1. Explain How Betting Odds Work
2. How Does Betting Odds Work Sports
3. How Does Baseball Betting Odds Work

How betting odds work. Betting odds are usually expressed either as fractions (e.g. ‘3/1’) or as decimals (e.g. Fractions were traditionally used to bet on horse racing and were most popular in high street betting shops in the UK, before the advent of internet gambling. American odds for betting on the favorite work by showing how much money you would have to bet in order to win $100. Things are different when betting on an underdog. The positive number shows how much you can win if you risk $100. You may notice that this is similar to 'odds-on' bets in UK markets. Decimal Style Sports Betting Odds Decimal style odds are used mostly in Europe, and are pretty easy to understand. To calculate the decimal style odds all you will need to do is simply multiply the amount you wish to wager by the decimal odds shown and you will get your payout. For example it may look something like this.

Understanding how betting odds work is crucial for success in gambling, whether you want to win at slots or place bets on sporting events. By knowing the odds of potential bets you can calculate your expected winnings and build an entire strategy for a successful session. Let’s see where betting odds come into action and how to read them.

Betting odds on sports events

Knowing what bet to place on any type of sports events all comes down to the odds. These events can come with different odds based on the bookmaker you place a bet at, so you want to find the ones which offer the best odds for your bet.

However, you should make sure you understand the odds properly as different bookmakers use various formats of odds for their events. This is so mainly because of geographical differences. In general, there are 3 types of odds you can come across; Fractional, Decimal and American. Let’s see how each one works and how to easily read them.

1. Fractional Odds

Fractional odds are usually found at British or Irish bookmakers. They are also referred to as traditional odds since they were used early on, originally on horse races. These odds are usually shown with a hyphen or a slash, for example, 5/1 or 5-1. This odd is read as five to one. So what does this mean exactly?

A fraction odd of 5/1 means that you stand to win £5 in profit for every £1 you wager. So the total payout from a £1 wager to a 5/1 odd is £6. The same formula is used for bigger wagers and bigger odds. For example, a wager of £100 on an 8/1 odd comes with a total payout of £900. So that’s 8 times what you bet, so it’s 100 x 8 = £800 which is your profit, plus your initial £100 back, given you the total winnings of £900.

This type of odds is still heavily used today, but as we mentioned earlier it’s mostly focused on the UK.

2. Decimal Odds

Decimal odds are also called European odds and they are mostly used in Europe. They are based on the decimal system and are very easy to understand and to work with. With decimal odds, all you need is a calculator and you can easily calculate your profit. This comes especially in handy if you place a single wager and divide it over several events.

The main reason why decimal odds are easy to calculate is that they give you the total expected return. In fractional odds, you need to calculate the profit first and then add your initial wager. With decimal odds, the entire amount is calculated at one go.

For example, you bet $/£100 on a sports event which has decimal odds of 1.60. In order to calculate how much you can win in total all you need to do is multiply your stake with the decimal odds. In this case, it’s 100 x 1.6 which gives us a total of $/£160. As you can see the profit from betting on an event with this odd is $/£60. Just like in fractional odds the higher the odd, the higher the overall payout will be.

3. American Odds

American odds are used pretty much only in the USA and are also known as Moneyline odds. For a person coming from Europe, they can be very confusing, but in fact, they are very simple to read. They are based on placing a $100 bet, so you can easily calculate the end profit based on that bet. The odds for the favourite on an event come with a minus sign, while the odds for the underdog come with a plus sign.

For example, an event can come with +400 for the underdog and -200 for the favourite. So if you bet $100 on the underdog you would make a profit of $400 plus the initial $100 you stake, giving you a total of $500. On the other hand, for the bet on the favourite, you would need to bet $200 in order to win $100, giving you a total of $300.

As you can see the American odds are actually quite easy to read if you’re betting $100. Problems can arise when you want to bet with smaller or bigger amounts and you will need to do some maths in order to calculate the correct odds.

Betting odds on casino games

When we talk about betting odds the first thing that springs to mind is the odds on sporting events. But betting odds are just as important on casino games, especially on table games like blackjack and roulette. In fact, on these games, the odds and payouts are one of the first things you need to learn.

The simplest odd pairing on roulette, for example, is betting on red or black, odd or even. This bet comes with a payout of 1:1 or simply if you bet $/£10 and win you will win $/£20 in total. However, the odds of this bet differ depending on whether you are playing European or American roulette. The European version has a house edge of 2.7%, while the American version comes with a house edge of 5.26%. This means that the odds are more in your favour on the European version because of the smaller house edge.

For a more detailed explanation of how betting odds work for Roulette visit our online Roulette page, and for Blackjack visit our guide to playing blackjack.

Other Betting odds to consider

As you can see odds are pretty easy to read once you know what you’re looking for. It’s imperative to know how to read all types of odds before you embark into the world of betting. You never know which types of odds you can come across at different bookmakers.

Knowing how betting odds work will also come in handy when you want to bet on multiple matches or even on multiple features from a single event. Many bookmakers offer multiple bets on single events so things can start to get a little more complicated when you move away from simply making 1 bet.

Luckily there are ways to reduce the complication because at the end of the day it’s just a calculation. Bookmakers and casinos will often give you a summary of the total you can win, and there are also betting calculators (a good example can be found here https://bookies.com/betting-tools/odds-calculator) which allow you to enter your bets and out comes a total. This is useful as often gamblers will place multiple bets to cover loses, you can’t win them all but you can at least minimise your loss to fight another day.

Understanding how betting works is of crucial importance for any future punter, because there is no point in trying to play against the betting provider if you don’t understand the underlying principles of betting.

In addition, betting without any knowledge of how betting operators conduct their business will only increase the chances that you will lose your money. And while that can happen to all of us, it is important to try to minimize those losses since the point of betting is to beat the bookie and overcome the advantage that the ‘house’ has over you.

So how can you overcome this advantage? Are there any techniques which you can use to beat the bookmaker? In order to answer these questions we first have to understand how betting works. In this article we will look at the basics of betting, how bookmakers compile the odds, balance their books and how the new trends in betting exchanges and eSports betting might influence your choice of wagers.

Betting Basics

In essence, when you are making a bet, you are depositing money with the bookmaker. If the bet is unsuccessful, the bookmaker keeps the deposited money. However, if the bet is successful, then the bookmaker has to pay out the client the deposited sum multiplied by the odds of the winning bet. This is pretty straightforward and easy to grasp.

The next and more complicated step in understanding betting is the adjustment of the odds and the balancing of the books. These enable the bookmaker to always have an advantage over the punter. Let’s see how this is done.

The Bookmakers’ Margin

The bookmakers’ margin, or also known by a couple of other names such as vigorish (vig for short), house’s edge or overround, is the technique with which the betting provider ensures that he always has an advantage over the player, regardless of the outcome of the match.

The simplest way to understand the bookmakers’ margin is to look at a coin toss. In this game there are only two outcomes, each with a chance of happening of 50%. This means that if the bookmaker decided not to include the vigorish in the odds, he would give odds of 2.00 for tails and 2.00 for heads.

If there were 10 players playing the game, and 5 of them bet $1 on heads, and the other 5 bet $1 on tails, the bookmaker would not make any profit at all. If the coin flip results in heads, the bookmaker will have to pay out all of the $10 he received as a deposit, and exactly the same thing will happen if the coin toss results in tails. But let’s say that the coin toss bets were not distributed equally, and say, 7 people bet on heads and 3 on tails. In this situation the bookmaker would basically be riding his luck.

If the coin toss results in tails the bookmaker will win $4 as he will only have to pay out $6 in winnings. However, if the coin toss results in heads, the bookmaker will have to pay out $14 and will therefore record a loss of $4. Based on this, we can easily see why bookmakers have to have a technique which would prevent their business from either constantly working with 0 profit or from being completely dependent on fortune.

The bookmakers’ margin ensures that the bookmaker will make profit regardless of the outcome of the match or event. That’s why when there are only two outcomes in a game (and both of them are equally possible), such as in a coin flip, it is much more likely that you will see odds such as 1.85 or 1.90 instead of odds of 2.00 being given to the two outcomes.

If we use the same example, we can see that if there were 10 people betting $1 on the coin flip, 5 of which bet on tails, and the other 5 on heads, the bookmaker will always stand to make a profit. This is because the total deposits will again amount to $10, but this time the maximum amount which the bookmaker will have to pay out will be $9.5 (if the odds were 1.90) regardless of the outcome.

However, it must be said that this is an overly simplified example, and that there are many more factors involved when creating the odds. This is because most of the time there are more than only two possible outcomes. In addition, the outcomes don’t have the same likelihood of happening. And finally, people don’t distribute their bets equally on all outcomes.

Compiling the Odds

When compiling the odds, it is incredibly important to understand all of the above mentioned factors. That’s why when bookmakers hire people to create the odds they always look for people who specialize in only one or two sports and have extensive knowledge of how statistics and odds work. Odds compilers must look at factors such as the form of the teams and players, their previous results leading up to the game, match history, injuries to players and even the weather conditions on the day of the match.

However, since these are all top notch professionals, they know how to compile odds containing the right vigorish every time, all the time. Let’s look at an example of how odds compilers would create the odds for one specific esport match up.

When Cloud9 are playing TSM in let us say League of Legends, the relative probability of a Cloud9 win is 60% (1.67) and the probability of a TSM win is 40% (2.50). As we can see, when combined together, the percentages add up to the expected 100%. This is not an optimal scenario for the bookmaker.

Explain How Betting Odds Work

This is where an odds compiler comes in. His job is to make sure that the combined chances for both teams to win, always go over the expected 100%. For example, a Cloud9 win will be priced by the odds compiler at 70% (1.43) and a TSM win will be priced at 50% (2.00).

As you can see, the odds are much lower after the odds compiler has been at work.

Balancing the Books

In addition to creating the bookmakers’ margin, it is the odds compiler’s job to create a balanced book of a specific market. The odds shown for the esport match between Cloud9 and TSM represent a nice example of a balanced book of a market. A balanced book means that the odds compiler has taken into account the fact that Cloud9 are favourites for the match against TSM and has lowered the odds as he is expecting an influx of bets on Cloud9 to win.

However, if for some reason the odds compiler has not factored in an injury to a key player, or the injury happened just before the match started, the bookmaker can further balance the odds. For example, if one of Cloud9's key players wakes up with the flu on match day, the bookmaker can increase the odds for an Cloud9 win, thus compensating for the expected influx of bets on a TSM victory.

Betting Exchanges

The bookmakers’ margin is great for the bookmakers business. However, it is not so good if you are a punter who is betting big money and is expecting his winnings to be as big as they possibly can. In his situation, the lower the bookmakers’ margin the better.

How Does Betting Odds Work Sports

This is where betting exchanges come into play. Betting exchanges are transactions made between gamblers, where the bookmaker is only there to make sure that the transaction occurs and only charges a commission ranging from 2% to 5%. In a betting exchange one punter 'backs' a player / a team to win, and the other gambler 'lays' the same player / team to lose. All bets must be matched, meaning that if there is no one to bet against you, the bet will be void.

In short, at betting exchanges players and punters make the rules and set the odds. This means that there is almost no overround and that as long as you find someone to bet against you, you have basically cut out the bookmaker out of the equation.

eSports Betting

Something similar to betting exchanges happens in eSports betting. eSports are probably the youngest type of sport that bookmakers have started to include in their offer, so it is only to be expected that there will be many variations in how the odds are compiled until the most ideal solution is found.

Some bookmakers still use the traditional method of giving odds to eSports matches and events just like they do to all the other sports. They try to make sure that the books are balanced and that they have incorporated all of the useful information such as form, stats and history in their odds.

However, some other bookmakers, especially those working exclusively in eSports betting, have let their customers do all of their work for them. They give their punters the chance to choose the winner of a match and then compare how many people have bet on each outcome.

If both outcomes are equally bet on, then the odds would reflect this, meaning that each team will have odds of around 1.90. However, if one outcome is more heavily backed than the other, then this outcome will have much lower odds.

How Does Baseball Betting Odds Work

In fact, because of the interconnected nature of the eSports community, insider betting news often travels quite fast and there are numerous bets being placed on only one outcome as a result. In this situation, it is even possible that, if you win, you will only get your original deposit and wouldn’t make any profit.

Summary

To sum up, betting is big business and is programmed in a way which ensures that the bookmaker will always make a profit regardless of which the final outcome is and how many people have backed it. In addition, odds compilers and bookmakers always try to make sure that they have covered all the aspects of an event before they give you their odds for it. And even when they have compiled their odds, they can still modify them to protect themselves against losses.

It is up to the punter to choose the best betting opportunity for him. This might mean taking advantage of an inside information that he has got; being really meticulous in his pre-match analysis; or focusing his wagers on some strategic eSports betting.