Different Types of Betting Odds Explained

Betting Odds

2023-03-01

Ethan Tremblay

You must understand the odds before you begin betting at any level. Understanding the most common betting odds and how to read and understand their various formats is essential for placing educated wagers.

Different Types of Betting Odds Explained

Fractional odds (British), decimal odds (European), and money line odds (American) are the three most common systems for representing wagering odds. These are merely alternative ways of displaying identical odds, and there is no difference in the payments resulting from using either method. So, the probabilities of events can be expressed in any of the formats shown above simply by changing the odds multiplier.

Let's dive in to our expert guide on betting odds to prepare you for your online betting journey.

How Fractional or British Odds Work

The use of fractional odds (also known as "British, "U.K," or "traditional" odds) is the most popular online betting odds among British and Irish bookmakers. Usually, these are expressed with a slash (/) or a hyphen (-).

A fractional betting odds format of 6/1 (six-to-one) chances would indicate that you would make $6 for every $1 wagered and get your $1 back (i.e., the amount you bet).

This is the payout percentage, so if the odds were 1 to 6, you would win $6 and get back your $1 stake for a total of $7. A successful bet of $10 at 6/1 would return $70 ($60 profit plus $10 stake).

A stake's full (possible) yield may be expressed as Tp= S(ND)+S

where:

  • Tp is the full payout
  • S is stake amount
  • ND is the numerator/denominator of the fractional betting odds formats (28/6, for example).

Let's say these three organizations are the favorites to win the 2022 NBA Finals:

  • Miami Heat: 13/5
  • Golden State Warriors: 9/2
  • LA Lakers: 7/1

It's easy to see that the Heat are favored, while the Warriors and Lakers have longer online betting odds of winning. If you bet Miami will win the championship, you'll collect $13 for every $5 you risk. If, on the other hand, Golden State were to win, you would receive $9 for every $2 you risked. If you bet on the Lakers and win, you'll collect $7 against every $1 wagered.

In the above hypothetical, a $100 wager on Miami Heats's victory would return your original investment plus a $260 profit ($100 x (13/5)), for a total of $360. However, if you bet $100 on the Golden State to win, you may gain $450 ($100 x (9/2)) on top of your original $100 bet for a grand total of $550.

If Milwaukee were to pull off the upset, your winnings would increase to $700 ($100 x (7/1)). The return of the first wager of $100 would bring the payoff to $800.

How European or Decimal Odds Work

Decimal odds, often known as "European," "digital," or "continental" odds, are widely used as betting odds for sports in Australia, New Zealand, and Canada. These are less complicated and more straightforward. By glancing at the odds, you can tell who the favorites and underdogs are.

Decimal odds are expressed as a percentage and are used to calculate potential winnings per dollar bet. If the odds are displayed as a decimal, the payout, not the take, will be that amount. Thus, there is no need to re-add your stake to the final payment amount because it is already factored in.

A stake's full (possible) yield may be expressed as Tp = S.D 

where:

  • Tp is the total profit
  • S is the amount staked
  • D is the decimal odd

Take the 2023 League of Legends World Championship as an example.

  • DRX: 4.00
  • T1: 1.3

The odds of winning are shown below regarding the amount per dollar bet. You might earn $400 ($100 x 4.00) if you wager $100 on DRX to win the Summoner's Cup. There was an initial investment of $100. Thus, the net gain was $300.

You may expect a return of $130 ($100 x 1.3) if you wager $100 on T1. A net profit of $30 is obtained by deducting the initial investment of $100 from the total return.

Based on these odds, it's clear that the bookies had T1 pegged as the most likely team to win. Listed competitors have a lower chance of winning and are taking a greater risk if the total payoff (i.e., the decimal odd) is bigger.

How American or Money Line Odds Work

Money line odds (sometimes known as "American" or "U.S." odds) are widely used as the betting odds for sports in the United States. When betting on a favorite, the odds are displayed with a negative sign (-) next to them to show how much money must be wagered to win $100. The odds for the underdogs have a plus symbol (+), signifying a potential return for every $100 wagered.

Let's use an illustration to get a handle on this:

Let's pretend an online betting site posted the following money line odds for a football game between the Pittsburgh Steelers and the Kansas City Chiefs.

  • Steelers: +585
  • Chiefs: -760

The sportsbook placed a far smaller likelihood (about 15%) on the Steelers winning the game, as seen by the fact that the bookmaker had published odds of +585. So, if you want to win $585, you need to bet $100 on the Steelers. If the Steelers can come away with a win, you will receive $585 plus your original bet of $100, for a grand total of $685.

Betting on the Chiefs, the club with the highest estimated probability of winning the game would need a wager of $760 to win $100. If the Chiefs win, you will collect $860 (your original wager of $760 plus your profit of $100).

With such a large spread between the two odds, it's clear that the Chiefs have a better chance of coming out on top in this battle.

The House Always Wins: What Does It Mean?

The odds shown never represent the actual likelihood or possibility of an event happening (or not happening). A bookmaker's profit margin is baked into these odds, so the winner always gets less than they would if the odds accurately reflected the likelihood of winning.

Sportsbooks must calculate the online betting odds they post in such a way that they will generate a profit, whatever the outcome of the action. This requires the sportsbook to assess an occurrence's true probability or possibility accurately. To illustrate this point, let's look at the inferred probability for each result in the sample game below.

  • Team A: -250 (implied probability = 71.43%)
  • Team B: +200 (implied probability = 33.33%)

Notice that the sum of these probabilities is 104.76% (71.43 + 33.33). Does this contradict the requirement that the total of all probabilities equals 100%? This is because the displayed odds are not true odds.

The "over-round," or the percentage above 100%, is the bookie's possible revenue if the wagers are accepted in the proper proportions. Betting on both teams requires an investment of $104.76 to win $100.

The bookmaker anticipates receiving $104.76 and paying out $100 (including the bet), yielding a profit of 4.5% (4.76/104.76) regardless of the game's outcome. The bookmaker's advantage is factored into the odds.

Final Thoughts

Reading and comprehending online betting odds is crucial if you want to be a successful punter. You need to know how to convert odds from one format to another, interpret inferred probabilities based on shown odds, and compare the real odds of an occurrence to those displayed. After that, you'll have enough information to make an informed wager.

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