Betting Odds Explained
A big part of learning how to effectively bet on sports is learning how betting odds are determined and what they indicate about a game or match that is scheduled to be played. Online bookmakers do not create their odds and/or betting lines in a vacuum. There is actually a lot of work that goes into setting an appropriate line or odds on each and every game and match. The slightest error could end up costing a bookmaker millions of pounds or dollars.
How Odds and Betting Lines are Determined
The biggest advantage a bookmaker has is they don’t get emotional about the process of setting odds or betting lines. Their responsibility is to find the odds and betting lines that balance the action on both sides of every game or match on the board. If they can successfully pull off this balancing act, they can sit back and collect the vig (commission) or odds differential regardless of which team wins.
The process of setting betting odds and betting lines is two-fold. First, the bookmaker and their minions will scour over mounds of statistical data that will eventually shine a spotlight on the probability of each team winning a particular game. Based on this output, preliminary odds or lines are set. From there, a small group of experts will interject any possible intangible information that should be taken into account. This intangible information might relate to possible weather conditions, injuries or news information on a team or players. After all possible adjustments are made, the official line or odds gets posted.
Betting Odds Explained
Considered a precondition for betting, odds and their different formats are crucial to understand in order to get a full grasp on what is the value you can expect to get from money invested in betting. Learning to read betting odds, convert them into a different format and ultimately use them to calculate you potential betting payouts is not a difficult task, but a required one.
Understanding the odds is extremely important and needs to be taken seriously. Novice bettors and beginners would often think of odds as the possibility of an outcome, but that is the most commonly made mistake in betting which can ultimately cost you dearly. When it comes to betting, odds are the amount a bookmaker is willing to pay out on the winning bet.
In order to be successful in betting, one needs to find the perfect balance between the odds given and the value involved. Generally speaking, high odds often mean a lower probability of an outcome, but the better payout. And in order to get the best odds, a bettor needs to understand and appreciate them.
As indicated above, there are two very different ways that bookmakers try to balance the action on a particular game or match. For individual sports like boxing, golf, tennis and darts, as well as low-scoring sports like European football and Major League Baseball in the US, betting odds or a money-line is the preferred option. On team sports with a higher number of points involved, betting lines or point spreads become preferred. This would typically include sports like college and pro American football, Cricket, Rugby, Aussie Rules Football and basketball. Let’s take a further look at each option.
Betting Odds or Money-line – In all cases, the favourite in a game or event can be identified as the one with the lowest odds. Look at the following odds on a typical soccer match:
Manchester United +200
In this case, Manchester United would be considered the favorite and the better of the two teams under the circumstances of the game. It does not mean they are the better overall team, just possibly the better team for this particular game with all things considered. Here’s another example:
Manchester City +350
With the minus (-) odds being the lowest odds, Liverpool would be considered a heavy favorite to win the game.
When the odds are stated as a minus (-), a bettor would be “laying” the odds to the bookmaker. If the odds come with a plus (+), the bettor would be taking the odds while the bookmaker is actually laying the odds. By definition and assuming betting increments of 100, odds of -120 means the bettor would have to bet 120 in order to win a net of 100. Conversely, odds of +120 means the bettor would win a net of 120 with a bet of 100.
As the action starts coming in, bookmakers always have the option of changing the odds to entice future gamblers to come with action on one side or the other. As mentioned above, bookmakers would do this in an attempt to keep the wagering balanced between the participants, which would give the house a significant statistical chance of winning regardless of the outcome. If early betting is greatly skewed in one direction, there’s a possibility the bookmaker made a mistake in setting the odds and will want to make the necessary adjustments.
If we are to determine the most popular betting odds format then decimal would definitely be the one. The reasons behind the popularity of this odds format is its simplicity.
Decimal odds – 1.45, 1.70, 2.75 etc. – are the simplest ones to understand and calculate since all you have to do is to multiply your stake by the odds so that you can see what the payout of the given bet would be.
It is actually the simplest math formula of Your Stake x Odds = Payout.
If you are about to place a bet on Liverpool against Manchester United at the odds of 2.30, your return on a £10 bet would be £23. You should remember that the total return is the amount which includes your initial stake, so in order to calculate the net profit on your bet, you simply remove the stake.
In this case, it would be £23 – £10 = £13
The same amount can be calculated on a different approach so use whichever works best for you: Net Profit = Stake x (Odds – 1)
And again, in the Liverpool bet it is £10 x (2.3 – 1) = £13
Another thing worth remembering about decimal odds is the breakeven odds which are 2.00. These odds will double your stake which means you win exactly the amount you invested. Decimal odds below the 2.00 mark are less than even money odds which mean that the potential return on your investment is lower than the stake.
Decimal odds are considered the most economical way to bet parlays since it calculates the true odds, giving you the most accurate odds to maximise the edge and offer you a fair leverage.
Unlike the decimal odds which are often referred to as the European odds, fractional odds are traditionally used in the United Kingdom and Ireland.
The fractional odds originate from horse racing betting and are one of the oldest forms of odds going all the way back to the sixteenth century. As the word itself explains, fractional odds are represented in fractions – 1/2, 6/4, 10/11 etc. – and are therefore extremely easy to calculate since they indicate the net payout you will earn in relation to the stake.
The main difference to the decimal odds is that fractional ones show the possible profit with the stake excluded. Odds of 2/1 – which reads ‘two to one’ – means that bettors can hope to earn £200 profit on a £100 stake. To put things into perspective, the 2/1 fractional odds would be equal to 3.00 decimal odds since there are £200 of profit and £100 of the stake to be won in total.
The less favourable odds, such as 1/2 – which reads ‘one to two’ – will have you earn a £50 profit on a £100 bet (1/2 is 1.50 in decimal odds).
Note that odds of 1/1 are known as Evens or Even Money which means you will earn the exact amount you stake.
The easiest way to convert fractional odds to decimal is to divide the fraction and add 1 – 1/2 + 1 = 1.50.
Betting Lines or Point Spreads
On team sports where a significant number of points are likely to be scored, bookmakers find it easier to bring teams closer together by setting a line based on points. When this is done, the actually odds are equal with a commission built in for the bookmaker. The commission is also known as the vig. Using the 2017 Super Bowl as an example, lets review an example of how a betting line works.
The New England Patriots are listed at -3 points and betting odds of -110.
The Atlanta Falcons are listed at +3 points and betting odds of -110.
By definition, the Patriots (the favorite) have to win the game by more than 3 points to be declared the winner of the bet. If the point differential is only 3 in favor of the Patriots, the bet is considered a push or a tie and all wagers will be refunded. If the Patriots win by less than 3 or lose the game outright, the Falcons will be declared the winner for betting purposes.
If the bookmaker is able to balance the action on both sides of the game at -3, they stand to win 4.55% commission on everything bet on both sides. Example: 22,000 to win 20,000 is bet on New England and 22,000 to win 20,000 is bet on Atlanta. The bookmaker collects 44,000 on the game. No matter which side wins the bet, the gross payout is going to be 42,000 and the bookmaker keeps 2,000. That’s 4.55% commission with absolutely no risk for the house.
As the action starts pouring in, the bookmaker again has the option to start adjusting the line to draw more action in one direction or the other. As a side note, there are a couple of “key” betting lines in American football. Those numbers are 3 and 7. If an original line was set on one of these numbers, the
bookmaker might opt to change the betting odds instead of the point spread. Coming off the 3 or 7 could put the bookmaker at risk of losses if the game in fact landed on the stated number.
That’s betting odds explained. The hope is you have a clearer understanding of how bookmaker operate and how to properly assess you risk/reward situation whenever you want to place a sports wager.
If you got confused with maths, fractions and formulas and are worried that you will have problems converting and understanding the odds, there is no reason to feel that way. Most of the top betting sites today have their odds presented in all the formats so until you learn to read them properly, just select the tool to change the odds and you will be good to go.