If you’re just getting into the world of gambling, odds can seem like a complicated mess. We’ve all seen them—6/4, 3:2, etc.—but what do they mean? How do you calculate them? What is the difference between decimal and fractional odds?
Well, we’re here to help untangle the messy web of odds and give you some clarity on this sometimes-confusing subject with some help from BettingGuide.com.
There are two main types of odds for gambling: decimal and fractional. Let’s go over how each kind works to make sense of the next time you see someone talking about those betting odds.
What are Betting Odds?
Let’s start with what they are and how they work.
Betting odds are the chances a bookmaker gives an outcome to happen or not happen. These are fractions, decimals, or percentages. If you bet $1 on it happening, you stand to make $4 if it happens. If the odds are 4/1 against something happening, you will make $4 if it didn’t happen.
Odds of 1/2 mean that if you bet $2 on something happening, you stand to make $1 if it happens (or lose your initial bet). Odds of 2/5 mean that if you bet $5 on something happening, you stand to make just over $2.
Different Odd types; Fractional, Decimal, and American Odds
In this guide, we look at how to calculate betting odds in three of the most common betting markets: fractional, decimal, and American.
Fractional odds are used primarily in the UK and Ireland. Sometimes called Traditional odds, they show the amount you win for every unit you stake. For example, 4/1 will pay $4 for every $1 you stake. Fractional odds are also known as British odds, UK odds, or traditional odds.
Decimal odds are used across Europe and beyond. They show how much a bookie will pay out money (including the return) for a winning bet – so if your bet wins, the total return would be five times your stake (assuming a $1 stake).
American odds are also called Moneylineodds. They show how much money you need to stake to win a specific payout amount or how much you will win if your bet is successful at a given stake amount, such as 2/1 ($2 won for every $1 staked).
What is probability in Betting Odds?
Probability is the likelihood of something happening, and it’s calculated by looking at the number of possible outcomes and how many are favorable. For example, if you’re tossing a coin, there are two possible outcomes, which means each side has a probability of 0.5 (1/2).
When you’re betting on your favorite sport, the odds aren’t directly related to the probability of something happening (as would be in science or maths). Still, they give you a good idea of how likely it is for something to happen. This is what bookmakers use to calculate the free bets and bonuses that they give out.
Using Betting Odds to Calculate Probability
So how do you calculate the probability of an event actually happening so that you can use it to compare the odds and make your value bet?
It’s pretty simple:
- Convert the odds into a fraction. For example, if someone says, “the odds are 3-2”, then our fraction would be “3 over 2” (try saying that three times quickly). If they say “the odds are 5.0,” our fraction is “1 over 5.0”; 0.20; 20%.
- Use this formula: 1 / (1 + fraction) = probability. So for 3-2, we have 1 / (1 + 3/2) = 0.4 or 40%. For 5.0 our calculation is 1 / (1 + 1/5) = 0.167 or 16.7%
Using Betting Odds to Calculate Winnings
As a bettor, you have three different ways of calculating the betting odds. The first thing to know is that most sportsbooks allow you to choose between American, fractional, and decimal odds.
- Calculate your winnings using fractional odds
Let’s say the betting odds in favor of an event are 1/4 (1-4). These betting odds mean that you will receive 1 unit in winnings for every four units staked. Staking 100 units at these odds would return 25 units (100 / 4 x 1 = 25) if your bet was successful. If the betting stake were 200 units on this outcome, the calculation would be: 200 / 4 x 1 = 50.
- Calculate your winnings using decimal odds
If you were offered 10/3 on a market with even money implied probability (50%) and staked 100 units, then the calculation would be: 2 * 100 / 3 = 66.6667 rounded up to 67, resulting in a profit of 67 -100 = -33 if this wager was unsuccessful. The return, if it landed, would be: 67 + 100 = 167 resulting in a profit of 67 units rounded down to 66 Profit After Commission (PAC) results will vary according to the commission rate offered by bookmakers on exchanges like Betfair or Matchbook, but these are very close examples giving some idea as to how they work if used correctly and within reason of course!
Calculating the betting odds ratio
Now that you have an idea of what betting odds are let’s run through some simple ways of calculating them.
To calculate the betting odds ratio for a single event, simply subtract the number from 100. So, for example, if your chosen team has a $2 chance of winning, the betting odds would be $98 ($100 – $2), which could also be written as 1/50 (1 / (100 – 2)). Conversely, if your team had a 50 percent chance of winning, the betting odds would be equal (1/1 or 2.00).
You can calculate a single outcome with multiple events like this: divide one by the decimal figure given by adding all the individual chances and then multiply that number by 100. So if there are three teams each with a 50 percent chance of winning and we want to work out how much we’d win on a bet on any one of them triumphing, first add their chances together to get 150%. Then divide one by 1.5 to find that each has a two-thirds probability (66% or 20 to 33 in fractional terms) of winning and therefore one-third probability (33% or 10 to 33 in fractional terms) of losing. Multiply 100 by three, then divide it by 10 to get 33 as the answer – this is how much you’ll win for each unit staked if your chosen team triumphs.
If you’re looking at multiple events with more than one possible outcome and need to work out their combined probabilities so that you can convert them into betting odds ratio format, just multiply the probabilities together.
Understanding betting odds is a crucial part of forming a winning strategy. Knowing how to convert different formats of odds will help when comparing prices across bookmakers to identify where the best value lies. At least now you know all about betting odds and how to get started using them successfully. Use the tips here to make the most of your betting experience.