Online Betting » Betting Guide » Understanding How Betting Odds Work in 2024: A Comprehensive Explanation

Understanding How Betting Odds Work in 2024: A Comprehensive Explanation

Dave Kuzio
Editor
Fact checked by: Mike McKean
Publish Date: 31.01.2024

If you’re going to wager successfully on sports and make the most of your starting bankroll, understanding betting odds and knowing how they work is crucial. But how can you go about acquiring this knowledge?

You can start by reading this guide, which explores betting odds and their purpose in comprehensive detail. Odds can be used to both calculate your potential returns and comprehend the likelihood of a particular event occurring, while they may also be displayed in different formats. So, let’s take a closer look at betting odds and their role in sports wagering.

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OK, So What Are Betting Odds?

We’ll touch on precisely how odds are presented below, but first, it’s important to understand the role that they play in facilitating sports bets. In simple terms, odds tell you how much you can potentially win in relation to your stake amount, while they also imply the probability of a particular outcome occurring.

Back and Lay

Betting odds also facilitate the ‘back’ and ‘lay’ elements of sports wagers. When you place an online bet at a sportsbook, you’re staking a certain amount of money on a particular outcome occurring. This is known as a back bet.

The sportsbook will then lay your bet at the published odds, which means that they’re effectively backing the same outcome not to occur. The odds simply determine how much they’re willing to lay your stake amount of a particular outcome not occurring.

Example

Let’s say that you place a bet backing Newcastle United to win the Premier League title at odds of 33/1. In this case, your chosen sportsbook (the first party) is open to laying 33 times your stake amount that Newcastle won’t achieve this objective, and if your wager is unsuccessful, you’ll lose your entire stake amount.

If you pick well and Newcastle does win the Premier League title, however, the bookie will have to pay out at 33x your stake as soon as the bet has been settled.

How Are Betting Odds Calculated? Understanding Odds in Betting

In order for odds to be fully explained, it’s important to understand how sportsbooks initially set their prices. Unfortunately, appraising how odds are calculated is not straightforward, as there are several different factors that bookies take into consideration. These include:

  • The Probability (and Number) of Event Outcomes: Initially, sportsbooks source and analyse data pertaining to a specific event, such as recent form, historical data and relevant statistics. This helps to accurately determine the probability of different outcomes occurring. Operators will also consider the number of potential outcomes in play, with future events that have a number of potential winners likely to be priced considerably higher overall.
  • Will Punters Wager on Specific Outcomes? Bookies will also give weight to the probability of punters betting on specific outcomes. This, in turn, can be influenced by the popularity of the teams and competitors in question, while the number of potential outcomes is also a key consideration here. This factor also explains why odds can change in the build-up to and during events, as outcomes that receive a high volume of bets are likely to see their odds shorten accordingly.
  • The Bookmaker’s Margin (or Vig): While there are different business models used in the sports betting industry, sportsbooks typically price a desired profit into their odds too. This margin is known as the ‘vigorish’ or ‘vig’, while bookies typically factor in a premium of between 5% and 10%. To finalise precisely how betting odds work, bookies also ensure that their pricing is as balanced as possible, in order to create equal wagering volumes for all potential outcomes.

Betting Odds Explained – How Are They Presented?

The process of understanding odds in betting is complicated by the fact that they can be presented in different ways. In fact, there are three main odds formats used in the UK, Europe and the US, each of which relay crucial information about your bet in slightly different ways. Here’s a more in-depth look at the most commonly used formats:

RepresentationExample
➗Fractional Odds10/1
◼️ Decimal Odds10.00
🇺🇸 American Odds+100/-100
Fractional Odds

Fractional odds are most commonly used by UK sportsbooks, which feature two numbers separated by a slash. The first number tells you how much you can expect to win in relation to the second (your stake amount), should your wager ultimately be successful. So, if you accurately predict an outcome and stake £10 at odds of 5/1, you’ll bank £60 in total (including your stake) and claim a total profit of £50. Interestingly, fractional odds can easily be converted into decimal pricing, simply by dividing the fractions and multiplying the remaining value by one.

Decimal Odds

Decimal odds are widely used in Ireland and Europe, while they’re presented as single numbers to two decimal places. This figure tells you how much you’ll win for every £1 that you bet successfully, inclusive of your stake amount. So, if you wager £10 at odds of 6.00, your total return will be £60 if the outcome that you back ultimately comes to pass. Decimal odds are widely considered to be the most popular format and one that’s incredibly easy to read.

American Odds

When wagering at a sportsbook in the US, you’ll typically see a three-figure numerical value accompanied by either a ‘plus’ or a ‘minus’ sign. If you see a plus sign, this indicates a betting underdog, while it means that the associated number tells you precisely how much you’ll win if you successfully wager £100. Conversely, a minus sign is indicative of a betting favourite, and in this case, the number lets you know the amount you’ll need to stake to win £100. Understanding American betting odds can be a little difficult as they present each wager’s value proposition in a slightly complex manner.

Calculating Implied Probability – How it Works and Why it’s Important

When explaining precisely how betting odds work earlier in this guide, we talked about how bookies first determine the probability of specific outcomes occurring. The good news is that you can also use published odds to calculate the implied probability for yourself, which enables you to identify value and tailor your stake accordingly.

When you learn how betting odds work, you’ll also discover that there’s a formula that can be used to calculate implied probability. This varies slightly depending on the odds format in question, but here’s how the formula looks when dealing with decimal pricing:

  • (1/ decimal odds) * 100 = implied probability

To provide further context, let’s say that you wanted to bet on an English Premier League football match between Aston Villa and Arsenal at Villa Park. The former is priced at 3.30 to win, while the away side can be backed at odds of 2.10 to prevail. The draw is priced at around 3.50, so here are the exact calculations to help you determine the most likely outcome:

  • Aston Villa Win: (1/ 3.30) * 100 = 30.30%
  • Arsenal Win: (1/ 2.10) * 100 = 47.61%
  • Draw: (1/ 3.50) * 100 = 28.57%

This allows you to analyse all potential outcomes at a glance, including the statistical chance of each one occurring. As you can see, short odds are generally ascribed to outcomes that have a higher statistical chance of happening, whereas less likely scenarios have much longer prices.

By understanding this key aspect of how betting odds work, you can also stake the optimal amount for every single wager. While this will also depend on your wider betting strategy, it’s generally recommended that you raise your stake when betting on short-price favourites with a high probability of winning, as this can maximise your potential returns without overly increasing your risk of loss.

Conversely, you should reduce your stake amount when backing less likely outcomes. After all, this type of wager is much higher risk, while you won’t have to stake large amounts to bank a sizable return when backing underdogs.

How to Create Value in Published Odds

While calculating implied probability may make the process of understanding betting odds much easier, it also raises a common challenge faced by sports bettors.

More specifically, the process that determines how odds are calculated ultimately means that short-price outcomes are more likely to occur, making it hard to identify value and strike the ideal balance between managing risk and pursuing reward.

The good news is that you can create value through the deployment of specific betting strategies and wager types. You’ll need to understand the most effective wager types in this respect for betting odds to be fully explained, so here’s a brief guide to help you on your way:

#1. Handicap Betting

Handicap or ‘spread’ betting is widely used by experienced bettors, in order to access enhanced odds when backing short price favourites and highly likely outcomes.

But how exactly does this work? Well, let’s say that you’re wagering at one of the best online betting sites and want to back Manchester City to defeat Luton Town in the Premier League. They’re priced at just 1.17 to achieve this objective, which means that a successful £10 bet would trigger a return of just £11.70.

However, you can apply one of several available betting line handicaps, which are provided by your chosen sportsbook. For example, you could apply a -1.75 goal handicap to the Citizens, which unlocks an enhanced price of 1.55. However, for the bet to come in, City would need to win the game by two clear goals or more.

Conversely, a -2.75 goal handicap will create a much more competitive price of 2.50, but City will have to win by three clear goals for the wager to be successful. Regardless, you can see exactly how betting odds work in relation to handicapping, and the key is to use data and insight to set the appropriate handicap in each specific scenario.

#2 Accumulator Betting

Accumulator (or acca) betting can also be used to create value when engaging in match or game betting. Acca bets are also referred to as parlays in the US and Canadian markets, while they enable you to combine between three and 20 selections in a single wager.

As you combine individual picks, winners and match outcomes in your acca, the odds of each one are multiplied to create an extended, single price. This immediately creates a superior value proposition, although each of your selections must win for the overall wager to be successful.

When building successful accas, you should ideally aim to include between six and eight selections while also prioritising short-priced favourites. This helps you to tread the fine line between risk and reward, as you look to bet at optimal prices without overly compromising your chances of winning.

If you find betting on multiple outcomes with accas intriguing, you might also want to check out our each way betting guide which involves win bets and place bets. It is most famous in horse-racing, but is also a type of wager that applies for big league events and competitions.

#3. Make Use of Odds Boosts and Guaranteed Odds Promotions

For betting odds to be adequately explained, you also need to understand the overall impact of bonuses and odds price boosts. These offers vary from one sportsbook to another, but they can be used to alter and enhance the odds of specific outcomes on a daily basis.

Some sportsbooks certainly run daily odds boosts promotions, including global brands like Unibet. These are typically applied to popular betting markets such as the Premier League, NFL, and NBA, and they allow you to wager on selected outcomes at enhanced odds for a limited time.

Some sportsbooks may also offer enhanced and guaranteed odds promotion. These promotions are key elements of online gambling in 2023, while the latter require betting sites to match the best odds in the real-time market across a selected range of operators. You can also refer to our 

#3. Make Use of Odds Boosts and Guaranteed Odds Promotions

For betting odds to be adequately explained, you also need to understand the overall impact of bonuses and odds price boosts. These offers vary from one sportsbook to another, but they can be used to alter and enhance the odds of specific outcomes on a daily basis.

Some sportsbooks certainly run daily odds boosts promotions, including global brands like Unibet. These are typically applied to popular betting markets such as the Premier League, NFL, and NBA, and they allow you to wager on selected outcomes at enhanced odds for a limited time.

Some sportsbooks may also offer enhanced and guaranteed odds promotion. These promotions are key elements of online gambling in 2023, while the latter require betting sites to match the best odds in the real-time market across a selected range of operators.

Understanding Odds in Betting – A Crucial Step Towards Sports Wagering Success

As you can see, odds play a central role in facilitating sports betting, from determining how much you’ll win in relation to your stake to calculating the implied probability of a particular outcome occurring.

Because of this, understanding betting odds is crucial if you’re to successfully identify value in wagering markets and make the most informed selection. It can also help you to set optimal stake amounts, depending on your projected return and how likely it is that your bet will come in!

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Understanding Betting Odds FAQ

❓How are betting odds displayed?

At online sportsbooks, you will see betting odds displayed in one of three ways – fractions, decimals, or the American format. You can easily adjust the way that the odds are displayed in your account settings to make it easier for you to understand the odds before betting.

🇬🇧 How do UK betting odds work?

UK betting odds typically use the fractional format, which presents as two numbers separated by a slash. The first number tells you precisely how much you can win in relation to the second, which is your stake amount.

🥇 What sportsbooks offer the best odds?

The answer will vary in different markets, while most licensed and reputable sites offer competitive odds. However, look for operators that run daily odds or guaranteed odds promotions and boast a large number of handicap betting markets.

💲 What do odds of 2.00 mean?

These odds are in decimal format, while they tell you that you’ll win £2.00 for every £1 that you wager successfully on a specific sporting event.

🧮 What are ‘short’ and ‘long’ odds?

Short odds are prices that deliver lower returns and indicate heavy betting favourites. Conversely, longer odds describe less likely outcomes and can trigger higher payouts.