Betting Odds Explained – How Do Sports Betting Odds Work
10 minutes
Last Updated: March 23, 2022
If you plan to become a serious sports bettor or even an occasional one, you first want to build a strong foundation and understand how to bet on sports correctly.
This means learning as much as you can about sports betting before placing your first wager.
Sports betting can be a great source of income, but it can also go the opposite direction.
To prevent the latter from happening, you need to learn the basics first, and there is nothing more important than the betting odds.
Understanding how betting odds work is the bread and butter of every good bettor.
This article will explain what betting odds are, the different types of betting odds you can find, how to calculate your winnings based on it, and when is the best time to place bets depending on the odds value.
What Do Betting Odds Mean?
Sports betting odds represent the chance of a certain result happening in a sporting event. They are created by the bookmaker and reflect their opinion on how likely a certain outcome is to happen, so you need to understand what does odds mean in betting.
To create the most accurate odds, bookmakers use all kinds of software that calculate it based on things like previous matches, form, injuries, fatigue, and other factors.
There are two things that you can find out from betting odds.
The first thing that the odds will tell you is who the bookmaker considers to be the favorite. The odds on the favorite will always be lower than on the outsider because the oddsmakers think that there is a higher chance of them winning.
The second thing you can find out from the odds that the bookmaker is offering is the amount of money you will receive if your bet wins.
To calculate how much you are going to win, you must know what type of odds you are looking at because the calculation will differ depending on the format of the odds.
In the next part, we will explain the different types of odds and how you can calculate your winning for each one.
How Do Betting Odds Work – Understanding Different Types Of Odds
When you open any of the sports betting sites and pick a match to bet on, the site will display all of the odds for that match in a certain format which depends on your location and the company that runs the site.
You will be looking at one of the following odds formats: fractional, decimal, or American, also called Moneyline odds.
Betting Odds Explained – Fractional odds
Fractional odds are used in markets such as the United Kingdom. These odds might seem tricky to understand for beginners, so we will do our best to explain them as clearly as possible.
Fractional odds are displayed by the bookies as two numbers and a slash between them.
For example, 2/1 fractional odds is pronounced as two-to-one and represents the ratio between the profit and your initial bet.
To find out how much you will win in this case, you need to multiply the stake with the profit and add the stake to the total.
The calculation would go like this if you bet $1 – 1 x 2 + 1 = 3, this means that if you invest $1 on these odds and your bet wins, you will receive $3.
Determining the favorite by using the fractional odds is much simpler than determining the amount of money you will win if you place a winning bet.
The only thing you need to pay attention to is whether the number before the slash is higher than the number behind the slash.
If the number before the slash is higher, the displayed odds are for the underdog, and if the opposite is true, the displayed odds are for the favorite.
Betting Odds Explained – Decimal odds
Decimal odds are mostly used in Europe, and that’s why they are also known as European odds.
This odds format is probably the easiest to understand for beginners both in terms of determining the favorites and calculating the winnings.
European odds are displayed as decimal numbers, and that number represents how much you will win for every 1$ wagered.
If the odds are 3.00, this means that you will win $3 for every 1$ you stake (1 x 3 = 3). As you can see, decimal odds show the total amount you will win, including both your stake and the profit made.
Using decimal odds to determine who is the favorite in the match is pretty straightforward. You just need to see for which opponent the odds are higher. Let's take a tennis match, for example. The odds for player A are 1.60, and the odds for player B are 2.20, this means that player A is the favorite as the odds for his win are lower than the odds for player B’s win.
Betting Odds Explained – American or Moneyline odds
American or Moneyline odds are mostly used in the United States. Moneyline odds have the sign + or – placed before the number.
The sign helps players determine how much money they can win and who is the favorite.
If oddsmakers offer +200 on a certain outcome, this means that if you place a bet of $100 on this outcome and win, you will make a profit of $200.
If you want to know how much in total you will win, you need to add your stake to the profit, in this case, you need to add the $100 you staked to the profit of $200.
If the odds are -200, the calculation is completely different. Odds of -200 mean that you need to stake $200 to win $100. Just like in the previous example, you would win a total of $300, but his time, your bet would be double the amount of your profit.
As you can see, if the odds have the sign + placed before them, they represent the underdog and vice versa.
Today almost all top sports betting sites offer players the option of choosing in which format they want odds to be displayed. In practice, you only need to learn these calculations for one format, and you can always adjust your preferences and make your life easier.
Why Do Different Bookmakers Offer Different Odds?
If you have done some research on your own, you probably noticed that different bookmakers offer different odds on the same outcomes of matches in some cases.
There are a few possible reasons for this, such as different views of the match from the standpoint of the bookmakers, promotional offers, use of different software, bookmarkers edge, and the amount of money staked.
Just like different bettors have different opinions in which directions a match will go, the same can happen with bookmakers.
The only difference is that bookmakers will rarely have a difference of opinion regarding who is the favorite. There will only be a minor discrepancy in the odds most of the time.
Promotional offers can also impact the odds prices.
If a bookmaker runs a promotional offer for a certain league or a market, they will boost odds for those leagues and markets. By doing this, bookmakers want to encourage players to place more bets during the promotional period.
The type of software and algorithm that the bookmaker is using also has a major impact on their odds. And while most software works on the same principles in today's world, there can still be some differences in the produced odds.
Another thing that impacts odds is the bookmaker's edge. Some bookmakers have a higher edge than others, which results in lower odds than their counterparts.
The amount of money staked on a certain outcome can result in the shift of odds prices. Bookmakers will sometimes adjust their odds if they notice that money is being placed unevenly. In the next paragraph, we will talk about public money and how it affects the odds movement.
How Do Bets Work – Odds Movement
In the world of online betting, odds move all the time. As a matter of fact, odds that you see before the start of an event are rarely the same odds that were offered when the bookmaker first released them.
In most cases, odds change for two reasons:
- when important news regarding the match comes out
- and the flow of public money
In some instances, it can be a combined effect of both.
Public money is the term used in the sports betting industry to explain what the majority of the public is betting on.
For example, if the Lakers play Boston, and 70% of bettors are betting on the Lakers, it means that the public money is on Lakers.
Depending on the size of the market, bookmakers can release odds a few days before the event to up to a year.
The bigger the market, the earlier the odds will be released. This is because bigger markets are better covered by the media, and bookmakers have more information and data since they have been offering them for years.
Let's compare the English Premier League and the Thai Premier League and see how news and public money impact them.
The odds offered for the English Premier League will be released a lot earlier, they will be much less volatile, and the public money will have a lesser impact on them. The odds on the Thai Premier League will have all of the opposite attributes.
Even though we live in an age of globalization, there are still regions in which news is released late and they are not updated on a regular basis.
To counter the lack of information from smaller markets and avoid being exploited, bookmakers release odds a lot later, relying much more on public money when adjusting their odds.
For example, if you place a bet of $5000 on a match of the English Premier League, the chances are that you will not impact the odds offered in any way.
If you do the same with a match of the Thai Premier League, there is a big chance that you will cause a shift in the odds.
How Sports Bettors Use Betting Odds to Make Money
There are a couple of things that you should know about making money in sports by using the movement of the odds. But for now, the most important and probably the most shocking is the strategy of placing “sure bets.”
A sure bet is a term used to describe bets that will make money 100% of the time, also known as arbitrage.
Betting Odds Meaning – Sure Bets and Arbitrage Betting
Sure betting or arbitrage betting is an activity in which bettors use different bookmakers to place bets on the same events. This strategy aims to use the difference in the odds and odds movement to make a profit. To make things easier to understand, let's cove an example.
Let's say that bookmaker A has the following odds on a tennis match (we will use decimal odds):
Player 1 to win 1.66 Player 2 to win 2.10
The bookmaker B has the same tennis match in the offer but with different odds:
Player 1 to win 2.20 Player 2 to win 1.60
A sure bet would be to place $100 on player 2 using the bookmaker A and at the same time place $100 on Player 1 using bookmaker B. This way, you will make money no matter the outcome.
Here is the math part:
You placed $100 on player 2 using bookmaker A, and you placed the same amount of money on player 1 using bookmaker B
Total investment $100 + $100 = $200
If player 2 is victorious, you will win $210 ($100 x 2.10). When you deduct the total investment of $200, you are $10 in green ($210 – $200 = $10).
If player 1 wins the match, you will win $220 ($100 x 2.20). When you deduct the total investment of $200, you are $20 in the green ($220 – $200 = $20)
As you can see, you will make money in whichever direction the match goes. But don't be fooled by temptation, arbitrage betting is profitable, but it is very time-consuming and hard to implement.
Conclusion – The Importance Of Understanding Betting Odds
If you plan to get into sports betting or just considering making your first bet, this is vital information to know.
Understanding betting odds, different bet types, and getting familiar with the best sports to bet on will surely help you a lot in this journey.
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