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How Betting Odds Work: Betting Odds Explained for 2024

Dave Kuzio
Editor
Fact checked by: Jim Knight
Publish Date: 20.12.2023

We all like to have a bet don’t we? The bigger the odds the better, but how are those betting odds calculated?

In this article I will explain how betting odds actually work and how the odds that we depend on so much are calculated.

If you don’t understand the odds and what they mean, how can you be expected to place a bet and turn over a profit?

What Are Betting Odds?

Betting odds are created by bookmakers to show the likelihood of something occurring in your bet. Betting odds are used to highlight what amount of money punters can potentially win and the chances of that happening.

If the odds are really low then the bookmaker is making the assumption that the outcome is very likely to happen. The higher the odds means the bookmaker is not really convinced the outcome will occur.

Bookmakers display their betting odds in decimal or fractional and this is across the board with all sports, while some bookmakers will use American odds on occasion. These can easily be changed on-site based on your preference.

How Are Betting Odds Calculated?

There has been many times when I have been placing a bet, when I have said ‘how have they worked out those odds?’ Sometimes they do not make sense, but the bookmakers are not going to just guess the odds to give you a better chance of winning. There is an art to calculating the odds and I am going to explain it here.

The bookmaker’s main aim is to stay profitable, while the punter is looking to take that profit away from them.

Each bookmaker sets a profit margin they want to achieve. For the purpose of this article, let’s say it is 5%. This is known as the Vig. Each online betting site will calculate the probability of each bet and then subtract their margin in order to reveal the odds they will put on the website. So, if the bookmaker thinks a certain bet is 2/1 then they will take away the 5% to reveal their trading odds of 19/10.

Bookmakers consider a number of options when calculating odds. One of them is the probability of that situation occurring, while the other is the probability of the punter actually betting on that situation.

The first option can be figured out by doing the research. As punters, we are expected to know the form of all the teams we are betting on and how many goals have been scored etc. Do you not think bookmakers do the same? Of course they do. Data is key for everyone involved.

Can Odds Change?

Yes, odds can change all the time. One team might be favourite to win a match at the start of the week, but by the time kick off comes around they could be missing their star striker, key midfielder and goalkeeper for that game. The odds will shift in terms of the information that has been made public.

Also, the odds will move if there has been a lot of interest in a certain outcome. The more money that is placed on an outcome, the more you will have to stake in order to see a profit.

What Does Probability Mean in Betting Odds?

In the world of betting, the term ‘probability’ is used a lot. It basically means how likely something will happen. Let’s say Man City are playing Blackpool in the FA Cup third round.

We are all very confident that City would win that game, so that outcome will have a high probability. Blackpool would be massive underdogs in that game due to the difference in league positions, home advantage and financial clout. So, Blackpool winning would be low probability. That’s where markets like handicap betting could come into play for many bettors.

A very watered down version of probability could be the rolling of a single dice. A regulation dice has six sides, meaning there will be six possible outcomes once the dice has been rolled. If you decide to bet on one player rolling a three, then there is a 16.67% chance of that actually happening.

How To Calculate Probability For Betting Odds

Betting odds are more than likely to be displayed as a fraction – 4/1, 7/1, 100/1 etc. Once you have the fractional odds you can work out the probability of that bet being successful.

The best explanation for calculating the probability of betting odds would be to substitute the number in the odds for letters. In this instance, 4/1 becomes A/B. The calculation would then  be Probability (%) = B/(A+B).

For decimal odds you can use a similar calculation by again replacing numbers and letters. The formula for this would be (1/A)x100 = Probability.

Here are a couple of examples:

Fractional Odds

Fractional Odds % =B/(A+B) Answer Probability
1/1 1/(1/1) = 0.5 50%
5/1 1/(5+1) = 0.16 16%
10/1 1/(10+1) = 0.09 9%

Decimal Odds

Decimal Odds (1/A) x100 =% Answer Probability
1.50 (1/1.50)x100 = 66 66.7%
8.00 (1/8)x100 = 12 12%
10.00 (1/10)x100 = 10 10%

Understanding Different Odds Formats

There are a few different types of odds formats that feature in the world of betting. I have covered them more in depth on this website, so I will just give you a brief overview.

Fractional Odds

Fractional Odds are the most preferred methods used by bookmakers. They are easy to follow and understand, plus you can work out immediately what your bet would be worth.

Odds Stake Outcome
9/4 £1 £2.25 profit + £1 stake
4/1 £1 £4 profit + £1 stake
9/1 £1 £9 profit + £1 stake

Decimal Odds

Bookmakers in the UK use decimal odds on occasion, but if you are more comfortable using them over fractional odds, then you can change your odds preference in the settings.

Odds Stake Outcome
2.25 £10 £12.25 profit + £10 stake
4.00 £10 £30 profit + £10 stake
8.00 £10 £70 profit + £10 stake

American Odds

American odds are not always used outside of North America, but there is no harm in understanding the basics of what they are and how they work.

American Odds Stake Outcome
-120 $100 $83 profit + $100 stake
+120 $100 $120 profit + $100 stake

Final Say On Betting Odds

It is safe to say that you really need to understand what betting odds actually are before placing your first bet. Once you have the grasp of what the odds are, the chances of winning and the amount you could win, then you are ready to go. Do not be persuaded by the high odds. They look attractive, but the probability of them coming in is very low..

Make sure you fully understand what the odds mean on each bet and do your research. If a team you feel is the favourite to win has high odds, check out the relevant information like team news and league standings to try and discover why they are not the favourite. There is usually a good reason.

Find the Best Betting Odds Online

Betting Odds FAQ

💷 What Are Betting Odds?

Betting odds are created by bookmakers to indicate the likelihood of something happening.

🔢 Should I be using Fractional or Decimal Odds?

This boils down to individual preference and whatever you are comfortable with. If you want to change from fractional to decimal, just change them in the settings.

❌ Should I Always Bet On The Higher Odds?

No, do not always back the high odds. They will be that high for a reason. Only back the attractive odds if you are confident about that bet being successful. You do not want to be chasing your losses.

🇺🇸 Do I have To Use American Odds?

No. Some UK bookmakers like to use American odds, but the majority use fractional and decimal odds. Obviously, if you are using a US site, then you will need to use American odds and have a good understanding of how they work.You can go to settings and manually change it to whichever option suits you best.

 

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