What Are Odds in Sports Betting
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 Do Betting Odds Work?
For those of us that are U.S. sports bettors, these will likely be the most familiar from various U.S. sports betting apps. Typically, you will notice a three-digit negative or positive number, as below:
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 might wonder what does 200 mean in betting? It means that you would need to stake $200 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. For more examples, you can also check what does 100 mean in sports betting.
American Odds to Decimal
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. You can easily conver decima odds to American odds with our Odds Calculator.
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.
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.
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.
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:
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.
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.
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.
