If you’re new to sports betting then odds and how they are calculated can seem a bit of mystery. In actual fact, odds are merely a reflection of how likely something is to happen. Here, we’ll explain how betting odds are calculated, and how they reflect the probability of an event occurring. By the time you have finished reading, you should be able to answer the question ‘What do betting odds mean?’ and have a reasonable idea of how to calculate betting odds.
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Bookies always set odds that will guarantee a profit for them
Odds tell you how likely something is to happen
They also tell you how much money you will win if an event occurs
You can see odds as fractions or decimals at most bookies
How Betting Odds are Calculated: 5 Lessons to Learn
When it comes to knowing how betting odds are calculated there are several factors that you need to take into account. We’ll look at five things you need to keep in mind when you’re learning how to calculate betting odds.
Probability is Key
The most important thing to know when asking what do betting odds mean, is that odds reflect probability. Probability is how likely a certain event is to occur. Odds are a simple way of writing down this probability in a way that is relatively easy to understand. For any given event, there are a certain number of outcomes that can occur. Each of these outcomes will have its own probability of occurring. This probability is represented by the odds.
One of the simplest examples of this is rolling a dice. When someone rolls a normal six-sided dice there are six possible outcomes that can occur. Each of these outcomes has the same probability of occurring. There is a one in six chance of rolling a one, for example, and the same likelihood of rolling a six. There is a 16.67% chance of each of these outcomes occurring. A bookmaker will represent that chance as their odds.
Most UK bookmakers use fractions to display their odds, though you can also see them presented as decimal numbers. We’ll take a closer look at how odds are presented by bookies later in this article. The important thing to remember, though, is that odds are a simple way for bookies to show how likely they think an event is to occur. This will never be a truly accurate reflection of probability, however, as bookies also need to ensure that they make a profit, something else we’ll take a closer look at later in this article.
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Odds Allow You to Calculate Winnings
Another important thing to note about what do betting odds mean is that they allow you to calculate what your likely winnings from a bet will be. This is simply a case of multiplying the odds by your stake. For example, a £10 bet at odds of 6/1 that wins will see you collect £60 in winnings, plus your £10 stake returned, so £70 in total. You may also see odds written in what is called the decimal format. We’ll take a closer look at that in the next section of this review.
Of course, being able to calculate your likely winnings also makes it easier to assess the relative value of each bet. This makes it simpler for you to assess the relative risks of betting on particular markets. This means that you can shape betting strategies more effectively.
Understand the Different Formats
If you are betting in the UK you will see odds presented in two different formats. Both are essentially representing exactly the same thing – the probability of an even occurring. Traditionally in the UK and Ireland odds have been represented as a fraction. So you will see things like 2/1, 3/2 or 4/5 if you cast your eye over the sporting markets. These are pretty easy to understand, as they are a straightforward representation of probability.
But while many experienced sports bettors will be very familiar with fractional odds and how they work, they can be a little confusing at times. Calculating likely wins can often seem somewhat complex when you are faced with fractional odds. If you find fractional odds tricky then the good news is that UK and Irish bookies now also tend to give you the option of seeing odds as decimals too. This makes knowing how to calculate betting odds much simpler.
This is the format that is more usually in place at bookies from continental Europe. If you have ever watched horse racing from France on the TV, for example, you may well have noticed the way that the odds are written. Decimal odds give you exactly the same information as fractional odds, they are just written as a number with a decimal point. So, rather than seeing 2/1, for example, you will see3.00, and rather than 9/1 you’ll see 10.00. This format can make calculating winnings from bets much simpler and quicker. These odds also include your stake as winnings, something that does not happen with fractional odds.
You can switch between odds at most online bookmakers now with a simple click of a tab. You may also see American format odds at some bookies, but it is best to ignore these if you are not betting at an American bookmaker. They take a different approach to representing probability that can seem somewhat complicated to European sports bettors who have had betting odds explained to them.
Remember the Bookies’ Profit Margins
An important thing to know when you are trying to find out what do betting odds mean, is that bookies will always alter odds to make sure that they make a profit. Bookmakers may well act like they are really generous when it comes to handing out welcome bonuses, odds boosts and other promotions, but they do not make their massive profits by giving things away for free. It is important to remember this when you are checking odds ahead of placing a bet.
When bookies give odds to punters those odds are never a raw reflection of reality. They do not necessarily reflect how likely an event is to occur with absolute accuracy. This is because bookies adjust them to ensure that, whatever the outcome of sporting events, they make a profit. They need to do this because punters will place different bets in different proportions on different events, according to very specific circumstances.
This is where the ‘vigorish’ (sometimes referred to as ‘the vig) comes into play. This is basically the commission that bookies charge for allowing you to bet with them. It will alter the odds very slightly so that the bookie will make a profit, regardless of the outcome of a sporting event. It is the percentage profit that the bookie will make from all bets placed on a specific market or event.
How Odds Move
If you have some experience of sports betting, especially on horse racing, then you may have noticed that odds often shift and change in the lead-up to a race or a match. Once you have had betting odds explained you will understand why this is.
Odds change according to betting patterns. If more money is coming in on a specific market then this could lead to the bookie losing out. They need to adjust their margins as a result, in order to make sure that their profits remain intact whatever happens in the race or the match. Heavy betting on one particular outcome can really shift odds quite significantly, particularly in horse racing, and it is not uncommon to see odds drop by quite significant amounts in the run-up to races if punters are acting on a particular tip. You need to watch out for this when shaping your own betting strategies.
Check Out Betting.co.uk’s Other Betting Guides
Now that you have found out how betting odds are calculated you can use to Betting.co.uk to research some other areas around sports betting. You might want to check out our guide to how to read betting odds, for example, or our guide on how bookmakers make money, learn more about 1X2 betting, or read through our cash out betting guide to learn more about this interesting practice. What's more, now that you have had betting odds explained, you might also want to know how to complain to bookmakers, just in case you spot them making a mistake!
Conclusion
Now that you have had betting odds explained you should have a better idea about how to calculate betting odds. Actually calculating odds for an individual market is something that you are unlikely to ever have to do, of course. But knowing what do betting odds mean and how betting odds are calculated puts you in a much stronger position when it comes to finding good value at your favourite bookmakers. Now that you are familiar with concepts like vigorish, decimal odds and how odds can shift ahead of events you should be able to enjoy much more successful sports betting.
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