it in the amount won to reach the payout of $200. It means that for every $100 you bet, you hope to receive 50% of $200, or $100, which makes the odds 50/50.
When it comes to sports betting, the house edge indicates that the implied probability of a group of events will accumulate to over 100%. The amount over 100% is the expected profit of the bookmaker.
How to use odds to calculate the probability of a bet or event
You can use a simple equation to comprehend the probability of any sportsbook event or implied probability. You just need to convert odds to a percentage.
In the case of positive odds, this equals 100/(odds + 100). In the case of negative odds, this equals odds/(odds – 100).
Let’s see the following example:
New York Yankees +120: 100/(120 + 100) = 0.4545, or 45%
Los Angeles Lakers -120: -110/(-120 – 100) = 0.5 or 50%
From the example above, we can see that the implied percentage is higher on the Los Angeles Lakers (50%). Betting on the same team makes sense if you think that they have been underestimated.
The bookmaker’s edge
In sports betting, the house edge means that the implied probability will always add up to over 100%. At the same time, the total amount over 100% is the advantage of the bookmaker, or their potential profit.
Here is an example for an American football game expressed in point spreads:
Dallas Cowboys: -2.5 (1.85)
New England Patriots: +2.5 (1.85)
If we place a $110 bet on the Cowboys at -2.5, we count on a payout of $0 in case of loss and $203 for a win.
If we place a $110 bet on the Patriots at +2.5, we count on a payout of $0 in case of loss and $203 for a win.
There are two possible results and we take the risked amount – the stake – and divide it by the overall payout to calculate the implied probability.
Dallas Cowboys: $110/$203= 0.541, or 54.1%
New England Patriots: $110/$203= 0.541 or 54.1%
If we add up both results, we have 108.2%. This indicates that if we place bets on both teams, we would need to invest $108.2 to receive $100.
This excess over 100% goes by many names in the betting world. In the US, it is commonly known as vig, or juice; while in the UK this would commonly be known as margin. The Cloudbet blog has written extensively on this, including a further explanation of ‘What is margin?’.
From a sports bettor’s perspective, it is also crucial that you know and appreciate the amount of vig or margin a bookmaker is taking from you if you want to protect your bankroll – or at the very least make it go further. In the example above, 8% is a hefty chunk – but some bookmakers might regularly take more than that.
Calculating the margin – the cost of placing a bet
In our market the probability of the two outcomes added up to 1 or a 100% chance, which is what you would expert of a fair market. The same would be true of a coin-toss, with Heads and Tails both having 0.5 probability of 50% chance – with a 100% chance of either outcome.
If you bet against a friend, neither of you would have an edge. In the short-term, luck would determine who wins or loses, while over the long-run the law of large numbers would average things out.
When betting with a bookmaker, you have to understand that they want to make money in return for the service of accepting bets. The higher the margin or vig, the lower your theoretical return; crucially the size of this margin varies a great deal among bookmakers, most of whom don’t really want customers understanding this.
Cloudbet generally offers betting odds with a margin of just 2%, which is extremely competitive as the industry average is around 10%. That means an 8% better return.
We use this formula to calculate the margin which is essentially turning the odds back into probability and summing:
- (1/decimal odds option A) x 100 + (1/decimal odds option B) x 100
Odds and percentages
Chance can be displayed in one of the following ways: probability or odds. The probability that a certain event will happen is the fraction of times you anticipate watching this event in several trials. Probabilities are expressed from 0 to 1. On the other hand, odds are shown as the probability that something will happen, divided by the probability that something will not happen.
The probability of 0 equals the 0 odds. Probabilities from 0 to 0.5 are identical to odds lower than 1.0. A probability of 0.5 is identical to 1.0 odds.
If the probability increases from 0.5 to 1.0, the odds will also rise from 1.0 to infinity. For instance, when the probability equals 0.75, the odds equal 75:25, 3:1, or 3.0. If the odds reach high amounts, such as 1,000,000:1, the probability would be about 1.0. If the odds are small, or 1:1,000,000, the probability will also be insignificant, or close to 0.
How fractional odds work
Fractional odds are typical of the European sports betting market, including the United Kingdom and Ireland. They are among the easiest to understand, as possible winnings are displayed as a fraction of the wagered money. At the same time, the denominator displays the amount bet and the numerator works as the amount your bet will deliver in a winning bet.
For instance, odds of 1/1 indicate that you will receive a return of $20 for a successful $10 bet. When placing a $10 winning wager on a game with odds of 5/1, you will receive $60 in total. To calculate fractional odds, you can take advantage of the following formula:
- ((Stake/denominator) x numerator) + stake = total return or (10×5) + 10 = 60
How decimal odds work
Decimal odds are also common in Europe, Australia and Canada. They represent the multiplication of the stake you will get for winning a wager. For instance, placing a bet on a market with 3.0 odds indicates that you will win 3x your stake if your wager wins. In other words, you will receive $3 for every $1 you place.
For example, a hockey match featuring odds of 8.0 on Team A to win. A $10 stake on odds of 8.0 will result in a payout of $80, with $70 won from the platform and your $10 stake being returned.
For calculation purposes, you can use the following formula:
- Odds x Stake = Payout or 8.0 x $10 = $80
Bettors can calculate the total profit with the following formula:
- (Odds x Stake) – Stake = Total profit or (8.0 x $10) – $10 = $70
How American (moneyline) odds work
American or moneyline odds are a bit different from other bet types and sports bettors can easily recognise them. First of all, odds include a (+) or (-) before the main number. They all appear in terms of 100s. Even money is expressed as +100, which indicates that for every $1 you wager, you will take $1 if your wager wins. If you want to bet on the Green Bay Packers, you should know the following:
- A (+) in front of the odds indicates that you will receive over $100 payout with a $100 bet (known as positive American odds).
- A (-) in front of the odds indicates that you need to bet over $100 to get a $100 (known as negative American odds).
With what you now know about betting odds, you can:
- Calculate the probability implied by head-to-head form
- Turn probability into decimal odds, and the other way around
- Calculate a return on your stake from decimal odds
- Work out the margin implied by odds – essentially the cost of placing a bet
- Compare margins between bookmakers to work out where to maximise your profit.
Why do odds matter in sports betting?
Odds are important when choosing a sportsbook as they influence your bankroll. If you select an online sports betting platform with modest odds, you will waste cash every time you decide to place a bet.
Let’s imagine you bet $10 on the Team A moneyline at -200 on a given platform. If you win the bet, you will get $5. If you delve deeper and find the same wager for -175 at another sport betting brand, you would get $6. Understanding betting odds will enable you to select the most favourable odds on a certain event and have better chances of winning.
How do plus and minus odds work?
As part of the betting line between two teams, the team anticipated to win – the favourite – will have negative odds. This means that for every dollar you wager, you will get less than a dollar if the bet wins. The team anticipated to lose – the underdog – will have positive odds. In other words, for every dollar you place, you will receive more than a dollar if the bet wins.
What do +100 and -100 odds mean?
Odds of +100 display 1-to-1, or even, winnings. For each dollar wagered on a team with odds of +100, you will receive $1. Specifically, if you place a $10 bet at +100 odds, you will get $10 if the bet wins. If both teams are evenly matched, you will see moneyline odds at +100.
On the other hand, if you see -100 odds, it means that the team with the minus odds is a favourite. The negative number shows how much money you’d need to wager in order to win $100.
Betting on negative odds
Negative odds indicate the favourite teams. Betting on a favourite generally means that your bet won’t earn as much as it would if you took a risk with a team showing positive odds. For example, a $100 bet on +200 odds would deliver a profit of $200. However, a team with -200 odds would need a $200 wager to return an initial investment of $100.
Calculating potential winnings
Before calculating possible winnings, you need to differentiate a wager with positive moneyline odds from a wager with negative odds. As a general rule, the following formula is used:
- Potential profit = Stake x (Odds/100)
Here is a concrete example:
- $15 stake at +120
- $15 x (120/100) =
- $15 x 1.2 = $18
- Potential profit = $18
- Potential payout = Profit + Stake = $18 + $15 = $33
In the case of negative moneyline odds, you can use the same formula as above and make the calculation:
- $10 Stake At -150
- $10 / (150/100) =
- $10 / 1.5 = $6.66
- Potential profit = $6.66
- Potential payout = Profit + Stake = $6.66 + $10 = $16.66
The bottom line
If you are looking to enter the sports betting universe, it is key that you understand all the different types of odds, including spread bets, parlay bet (accumulators), prop bets and the like. Once you’ve grasped the most popular odds formats (decimal, fractional and American), you’ll likely realise that, no matter the type of betting odds you follow, the bookmaker will always have a slight advantage. You can look at this as the price you have to pay to play – or the cost to take the risk of your position on to their books.
Don’t let this discourage you from your betting adventure, but definitely keep it in mind as you go – and hunt for bookmakers that will provide you better odds. So long as you keep your wits about you and stay focused on the numbers – and hopefully your growing bankroll – everything and anything is possible when betting online.
May the odds be forever in your favour.
