Understanding betting odds is instrumental in becoming a successful punter. However, lots of bettors these days don’t understand betting odds. Some of them simply don’t care about odds and wish to focus only on team news, form, and injuries before making their bets. Others look at decimal, fractional and American odds (also known as moneyline or US odds) and are just too scared to go any deeper. Why would they turn their favourite pastime into math homework, right?
Well, wrong, actually. Understanding betting odds is as important as any piece of news out there. What is more, some bookmakers offer lower and some higher odds for the same outcome. This means that if you bet at a betting site with higher odds, you would get more money. Don’t you think that a bigger profit is as important as form or injuries?
And don’t worry about odds looking complicated. They are actually quite simple. So take your seat, open your notebooks, and start taking notes. Your betting odds teacher today will be me, BettingRex.
How Do Betting Odds Work?
The first thing that punters should know is that sportsbooks don’t give them the real odds. What they give them is odds which come with an over-round also known as a bookmakers’ margin. This is implemented so that sportsbooks are covered against losses. However, this also means that they have the edge over the punter and that’s not good. Understanding betting odds can alleviate this to a large extent, and that’s why the first question that the BettingRex will answer today is: How do betting odds work?
As I said, there are ‘real’ and odds with a bookmakers’ margin. We will start with the real odds that even the best online betting operators don’t actually offer. Let’s say you are into football betting and choose a La Liga game to bet on. In it, Real Madrid are playing Valencia, and the following odds apply:
- Real Madrid (2.00) Draw (3.33) Valencia (5.00)
These are decimal odds, but sportsbooks also use fractional odds and American or moneyline odds. I am going to use decimal odds in this example, but I’m also providing the same match with the other two types of odds:
- Real Madrid (1/1) Draw (233/100) Valencia (4/1) – fractional odds
- Real Madrid (+100) Draw (+233) Valencia (+400) – American odds
For an in-depth explanation of how fractional and American odds work continues reading or head to my FAQ section in this article.
Calculating Real Odds
Let’s return to the example and see how calculating real odds actually works. First of all, please notice how high the odds are. They are all without an over-round and as close to the real odds as they can possibly be.
This is because in my example, Real Madrid’s odds of 2.00 represent a probability of 50%. Similarly, the Draw odds of 3.33 mean a probability of 30%. Finally, Valencia’s odds of 5.00 represent a 20% likelihood of the Mestalla side winning the match.
Here’s a simple tip on how to turn probabilities into odds by the way:
- Real Madrid 50% probability: 1/(50/100) = 1/0.5 = 2.00
- Draw 30% probability: 1/(30/100) = 1/0.3 = 3.33
- Valencia 20% probability: 1/(20/100) = 1/0.2 = 5.00
Combine the probabilities (50+30+20=100), and you will get a total of 100%. This means that the bookmaker will have to pay out almost the same amount it receives in stakes. There will be variations to this for sure, but in general, the betting site will either work with a minor profit or a minor loss.
Betting Sites with the Best Odds
As you can imagine, sportsbooks are businesses, and they would immediately close if they couldn’t pay the wages of their employees and their daily operating expenses. That’s why sportsbooks modify these ‘real’ odds with the bookmakers’ margin. However, not all bookmakers use the same margins and finding the betting sites with the best odds and lowest edges will mean profit for you, my dear readers.
Let’s see how the same La Liga example translates in the real sports betting world. To ensure that they make a profit, bookmakers have to lower the decimal odds above. They do this by slightly increasing the probability for all of the possible outcomes.
This would mean that instead of 50% for Real Madrid to win, they make the probability higher and set it at 53%. Instead of 30%, the Draw outcome now comes with 32% likelihood. Finally, the chances for a Valencia victory increase from the initial 20% to 25%. If you use the same formula from above, these are the odds you get:
- Real Madrid (1.89) – 53%
- Draw (3.13) – 32%
- Valencia (4.00) – 25%
It’s obvious that these odds are slightly lower than the ‘real’ odds. This is because the increased probabilities now are higher than 100%. In fact, the total of 110%. By doing this, the bookmaker has created a margin of around 10%.
As always, I brought you a detailed list to check for the best betting odds. Have a look at them before placing a single penny.
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Betting Margins and Winnings
In essence, what the above example shows is that for every €110 the betting operator receives it pays out a maximum of €100. That’s a guaranteed profit of €10 regardless of the outcome of the match. This means that betting margins and winnings go hand-in-hand and that makes over-round percentages all the more important.
This is why the BettingRex always tells his fans to choose betting sites with the lowest margins. These days bookmaker margins are within the 3%-10% range, and a 7% difference is quite important here. However, finding these margins is quite difficult as betting sites don’t normally show them.
Fortunately for you, my dear fans, in my bookmaker reviews, I always provide the margin with which a bookmaker operates. Just remember, the lower that margin is, the bigger your payouts will be.
How Does Betting Work
Now that you understand how betting odds work, we move onto the next thing on our list. Let’s start by answering the question: How does betting work? – First of all, you have to understand that there are different types of betting. There is betting on matches, in which punters bet on markets such as match winner, draw no bet, and handicap bets. In addition to this, there is also betting on outright markets such as who will win Wimbledon or who will be the next US president.
For entertainment purposes, let’s go with the US president. Donald Trump has done everything from berating San Francisco feminists to suggesting people inject disinfectant in their bodies. He is such a popular proposition with Las Vegas bookies that he even trumps the Super Bowl (all rights reserved on that pun). As a result, he has appeared in tons of different outright betting markets such as:
- Trump to win the Nobel Peace Prize (2/1);
- Get impeached at (7/4);
- To be invited to the Royal Wedding (50/1);
- To be replaced by George Clooney (200/1) and many others.
Let’s say you place €10 on the last one. In this case, you are backing George Clooney to become the next American president at odds of 200/1 (as I said these are fractional odds and are the same as decimal odds of 201.00). If the famous actor replaces Trump, you will win €2010 (10*201=2010). Betting is as simple as that.
How to Understand Betting Odds
As you probably noticed by now, there are some differences between fractional, decimal and American odds. This means that I will conclude his lesson by giving a lecture on how to understand betting odds.
The example that we are going to use in this case will be from a tennis match. Let’s say it’s the Wimbledon final and Novak Djokovic is playing against Rafael Nadal. These are the odds:
- Djokovic to win – 1.80 – decimal odds; 4/5 – fractional odds; -125 – American odds
- Nadal to win – 2.00 – decimal odds; 1/1 – fractional odds; +100 – American odds
The first thing that you should know is that all types of sports betting odds will bring you the same profit. This means that you will get the same winnings if you back Djokovic to beat Nadal at odds of 1.80, 4/5 and -125. These all mean the same and all payout €18 on a €10 stake.
Difference Between Decimal, Fractional and American Odds
The difference between decimal, fractional and American odds is in what they show to the punter. It’s fairly easy to explain what decimal odds show as you simply multiply them with your stake and you get your total winnings to be withdrawn. Sticking with the Djokovic vs Nadal example, a €10 stake multiplied by 1.80 equals €18.
Betting on fractional odds, on the other hand, is great if you want to see your profit and not your total winnings. Djokovic’s odds of 4/5, mean that you stand to make a clear profit of €4 if you wager €5 on the Serb winning.
Similarly, American odds betting also deals with the profit a punter can win, but there are two distinct variations to these wagers. There are positive and negative American odds.
The positive ones are very easy to understand as they show the profit from a €100 stake. For example, if you back Nadal with €100 and he wins, the odds of +100 show you that you will win a clean profit of €100 (total winnings will be €200).
In contrast, the second type of American odds deals with the amount of money you have to stake to win a clean profit of €100. Basically, if you want to have a profit of €100 in case Djokovic beats Nadal, you would have to place a stake of €125 on the Serb. Think of it in this way; you will be €125 down when you place the bet. If Djokovic wins though, you will get a clean €100 profit (total winnings will be €225).
Understanding odds is instrumental if you want to have successful sports bets. I always say that betting on low odds is the same as wagering without checking for injuries, suspensions and the like. For example, let’s say one betting site gives you odds of 2.00 for Liverpool to win and some other bookmaker gives you 1.90 for the same football match (soccer match for my Amercan readers). It would be quite foolish to place a wager at the second betting site as that would mean winning €10 less on the same €100 stake.
This brings me to my second point; checking the margins that bookmakers work with. This is because these margins are often the difference between a decent and paltry profit. As I already said, if you don’t have the time to check for betting operators’ margins, just head to my betting site reviews. All the margins are listed there.
In addition to checking odds and margins, a punter should also understand how betting odds work. You have probably found yourself in a situation in which an American soccer match came with moneyline odds, and you didn’t place a bet because you didn’t understand them. This is a big mistake in my book as all odds are fairly easy to understand if you just apply some logic to them.
Finally, a punter should never bet on high odds just for the sake of big potential winnings. As I said in the FAQ section, high odds are given for high-risk propositions. They don’t normally come to fruition, and it is always advised to back them with smaller stakes. Ignore this, and you could quickly find yourself in a gambling problem that you won’t be able to get out of.
Betting Odds FAQ
People bet on outcomes with negative odds because they are very likely to happen. Negative odds of -400, for instance, come with 80% probability.