How to Calculate and Read Sports Odds
Do you have what it takes to become a profitable sports bettor? One of the requirements for success is a keen understanding of odds and how they apply to make winning sports wagers online. You must know how to read and calculate sports odds before you can overcome the sportsbooks.
American odds, fractional odds, decimal odds. We teach you to read and understand the different types of odds, so you can succeed at sports betting.
Especially for those who are new to sports betting, reading and understanding betting odds properly can be a daunting task. Depending on your sportsbook of choice, odds can be presented in three different ways: American, fractional, and decimal. Not knowing this can result in confusion at the time of making your wagers.
This is why, through this post, we help you become familiar with these three systems so that you can acquire the necessary knowledge to increase your chances of success when betting.
Read this guide on how to understand betting odds.
What Do The Sports Betting Odds Mean
Sports betting odds allow you to calculate the return that you can make on a bet. Odds are set by the sportsbook, based on their calculations and algorithms, and tell us who the sportsbook considers is the favorite team to win. Understandably, the team that is considered the favorite to win will have lower odds.
For example, if Liverpool is playing Chelsea, and Liverpool is considered the favorite to win the match, a bet on Liverpool will have a lower payout than a bet on a draw or a bet on Chelsea. This is because the probability of Liverpool winning, according to the sportsbook, is higher than the probability of a draw, and even higher than the probability of Chelsea scoring a victory.
To sum it up, odds are used to calculate the return on a bet, which determines our payout if our wager is successful.
Betting Odds Calculator
The Three Types of Sports Odds You Will Encounter
As stated before, there are three types of sports odds that you will encounter when navigating a sportsbook: American odds, Decimal odds, and Fractional odds.
Each sportsbook will have a preference depending on where it is based. As its name states it, American odds are mostly used in the United States. Decimal odds are preferred in continental Europe, Canada, and Australia, while fractional odds are the main choice in the United Kingdom and Ireland.
Understanding American Odds in Online Sports Betting
For new bettors, American odds can be initially hard to understand. Here are critical concepts that you need to know to comprehend American odds fully:
- The base for American odds is $100
- When a team is favored to win, or an outcome heavily favored to happen, American odds will have a negative number, for example, -120
- In this case, -120 means that you need to bet $120 to win $100. If you win the bet, you would get $220 in total ($100 in profit, plus the $120 you invested)
- When a team is the underdog, meaning, not favored to win, or an outcome considered unlikely to happen, American odds will have a positive number, for example, +120
- American odds of +120 means that if you bet $100, you would make $120 in profit, and recover the $100 you invested.
- This doesn’t mean you always need to bet $100 or in multiples of $100. Instead, if you bet different amounts, the same proportion of return would apply. For example, if you bet $50 with +120 odds, you would make $60 in profit, and recover your $50 if your wager is successful.
How to Calculate Your Winnings With American Odds
To simplify things further, there is another way of estimating your winnings with American odds.
Let’s assume there is a tennis final between Novak Djokovic and Rafael Nadal.
The American odds are:
- Novak Djokovic, -130
- Rafael Nadal, +150
Since Novak Djokovic has negative odds, here is how you could calculate your potential winnings:
Profit Formula for Negative American Odds = (100/Odds) * Wager
It is important that we leave the negative sign aside for the odds, so it looks this way:
Profits for a $50 bet on Novak Djokovic = (100/130) * 50 = $38.45
You would get a $38.45 profit betting $50 on Novak Djokovic, as well as recovering the $50 you wagered, for a total payout of $88.45
But what if you wanted to bet on Rafael Nadal instead?
Since the odds for Nadal are positive, the formula used to calculate the potential winnings is different.
Profit Formula for Positive American Odds = (Odds/100) * Wager
In this case, the odds for Rafael Nadal are $150, therefore:
Profits for a $50 bet on Rafael Nadal = (150/100) * 50 = $75
You would get a $75 profit betting $50 on Rafael Nadal, as well as recovering the $50 you wagered, which would make your total payout $125.
The Simplicity of Decimal Odds
Compared to American odds, Decimal odds are a lot simpler to understand. Here are some key points:
- The base for a decimal odds bet is $1
- Decimal odds help us calculate the total payout. For example, if the odds are 10, it means that a $1 bet would generate a payout of $10, including the profit and the recovery of our initial wager.
- Favored outcomes will have decimal odds between 1 and 2.
These are the formulas for you to calculate your decimal odds winnings:
Total Payout = Wager * Decimal Odds
Total Profit = Total Payout - Wager
Let’s assume that the Dallas Cowboys are playing the Tampa Bay Buccaneers.
The odds on the moneyline are:
- Dallas Cowboys, 1.71
- Tampa Bay Buccaneers, 2.25
This means that if you bet $100 on Tampa Bay, you would get $225 back. Of this $225, $125 is your profit, and the other $100 is the money you wagered, which you get back.
For more information about decimal odds - read this guide.
What About Fractional Odds?
Finally, there are the fractional odds, which are the most common for UK-based sportsbooks.
Even though they can seem confusing in principle, fractional odds are simple. Basically, what you need to do is multiply your bet times the fraction, and the result will be the profit you make from your wager, in addition to recovering your bet.
To understand probability in fractional odds, just remember that, if the denominator is larger than the numerator (for example, 2-3), it means that the bet is considered a favorite. If the numerator is larger than the denominator (for example, 27-11), it means that that team or outcome is considered an underdog.
Here’s a practical case.
The Boston Celtics are playing against the Charlotte Hornets.
The odds are:
- Boston Celtics, 5/17
- Charlotte Hornets, 27/10
To calculate the profit on a $50 bet on the Boston Celtics, you would need to multiply $50 * (5/17), which gives us a profit of $14.70. Considering the $50 we initially bet, this wager would have a payout of $64.70.
If we bet on the underdog, in this case, the Charlotte Hornets, we would multiply $50 * (27/10), which would give us a profit of $135. After we receive our $50 back, we get a total payout of $185.
What is Vigorish?
In simple terms, vigorish is what the bookmaker charges for taking a bet.
To further illustrate this, let’s imagine a bet that we would expect to have even odds. A bet with even odds means a bet where both scenarios are considered to have the same probability of happening. Normally, these bets would have American odds of +100, or decimal odds of 2.
In sports that offer bets with a point spread, like the NFL, the spread is supposed to balance the scales so that both teams have even odds. If the Green Bay Packers are considered favorites against the Cleveland Browns, then, the spread could adjust for those differences. The odds could be:
- Green Bay Packers, -7.5, -110
- Cleveland Browns, +7.5, -110
As seen, the role of the spread is to give both teams an equal probability of winning.
So why are the odds -110, and not +100, if the bet is even?
The answer is the vigorish.
If we bet $100 on the Browns taking the +7.5 spread at -110, we can expect to get $90.90 in profits. If the odds were truly even, however, at +100, we would have received $100 in profits.
Therefore, the vigorish is the number between $100 and $90.90: $9.10.
Understanding Implied Probability
When a sportsbook publishes its odds for a particular event, they do so based on an underlying implied probability, which means, the likelihood that an event will happen according to its analysis.
This is important because through our analysis, we might assign a different probability to an outcome than the sportsbook did, and this can help us determine whether there is any “value” in the potential wager.
To estimate the implied probability of a wager, the following formulas can be used:
For the favorite team, the one that has negative odds, the formula is:
Implied Probability for Negative Odds = Odds/(Odds + 100) * 100
For the team that has positive odds, the formula is:
Implied Probability for Positive Odds = 100/(Odds+100)*100
Let’s say we are watching an All-Canadian Stanley Cup Final, and the odds are:
- Toronto Maple Leafs, -140
- Montreal Canadiens, +175
Implied Probability for Toronto Maple Leafs = 140/(140+100)*100 = 58.33%
Implied Probability for Montreal Canadiens = 100/(175+100)*100 = 36.36%
This means that, according to the sportsbook that published those odds, the Toronto Maple Leafs have a 58.33% probability of winning, while the Montreal Canadiens were given a 36.36% implied probability.
How Odds Correlate with Payouts
In the previous example, we can see that the team that has a higher implied probability of winning has lower odds, while the team that has a lower implied probability has higher odds.
This shows that there is an inverse correlation between odds and probabilities, which impacts the payouts.
Betting on the team that is favored by the bookmakers will result, if the bet is successful, in a lower payout than a successful wager on an underdog.
This is because there is more risk on the underdog, which reminds us of the basic financial principle: risk and return are positively correlated. The higher our risk, the higher our expected return.
Understanding Sports Betting Odds and Value
By being able to understand sports betting odds, implied probabilities, and how odds and payouts are correlated, you are in a better position to create value through sports betting.
Created value refers to how much you are getting in return for the money you invest, and considering the risks that you are taking.
In betting, as in investing, there are often bets that are underpriced or undervalued, which means, the odds and their implied probability are not aligned. To illustrate this with the last example, if your analysis tells you that the Montreal Canadiens have a 50% chance of beating the Toronto Maple Leafs, and the odds are priced by giving them a 36.36% chance, then, you are looking at a bet where value can be created, and you will have more chances of succeeding.