How Do Sports Betting Odds Work?

While prospective sports bettors have access to several platforms in the United States and internationally, there are a few essential elements to understand before wagering. Betting odds are set by bookmakers to represent the implied probability for any wager and calculate the total win payout.

Before choosing to bet on any sporting event, every bettor must understand the different types of sports betting odds, why they might change, and how they’re calculated. Lucky for you, the following sports betting odds guide is loaded with all of that information and then some.

Read on to learn about the types of sports betting odds explained, how to read betting odds and where they’re most commonly used, and how to calculate implied win probability.

There are a few different varieties of sports betting odds across the world that are available to bettors who meet the legal requirements to place a wager. American odds are the most common in the U.S. with money line odds, followed by fractional odds and decimal odds.

Before the surge of online sportsbooks, a few powerful Las Vegas casinos were the standard for setting the odds. Vegas odds and sportsbooks are still often used by established sports bettors because the wager limits are usually the highest and encourages more money to be put down.

Information on each type of odds is critical for bettors to know in order to place a wager and calculate potential winnings at the best sports betting sites.

American odds are most commonly found on both online and land-based sportsbooks. Typically explained by a hypothetical $100 bet, plus (+) and minus (-) signs (positive and negative odds) differentiate the favorite from the underdog.

Favorites, a bet that has a higher probability to win, will always have a minus next to its odds while underdogs, a bet that is most likely to lose, always have a plus.

For example, if a bettor places a winning $100 wager on +200 odds, the payout would include a $200 profit plus the original bet resulting in $300 total. On the other hand, a $100 bet on -200 odds would only profit $50 with a $150 payout.

Fractional odds are more popular in the U.K. and Ireland, but are also used for horse racing wagers everywhere including the US. Unlike American odds, understanding plus and minus signs is unnecessary with fractional odds.

They can also be easily converted into other types of odds including American and decimal.

Calculating fractional odds is fairly straightforward. It is determined by multiplying the amount wagered by the fraction. For example, a bet of $50 on a horse race with 10/11 odds that wins results in a $45.45 profit with a total $95.45 payout using the formula 50 x (10/11) + initial stake.

Unlike fractional odds and American odds, decimal odds factor in the initial stake. They’re rarely found in the US, but are slightly more common in Europe. Understanding how decimal odds work is fairly less complicated than American and fractional odds.

For example, calculating winnings and total payout on a $50 bet with 2.5 odds is as easy as multiplying the wager by the odds displayed. The potential profit win would be $75 with a $125 total payout in this case, which includes the profit + first bet.

Moneyline odds are a variation of American odds, but this type of bet only awards profit to bets on a winning team, regardless of the final margin. These odds are commonly applied for wagers on sports such as the NBA, NHL, NFL, MLB, and soccer.

Moneyline odds indicate how much a bettor would profit on a $100 bet and how much would be needed for a $100 profit. For example, odds on favored teams with a negative sign indicates how much to wager to win a total payout of $100. A moneyline bet on a favored team with -200 odds would need a $200 bet to win $100.

On the other hand, wagers on underdogs with a positive number represents how much a bet amount would win with a $100 wager. An underdog $100 bet on a team with +200 odds would result in a $200 payout.

Although using an $100 wager example to explain sports betting is very useful, prospective bettors must have an understanding of their own finances and how many units they can afford to bet and also fit a desired budget.

Bettors must also have a comprehensive understanding of how to read betting odds before placing any wagers.

Scaling wagers is determined by calculating the payout that may be more or less than the standard $100 bet. For example, when choosing to bet $50 on +388 odds the payout can be calculated by multiplying the wager ($50) by the odds (+388) then divide the product by 100.

In this case the winnings would be $194, added with the initial stake produces a $244 total payout.

To determine how much to risk to profit a certain amount with negative odds, the simplest way is converting odds to decimals. For example, if a bettor wants to win $200 on a game or event occurring with -388 odds, its converted dividing the number by 100 which equals 3.88.

That figure is then multiplied by the amount desired to profit, which means that the bettor will have to place a $776 wager to win $200 with those odds.

If the bet wins, the total payout will be $976, which includes the initial $776 stake plus the $200 profit.

Implied probability is evaluated based on the odds of the event occurring. It’s calculated using slightly different formats for each type of odds. The higher the percentage, the more likely the event is to occur.

With American and moneyline odds, the implied probability equation is different for both favorites and underdogs (negative and positive numbers). For favorites, it’s odds/(odds + 100) x 100. So if a team is -900 it would be 900/(900 + 100) x 100.

That equals 0.9, meaning the implied win probability of a -900 favorite is 90 percent. Wagering on -900 odds would require the bettor to win at least 90 percent of the time to make a long-term profit.

On the other hand, calculating implied probabilities for underdogs uses the formula 100/(odds +100) x 100. For example, calculating implied probability on a bet with +400 odds uses the equation 100/(400 + 100) x 100. The quotient would result in .2, when multiplied by 100 it’s equivalent to an implied win probability of 20 percent.

For an example using decimal odds, the formula is dividing 1 by the odds. If a team has odds of 1.25, the implied probability would be 0.8, which is equivalent to 80 percent (1/1.25). This means that the team has a 80% chance of winning the game.

Using fractional odds, which is most commonly displayed for horse racing, to calculate implied probability also uses a different formula, denominator/(denominator + numerator) x 100.

If a horse has 3/1 odds, the equation would be 1/(1+3) x 100 that has a product of 25. The horse or team with 3/1 odds has an implied win probability of 25 percent.

Odds on all types of bets can change often for a variety of causes. If there’s a last minute lineup change for one team due to injury or other factors ahead of a game, the odds may change to reflect the potential impact on the team’s performance. Bookmakers can also change the odds to encourage more bets towards an outcome or in response to a to a “sharp action.”

In a case where a player is scratched due to an injury or suspension, the odds may shift to reflect the potential impact of the player on the playing field and the team’s performance. The odds are usually shifted in favor of the opposing team.

The sportsbook can decide to shift the odds based on their own analysis of the event occurring, or to attract more bets towards an outcome that decreases the sportsbook’s liability. Bookmakers might also change the odds as a response to any “sharp action,” meaning a well-respected bettor placed a bet on a particular outcome.

Reading sports betting odds is a critical skill to understand when planning to place a bet. Both moneyline and American are displayed with a plus sign and minus sign next to a number. Negative numbers represent the favored outcome while positive numbers indicates the underdog.

Fractional odds are often displayed as fractions representing the numerator as the amount a bettor could win divided by the denominator including the amount wagered. They can be displayed with a dash, colon or slash (2-1, 2:1, 2/1).

Decimal odds will always be displayed as a positive number, without plus or minus signs, and indicate how much you can win on a bet for every $1 that’s wagered.

Below we’ve compiled some common questions and answers about How do Sports Betting Odds Work? Read on to learn more!

Wagers on underdogs, which always have positive odds, are typically more likely to lose. However, a winning bet will produce a bigger profit with a higher payout.

Betting on +200 odds and winning will result in a larger profit with American odds but winning the same bet on the moneyline excludes the original wager.

This type of odds is fractional, which means it’s represented as 3/1. It can also be represented with a colon or dash. The numerator represents the amount a bettor could win divided by the denominator, the amount wagered.

Following the formula of multiplying the amount wagered by the divided fraction will calculate the payout. For example, placing a $50 wager on 3:1 odds will result in a $150 winning profit with a $200 total payout.

Negative odds indicate that the bet is favored to win, and therefore results in a lower potential profit and total payout for winning bets.

The Inquirer is not an online gambling operator, or a gambling site. We provide this information about sports betting for entertainment purposes only.