# How Betting Odds Work

## What are the “Odds” and how are they calculated?

Bets are as old as the world. Since ancient times there has been news of games of chance and their development has unfolded over the centuries.

But regardless the type of game you play with, it is fundamental to understand how the odds work.

First and foremost, there are different types of odds. Today we can find three main types:

• fractional (British) odds,
• decimal (European) odds,
• American (moneyline) odds.

It is absolutely dangerous placing bets without having a good knowledge on the main types of betting odds because you risk a default in a very short period of time.

Despite they apparently seem to be different, in reality they are simply different ways of presenting the same thing and hold no difference in terms of payouts for the bettor. This means that a chance (percentage probability) of an event occurring can be converted and presented in any of the aforementioned types of odds.

We can summarise the differences in a very short explanation. Fractional odds are the ratio of the amount (profit) won to the stake while decimal odds represent the amount one wins for every \$1 wagered.

American odds are slightly different because they can have both a negative or a positive sign. That indicates respectively the amount one needs to wager to win \$100 or the amount one would win for every \$100 wagered.

## How Fractional Odds Work

Fractional odds (aka British odds, UK odds, or traditional odds) are (of course) popular among British and Irish bookies. These are typically written with a “slash” (/) or a “hyphen” (-), e.g. 4/1 or 4-1 and announced as “four-to-one.” However, all the biggest bookmakers in the world use them which is why they are so well known and recognizable.

A fractional listing of 4/1 (four-to-one) odds would mean that you win \$4 against every \$1 you wager, in addition to receiving your dollar back (i.e., the amount you wagered). In other words, this is the ratio of the amount (profit) won to the initial bet, which means that you will receive your stake (\$1) in addition to the profit (\$4), resulting in a total payout of \$5.

Therefore, the total (potential) return on a stake can be stated with the following equation:

Total Payout = [Stake x (Numerator/Denominator)] + Stake
Where: numerator/denominator is the fractional odd (e.g., 15/6)

Similar to decimal odds, the return can be determined by multiplying the odds and the bet.

## How Decimal Odds Work

Decimal odds (aka European odds, digital odds, or continental odds) are popular in continental Europe, Australia, New Zealand, and Canada. These type of odds are easier and faster to understand and work with. The favorites and underdogs can be spotted instantaneously by looking at the numbers.

The decimal odds number represents the amount one wins for every \$1 wagered. For decimal odds, the number represents the total payout, rather than the profit. That is why the total payout calculation is easier: your stake is already included in the decimal number (there is no need to add it back).

The total (potential) return on a stake can be calculated as:

Total Payout = Stake x Decimal Odd Number

The team with the higher of the two numbers is the underdog and the team with the lower of the numbers is the favorite. The return can be calculated by multiplying the bet with the the decimal odds.

The higher the total payout (i.e., the higher the decimal odd), the less probable (and riskier) it is for the selected team/player/event to win/happen.

## How American (Moneyline) Odds Work

American odds (aka moneyline odds or US odds) are popular in the United States. Compared to the previous ones, the odds for favorites are accompanied by a minus (-) sign, indicating the amount you need to stake to win \$100.

And, on the contrary, the odds for underdogs are accompanied by a positive (+) sign, indicating the amount won for every \$100 staked. In both cases, you get your initial wager back, in addition to the amount won. The difference between the odds for the favorite and the underdog widens as the probability of winning for the favorite increases.

For example, here’s a look at a line offered by PointsBet on Game 1 of the 2020 World Series:

Now, suppose you want to calculate how much profit a \$50 bet on the Dodgers would yield. First divide 100 by 165 (without the “-”), which yields 60.6. Then multiply that number by your \$50 bet to arrive at the profit 60.6*\$50=\$30.30).

A \$50 bet on the Dodgers at -165 odds would yield \$30.30 in profit. The \$50 wager would return \$80.30 to the bettor (\$30.30 profit plus the original \$50 bet).

To calculate “+” odds, divide the odds by 100 and multiply that product by the amount of the wager.

A \$50 bet on the Tampa Bay Rays, for instance, would calculate as 140/100 (which yields 1.4), multiplied by \$50 (1.4*\$50=\$70). A winning \$50 moneyline bet on the Rays returns \$120 total to the bettor (\$70 profit plus the original \$50 bet.)

## What is important to remember

As you have already realised, it is important to be able to understand and moreover interpret all types of odds well. It is important to remember how the calculations are carried out by the bookies and/or Casinos because that makes the difference between a sure loss and a more balanced choice when it comes to invest your money. Once you have mastered the three popular types of odds you can start a deeper reading of other interesting articles and discover why the house always wins.