Understanding odds is perhaps the most important thing in betting. The odds tell you how much you might win. Additionally, they give you an idea about the probability of success. Without an understanding of the odds, it is impossible to assess the value a bet offers. Therefore, the odds are central to your chances of beating the bookies!
What Are Betting Odds?
“How do odds work betting” is a common search term for those new to betting. As said above, betting odds serve two related functions. They let a punter know what they stand to win if a bet is successful. They also give them at least an idea of how likely that selection is to win.
If we bet £10 that I beat you at tennis, there are no odds stated. It is understood that whoever loses will pay the winner £10. This is essentially a bet at evens (or even money, or 1/1 or 2.0!).
However, if you are much better than I am, you might offer me odds of 2/1. That means that you would give me £20 if I win, but I would only give you £10 if you win.
Types of Betting Odds
Sites can list odds in different formats. They still work in the same way and express the same thing. Therefore, you can simply see them as different “languages”. Younger punters may ask, “How do fractional odds work in betting?”. Fractional odds are the traditional UK format, but many younger bettors may prefer decimal odds. Generally, these are used in Europe. There are also US odds (as well as other formats), but these are very rarely used in the UK.
Examples of these three formats are shown below.
- Fractional odds – 2/7, 2/1, 8/1
- Decimal odds – 1.29, 3.00, 9.00
- US odds – -350, +200, +800
So 2/7 is the same as 1.29 or -350 and so on, just in a different odds format.
How to Read and Calculate Odds
Bookmakers display fractional odds as 2/1 or 6/4, for example. The number on the right is your stake. The number on the left is the profit you would make from that stake. In decimal betting odds, the bookie would write the same prices as 3.00 and 2.50.
Decimal odds can be easier to understand as they are always based on a stake of 1 (be that pounds, euros, or anything else). However, it is important to note that with decimal odds, the number indicates your return from the bet, including the stake itself. In contrast, with fractional/UK odds, it is the profit, excluding stake.
How do American betting odds work? Betting sites would publish these prices as +200 and +150. Where the number is preceded by a +, this is the profit from a stake of 100. However, where it is preceded by a minus symbol, it is the amount you would need to bet to win 100.
US odds with a minus, decimal odds lower than 2.00, and fractional odds where the number on the right is bigger than the one on the left are all referred to as “odds-on”. This means that your stake is bigger than the profit you stand to make. In the UK, punters generally say 1/10 as “10 to 1 on”.
Odds and Implied Probability
Odds imply a probability. This is to say that from the former you can deduce the latter. Odds of evens, such as the toss of a coin, give a probability of 50%. To convert the odds into a probability is simple. Generally, it is easiest to convert decimal odds. All you have to do is divide one by those odds. So with evens (2.00), one divided by two is 0.5, or 50%. A bookie might price the draw in a game of football at 5/2. This is 3.50 in decimal (to convert, just divide five by two and then add one). One divided by that is 0.286, so just under a 30% chance of the game being a draw.
However, the odds will generally be shorter than they “should” be according to the true probability. This is because of the bookie’s profit margin, or overround. For example, the coin toss in cricket is 50/50, so the odds should be evens. But the bookmaker has to cover costs and make a profit, so you might see odds of 4/5 instead.
Why Do Odds Change?
Bookies change odds for a few, often interrelated reasons. Imagine that new information comes to light about team news, injuries, the weather, or anything else that might affect the result. The probabilities of the various outcomes change, and so the bookies alter their odds to reflect that.
However, it may be that some savvy punters become aware of this information first. They will then start placing bets at odds that offer good value. From the bookies’ point of view, these prices are too generous. As they accept more bets, the software the bookies use will automatically lower the odds.
Practical Examples
Let us imagine you want to bet £10 on Liverpool to beat Real Madrid at 7/5. Whether your betting site uses fractional (UK) betting odds, decimal (European), or American, your returns will still be the same. In total, you will get £24 back, making a profit of £14.
- Fractional odds 7/5 – 7 divided by 5 = 1.4. Multiply that by the £10 stake to calculate the profit (£14) and add on the stake (£10) for the total return from the bookie of £24.
- Decimal odds 2.40 – Multiply the odds by your stake to calculate the total return of £24.
- US odds +140 – Divide the stake by 100 (10/100 = 0.1) and then multiply by odds (140 x 0.1) to calculate the profit of £14. US odds use a different calculation for negative (odds-on) prices.
Tips for Beginners
Whether you ask, “How do betting odds work in horse racing?” or you want to learn how football betting odds work, it is vital that you understand the core principles. Understanding the relationship between odds and probabilities is also crucial. This allows you to decide if a bet offers value. If you think the true probabilities make the odds generous, you have found a value bet.
It is also very important to note that bookies offer different odds. Odds can vary by 20% or more between sites. Compare prices between bookmakers to enhance the value you get even further.
Finally, start with small bets until you are confident you completely understand how betting odds work.
Conclusion
If you need to ask, “How do betting odds work in the UK?”, you probably should not place a bet. Read our simple guide so you fully understand odds and their relationship to probabilities. You do not really need to understand how American betting odds work. However, the deeper you comprehend the subject of odds, the better your chances of finding good value bets – and then beating the bookies!