How Do Betting Odds Work in Gambling?

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Whether it’s a casino or sports betting, it’s important that you understand the odds in various market. Placing a bet with no knowledge of the different types of odds, how odds work in casino and soccer betting can lead to serious losses.

The three main types of betting odds:

Fractional (British) odds

Decimal (European) odds

American (money line) odds. 

I already covered how these odds types are converted in one of my previous posts.

These three represent a simple way of presenting the same thing in a different way and there is no difference in terms of payouts. This allows for easy conversion of odds.

How Fractional Odds Are Calculated

Fractional odds are also known as the British odds, UK odds, or traditional odds). They are popular among the British and Irish bookies. When you see a slash (/)” or a “hyphen (-),” e.g. 6/1 or 6-1 pronounced as “six-to-one, it’s a typical example of fractional odds.

They’re used by some of the world’s largest bookmakers, making them the most preferred odds across the globe.

For instance, a 4/1 (six-to-one) would mean that you’ll win $4 against every $1 you wager in addition to receiving your dollar back. In other words, it’s 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, if you stake $10 on 4/1, you get a total payout of $50 ($40 profit + $10 stake).

Therefore, the total (potential) return on a stake can be stated as:

Total Payout = [Stake x (Numerator/Denominator)] + Stake

where numerator/denominator is the fractional odd, e.g. 28/6.

For instance, one of the major sports betting websites listed the following fractional odds for futures betting on the team to win the 2019-20 1NBA Championship. Below is a selection of the three teams that had the lowest odds of winning.

Golden State Warriors: 10/11

Houston Rockets: 9/4

Cleveland Cavaliers: 7/1

It can quickly be determined that the Golden State Warriors are the favourites while the odds on Houston and Cleveland winning are longer. That is, one wins only $10 against every $11 wagered on Golden State to be the champions. Meanwhile, one wins $9 against each $4 (i.e. 3.25 times) put at stake for Houston to win, which is a bit less probable. For Cleveland, one wins $7 against each $1 bet. 

In the above example, if you bet $100 on Golden State to win, you could make a $90.91 profit [$100 x (10/11)], and could get back your initial stake of $100, resulting in a total payout of $190.91. However, if you wager $100 on Houston to win, you could receive a profit of $225 [$100 x (9/4)], in addition to the $100 initial stake leading to a total payout of $325. The potential profit for a Cleveland win would be even higher, as you could make a profit of $700 [$100 x (7/1)]. With the initial stake of $100 being returned, it would make for a total payout of $800.

Decimal Odds Explained

Decimal odds, European odds, digital odds, or continental odds are popular among sports bookmarkers in Europe, Africa, Australia, New Zealand, and Canada. These are a bit easier to understand and work with. The favourites 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. In other words, your stake is already included in the decimal number (no need to add back your stake), which makes its total payout calculation easier.

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

Total Payout = Stake x Decimal Odd Number

For instance, a game between Chelsea and Liverpool:

Liverpool to win: 4.0

Chelsea to win: 1.5

These odds represent the amount you could win against each $1 put at stake. So, if you bet $100 on Liverpool, you could make a total payout of $400 ($100 x 4.00). Unlike the fractional odds, this amount includes the initial stake of $100, and then a net profit of $300 for you.

Similarly, you could accumulate a payout of $130 ($100 x 1.5) if your bet is Chels to win.

The American (Moneyline) Odds Explained

American odds are most popular in the United States. They’re also known as Moneyline odds or US odds. 

In this case, the odds for favourites are accompanied by a minus (-) sign, indicating the amount you need to stake to win $100. And, the odds for underdogs are accompanied by a positive (+) sign, to indicate the amount win for every $100. 

However, In both cases, you get your initial wager back, in addition to the amount won. The difference in odds between the favourite and the underdog only widens as the probability of winning for the favourite increases.

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