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Understanding Sports Betting Odds

Understand Betting Odds

What are the various types of sports odds? What do they look like? What do they mean?

If you are new to sports betting, all the numbers and odds figures can be a little confusing. This sports betting guide will help you understand why odds look like they do and what they mean.

Let’s start with their meaning first.

Odds are a representation of the probability that an event will occur.  Of course, we cannot know with complete certainty whether something in sport will happen or not, but with probability we can provide a meaningful numerical value to things that we don’t know for certain.

The odds you observe on a sports betting website are the bookmaker’s answer to questions like:

  • How likely is Golden State to beat Cleveland?
  • What chance does New Orleans have of winning the Super Bowl?
  • Who will win the World Cup of soccer?

The bookmaker has an opinion on all those events and he has turned that opinion into some odds.

We’ll return to the process of deriving probability from odds later in the guide, but just as there are many languages around the world with which you can communicate the same thing, so there are several ways of communicating probability. They can be referred to as odds formats, and the most popular formats are explained as follows:

How Odds Work

For those of us of are U.S. sports bettors, these will likely be the most familiar. Typically, you will notice a three digit negative or positive number, as below:

Cleveland Browns betting

A negative number tells you how much you will need to stake in order to win $100; a positive number indicates how much you will win if you stake $100.

In the highlighted example, you would need to stake $250 in order to win $100 on Cleveland, whereas, a $100 stake would win you $190 at the prevailing odds on Tennessee.

Thus, common sense will tell you that Cleveland is more likely to win this particular matchup given those two financial scenarios where one has a negative number and the other a positive one.

Decimal Odds

Decimal odds are widely used outside the US, particularly in Europe, Africa, South America and Australia.  They are easy to understand, insofar as they indicate precisely what you will receive back, if your bet is successful, for a 1 unit stake.

Here, for example, New England is priced at 4.00 to win the AFC Championship. So, for a $1 stake, you would be returned $4.00 if successful. For a $5 stake, you would receive 5 x 4.00 = $20.00, and so on.

Decimal Odds

Fractional odds

Fractional odds retain a stubborn foothold with bookmakers whose customers are familiar with them, especially in the retail environment of sportsbooks. They are often to be found in UK facing sportsbooks, but occasionally rear their head Stateside.

Unlike decimal odds, fractional odds do NOT include your stake. So in the same example, New England is priced at 3/1 – you would win $3 for every dollar staked, in addition to your stake being returned in the event you are successful – so $4 would again end up in your pocket.

Fractional odds

These days, most sportsbooks allow you to choose your preferred odds format, so select the one that you are most comfortable with.  Now read on to find out what else the odds are telling you.

In addition to the financial information that odds provide, they also contain information about how likely the sportsbook thinks an outcome is. Now probability may be something you last thought about at high school, but some very simple maths can take you a long way when thinking about odds.

Of course, we often think about probability in different ways numerically, but let’s keep it simple and describe it as a number between 0 and 1, where:

  • 0 is impossible
  • 1 is certain

And everything else in between is possible, much as shown in this graph:

Betting probability

We can see from this picture, that some things are intuitive on this line – a coin toss; a roll of the dice.

The next question is: how do we understand where the sportsbooks place New England to win the AFC championship on this line?

Fractional odds probability

Let’s return to our NFL example.  Here, the sportsbook is offering New England at 3/1 to win the AFC Championship:

Fractional odds probability

You will often hear it said as 3/1 against – well think of that as 3 chances against something happening versus 1 for it happening i.e. it is a 1 in 4 chance.  And as we know 1 in 4 or 1/4, is an implied probability of 0.25.

So all we need to do to find any implied probability from a fractional price is to divide the denominator (the number at the bottom of the fraction) by the sum of the denominator and the numerator (the number at the top of the fraction. So Kansas City, a rather awkward looking 15/4 chance, has an implied probability of 4/(4+15) = 4/19 = 0.21 approximately.

Decimal odds probability

Decimal odds are easily converted into a probability.  Simply divide the odds into 1; hence odds for New England of 4.00 become 1/4.00  = 0.25.

Decimal odds probability

Similarly, odds for Pittsburgh become 1/11.00 = 0.091

Odds probability in the U.S.

The method of determining probability from U.S. odds format differs, dependent on whether that number is positive or negative.

Cleveland Browns betting

For Tennessee, which wins you $190 for a $100 stake, we can consider this as a fraction; 190 to 100.

Therefore, just as in the fractional explanation above, in order to determine the probability of Tennessee we divide the denominator (the number at the bottom of the fraction) by the sum of the denominator and the numerator (the number at the top of the fraction). This results in:

100/(190+100) = 100/290 = 0.345

For negative numbers like Cleveland’s -250, divide that number by itself minus 100.  This becomes:

-250/-350 = 0.714

Other odds formats do exist around the world (for example, Malay, Hong Kong and Indonesian) though if you are betting from the United States, you are very unlikely to come across them.

Take a look at the video below for a demonstration of the various odds formats that you will encounter when placing a bet:

In our next part we’ll cover the various types of sports bet there are.

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