How Do Betting Odds Work

Everything You Need To Know About Sports Betting Odds

Betting odds always represent the probability of an event to happen and they represent the prices on the market. This is why betting odds is crucial information and will tell you how much money you will win if your bet wins.

If you are going to start betting, gambling at a casino, playing Black Jack, poker, sports betting, or any other type, it’s important to understand the basics of odds. In our case, we will focus on sports betting fundamentals and a quick guide to different odds.

If you can not read the betting odds, you can not expect to win long term.

Table of contents

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Betting Odds Explained in a Spreadsheet

The concept

The concept of betting odds is the same for all kinds of different types of odds. They all represent the price on the market that you will pay. They also represent the implied probabilities of possible outcomes.

If you bet on an outcome, where the chance is more likely to happen your invested money will return less profit (less risk – less profit, makes sense). And vice versa.

We have different odds formats and here are the most popular. You can decide which one you like and you can also easily turn one decimal format into another.

It is up to every bettor which betting odds format will use, most bookmakers and sportsbooks offer at least 3 betting odds formats (American odds, Decimal odds, and Fractional odds). I personally use decimal odds, because they are for me most simple. But this is not the rule or recommendation of what you should use. You can use the format that you like the most. What is more important is that you understand how they work and how you can calculate probabilities from them.

Decimal Betting Odds

Decimal odds are very popular in Europe and Australia. You can easily identify favorites and underdogs.

  • [favourites] the smaller number 
  • [underdogs] bigger number

Total return calculation of your wager if very simple:

[Total Payout = Stake x Decimal Odds]

Example: Let’s say we have Red Sox that have 60% of chance and Yankees that have 40% to with this particular game in our example.

First, we can calculate the odds from probabilities:

  • [Red Sox 60%] -> 1/0.6 = 1.67
  • [Yankees 40%] -> 1/0.4 = 2.50

1.67 and 2.50 represent the odds. Bookmakers will lower these odds a little bit because of their margins (vig, juice) and it will more likely look something like 1.60 for Red Sox and 2.40 for Yankees.

  • [Red Sox 60%] -> turns into (example) = 1.60
  • [Yankees 40%] -> turns into (example) = 2.40

And these are the prices that you will pay.

If you decide to bet $100 on Red Sox, simply multiply $100 with 1.60.

  • [Total Payout] $100*1.60 = $160
  • [Profit] $100*1.60 -$100 = $60

American Betting Odds

American odds are very popular in the USA and the odds with minus (-) sign are favorites, where it tells you how much you must bet to win $100. Plus (+) odds are underdogs, where it will tell you how much you win for every $100 bet.

  • [Red Sox +130] – bet $100 to win $130
  • [Red Sox -130] – bet $130 to win $100

You can use these formulas in a betting spreadsheet or in excel to turn American odds to decimal:

=IFS(A<100,(abs(100/A))+1,A>100,(A/100)+1,A=100, 2, A=–100, 2)

Where A is American odds (example: -130 or +145)

Fractional (UK) odds

Fractional odds are very popular among UK bettors and their bookmakers. They come with (/) sign or (-) sign, where they represent the ratio of the amount won to the initial wager.

Example:

  • [5/1] – five to one means, that you win $5 against every your $1 bet.

Total Payout in our case = [Stake * (5/1)] + Stake

FAQ’s

Which odds format should I use?

It is up to you which odds format will you use. I personally prefer decimal, but this is not a rule and if you like some other format simply use it. You can download my odds converters and use the format you like the most. It is much more important that you learn the differences and how they work.

There are also some less known odds formats like Hong Kong odds, Indo odds, and Malay odds formats, but the basic concept is the same.

They all represent the probabilities and the prices on the market. The most important question is how to find the value, which is the difference between your discovered price (estimated, projected odds) compared to bookies’ implied probabilities.

What are juiced odds?

The juice is simply the sportsbook’s commission (vig, margins, vigorish) for taking the bet. In other words, the juice is the percentage of each bet that the sportsbook keeps as its commission. For example, if you’re betting on a football game with odds of -110, that means the sportsbook is keeping 10% of your bet as its commission. It’s how the sportsbook makes money on bets.

How is bookmakers’ margin calculated?

To calculate how big is a bookmakers’ margin you must look at how big is the difference between actual odds, which are always unfair, and the odds if they would be fair. The easiest way to calculate margins is to turn the odds into the percentages, sum them and see how much far is from 100%.

Bookmakers’ margin calculated on a real example:

Let’s say we have two teams with a winning probability of 50% vs 50%.

Fair odds would be +100 vs +100 (2.00 vs 2.00). Right?

But of course, you don’t see this. Bookmakers will offer you -105 vs -105 or -110 vs -110 or something like that, depends on how big the margin is:

  • TEAM A: -105 (1.952) turn into the percentages = 1/1.952 = 0.512295082
  • TEAM B: -105 (1.952) turn into the percentages = 1/1.952 = 0.512295082
  • 0.512295082 + 0.512295082 = 1.024590164 = 102.46%

The difference: 102.46% – 100% = 2.46%

Bookmakers’ margin is 2.46%. The bigger this number the worse for you.

Real sports betting example of getting the best odds

We want to bet at the best possible odds on a game between Houston Astros and Baltimore Orioles. To get the best odds and maximize profits we must:

  • Analyze game and estimate the odds we think should be fair
  • Select a value-based our projected odds and online betting market prices
  • Find a bookmaker that offers lightly better price for a side we want to bet

Here is the table with the odds and margins, plus my projected lines for this game.

  • A bookmaker with the lowest margins: Bet at Betonline (1.97%)
  • Getting the best odds if you bet on Astros: Bet at Betus
  • Getting the best odds if you bet on Orioles: Bet at Bovada

What does reduced juice mean?

In sports betting “reduced juice” means that the sportsbook is offering better (reduced) odds on a particular bet. For example, if the usual odds on a bet are -110 (meaning you would have to bet $110 to win $100), reduced juice might be -105 (meaning you would only have to bet $105 to win $100).