For anyone that is new to sports betting, it can often be the odds supplied by the bookmakers that are the greatest source of confusion.
What do all of the numbers mean? How do the bookies calculate their odds? Why don’t they all just quote the same prices? All valid questions, and while the last of the trio is easy enough to answer – why don’t all supermarkets charge the same price for a tin of baked beans? – the former two require further explanation.
So here is a comprehensive look at betting odds and the how’s, why’s, what’s and when’s.
Odds Formats: A Quick Heads Up
There are three main ways of displaying odds, and these will be presented as such depending on your location. The fractional form is traditional in the UK, while the decimal format is more of a European and Australasian construction. The American odds format is used most widely in American territories, believe it or not.
Understanding these formats – and as a UK based punter you are likely to encounter fractional and decimal at some point – is essential. This will ensure you can quickly recognise where betting value exists; basically what is a good bet and what isn’t. Without an appreciation of the different ways of displaying odds you might end up wagering on selections that will empty your bankroll in no time at all.
If you’ve ever been into a bookies shop in the UK or visited an online bookmaker then you will probably have already come across fractional odds. Those little numbers like 1/2, 1/4, 2/5, 8/11, etc. explain how likely it is in the bookmaker’s eyes that a certain event or result is going to happen.
Think about the example of a football match: there are three possible outcomes which are a home win, an away win, or a draw. So, from a fractional perspective that would be displayed as 3/1 – e.g. there are three possible outcomes and we are betting on one of those to happen.
That scenario would play out in a perfect world of course, but in reality, sport isn’t as straightforward as that. If Manchester City were playing Accrington Stanley in the FA Cup, for example, then we know that there isn’t an equal chance of Accrington beating the Premier League titans, so clearly the bookmakers aren’t going to offer these odds. Instead, you are more likely to see a split such as Manchester City (1/10) and Accrington (10/1). For ease of reference, that means you would win £1 for every £10 staked on City and £100 for every £10 wagered on Accrington. When you consider the two teams’ relative abilities, those odds make more sense.
To keep things simple, if the bookies think that an outcome is likely to occur then the number on the right of the fraction will be greater than that on the left – an ‘odds on’ wager, as it is sometimes referred to. If the number on the left of the fraction is greater than the number on the right then this is referred to as ‘odds against’; typically the bookmakers would consider this a long shot, depending on the size of their pricing.
Think about a tennis match where there are no draws, you simply win or lose. Consider these examples of pricing:
- Player A (1/8) vs Player B (6/1)
- Player C (2/5) vs Player D (21/10)
- Player E (10/11) vs Player F (10/11)
If you are a complete newcomer to sports betting then don’t get too hung up on the numbers themselves, instead focus on the disparity between the two players and their odds. So in the first example the bookmakers clearly believe that Player A will win comfortably against Player B as reflected by the wide margin between their respective prices. Player C’s battle with Player D is likely to be a closer affair but the former is still expected to triumph. But for the match between Player E and Player F, the bookies are basically saying that they don’t have a clue who will win.
Example bet: £10 on Player D (21/10) returns £31 (£21 profit plus £10 stake back). This is a fraction better than 2/1 odds.
Take everything we have learned with fractional odds and then supplant this into decimal numbers rather than fractions. Hopefully you are youthful enough to remember your maths classes at school (this writer isn’t!), and how decimals work. If not, don’t worry.
The first point to note is that the base level for decimal odds is 2.00. If something is priced at 2.00, the bookmakers are in essence saying that there is a 50% chance of this happening. If the decimal is a number lower than 2.00, then this is an odds-on chance (e.g. 1.10, 1.50, 1.85 etc); likewise, if the number is greater then it is odds-against (2.10, 3.00, 5.50, etc).
There really isn’t anything more to know about decimal odds, other than the lowest they go is 1.01. There is no upper limit, as Leicester City showed when winning the Premier League as a 5001.00 shot.
Example bet: £10 at odds of 1.80 returns £28 (£18 profit plus £10 stake back). Multiply your stake amount by the decimal to work out your winnings.
American betting odds, sometimes known as the ‘Vegas Line’ or ‘Money Line’, may look incredibly confusing but don’t worry, they are simple enough to understand.
With a 0 baseline, any plus or negative numbers reflect how much money can be won from a flat stake of $100. A negative number shows how much must be wagered to win $100, while a positive depicts how much can be won by wagering this amount.
It’s example time:
Manchester City (-200) vs West Ham (300): you would need to wager $200 on Manchester City to net a $100 profit. If you were to back West Ham, then you would win $300 from a $100 stake. Use this formula for additional clarity:
Positive Money Line odds calculation = Odds x (stake/100). Negative Money Line odds calculation = (100/Odds) x stake.
How Are Betting Odds Calculated?
This is a good question, and you’re right, bookmakers don’t just pluck their prices out of the air at random. Instead, they employ whole teams of compilers and traders to ensure that that their odds are accurate, financially viable, and perhaps most importantly, fit in with that bookmakers’ unique portfolio; they certainly don’t want to be completely undercut by their competitors, that’s for sure.
The main issue facing these guys is the unpredictable nature of sport, which dictates that not all eventualities can be catered for (Leicester City winning the league being a great example again). Traders will cover for things like injuries, suspensions, card-happy referees (and otherwise), the weather, the size of the crowd, the importance of the match and so many more factors before compiling their odds.
There are two other items to consider; movements of the line (i.e. bets being placed at volume), and profit margins, which are the going concern for most bookies.
You’ll find out later in this guide why chance doesn’t equal odds offered, and the short and sweet answer for that is because a bookie will want to make profit or minimise their losses no matter what the outcome. A fantastic example came from an Arsenal vs Manchester City match:
Arsenal 6/4 (2.50) 40% chance of occurring
Draw 12/5 (3.40) 29.4% chance of occurring
Manchester City 6/4 (2.50) 40% chance of occurring
Now, the eagle-eyed among you may have noticed that the percentages in the right-hand column don’t add up to 100%. That is correct, the total is 109.4%. What does this signify? That the bookmaker has a 9.4% margin built into their pricing.
So here the bookie has created a financially agreeable situation for themselves; while in a close contest that could go either way they are still presenting prices that the average punter would think are fair.
Movement of the Line
You probably know a bit already about the law of supply and demand, and so we won’t insult your intelligence by going into any great detail about it. Suffice to say, the greater the volume of bets for a specific selection, the shorter the price will fall.
It happens in football when a particular team is beset by injury problems just prior to a match, but the most common example is in horse racing, where the presentation of the runners and riders in the paddock can cause huge movements in price for those that are fancied and those that are not. Once this occurs the ‘crowd effect’ takes place; punters jump on the moving price as they think somebody out there knows something they don’t and the price shortens yet further. This is known as the movement of the line.
You might be wondering why bookmakers shorten odds – surely they want more people to bet and should thus quote more attractive prices than their competitors? There is an element of truth to that statement, but of course, the bookies are running a business, and as such protecting profits and balancing the book is the name of the game.
The movement of the line does have a ‘cause and effect’ impact upon the market though, so when one proposition shortens the others will lengthen, e.g. if Arsenal shorten from 11/8 to Evens against Chelsea then the Blues will typically lengthen in price from their current position.
Odds vs Chance: How Bookies Make their Money
You might think that surely the odds offered by the bookmakers reflect the possibility of the outcome happening? Unfortunately, this isn’t actually the case, and the main reason for this is that bookmakers want to make a sweet, sweet profit.
The best example to highlight why the above is correct is through the classic coin toss scenario.
Heads Equals Tails….Right?
Imagine if flipping a coin became an actual sport, and so the bookmakers took an interest in it. This is your standard coin and so it consequently has an equal 50/50 chance of landing on heads or tails when tossed in the air.
As such, we might expect the bookies to offer odds of Evens (or 2.00 decimally) whether you wanted to bet on heads or tails landing next. But when we investigate the numbers, we can understand why they wouldn’t….
Let’s say that a standard coin is flipped 100 times. We place a bet of £10 at evens on every toss landing a tail, and if 50 of the flips landed tails here’s how we would be rewarded:
50 bets win @ £10 x 50 (profit of £500 – not counting stake returns). 50 bets lose @ £10 (loss of £500).
Even from this plainest of examples, we can see that if genuinely 50/50 shots are priced as such, the bookmakers stand to break even. Now, as we know, breaking even isn’t much of a business model, and it certainly isn’t a recipe for long-term profit, and this is why the bookies will build a ‘margin’ into their pricing to ensure that their backs are covered in such circumstances.
Let’s use the coin flip example again, but this time our hypothetical bookmaker has built in a margin to his prices; both heads and tails are now available at 10/11:
50 bets win @ £10 (profit of £454.50 – not counting stake returns). 50 bets lose @ £10 (loss of £500).
Now look at this: if 100 coins are tossed and they land 50/50 on heads and tails at odds of 10/11, the bookmaker will take a net profit of £45.50. Clever, huh?
This example rather over-simplifies the subject, but at least you have gained an understanding as to why the chances of something happening will never be accurately reflected in a bookmakers’ odds.