Betting Odds Explained – Guide To Understanding How it Works

Our betting experts don’t believe you should fly blind when placing bets on your favorite teams or players, so we’ve put together this guide to get you up to speed with your betting odds knowledge. We break down different odds formats, and show you the formulas you need to calculate odds as well as how to get implied probability from betting lines.

What Are Betting Odds?

Like every form of gambling, sports betting outcomes have much to do with chance. But being able to read betting odds is a fundamental step to raising your betting game and becoming a successful bettor.

Therefore, understanding the odds will enable you to make smarter decisions about how much to wager, whether a market is worth betting on, and how much you can potentially win.

The complexity of odds puts off many sports gamblers, which results in bettors just “putting a few bucks on their favorite team” without understanding their bet's odds, risks, and potential rewards. But we believe that the element of chance should be limited to the outcome you’re betting on, not to whether you understand the odds or not.

However, when you browse online sportsbooks, you will see various ways of displaying odds depending on which format the site uses. Understanding the different formats of betting odds is essential and will help you get an idea of who the underdog and favorites are in a sporting competition.

Bookmakers decide what odds they will offer based on several factors, such as results from previous matchups, the current form of the team/player, injuries or other roster changes, weather, how much money bettors are staking, and odds at other sportsbooks.

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Why Understand Betting Odds When Choosing a Sportsbook?

Here at ThePuntersPage, we’re all about helping our readers have the best online sports betting experience possible. Our dedicated team of gambling experts has done the hard work to save you precious time in the search for the best sports betting site.

We’ve highlighted our top sportsbooks that stand out across the board right here on this page. That way, you can start wagering at the best of the best in no time at all. Picking the best betting brand for you means guaranteeing you’re standing on a solid foundation upon which everything else can be built.

As such, if the sportsbook platform is the foundation, then top-quality odds might as well be the concrete, as there are few things as significant as competitive betting odds (other than security). But you don’t have to worry about that since your safety sits at the top of the list of our concerns and we’ll never recommend a site that isn’t fully legal and licensed by your state’s gambling authority. Still, it is your responsibility to check if sports betting is legal from your current location.

American Odds Explained

Whenever you see odds represented by a negative (-) or positive (+) symbol, you are betting with American odds. There will be a three-digit number with a -/+ in front of it that highlights the betting odds for the favorite and underdog in a sporting competition. The obvious question here is, what do the + and – symbols mean when used in sports betting?

A negative symbol signifies the favorite for the betting market and highlights how much you must wager if you want to win $100.

Alternatively, a positive symbol means you are seeing the betting market for the underdog. It refers to how much money you will win back if you stake $100.

How To Calculate American Odds Payouts

So, now that you know the fundamentals of American betting odds, let’s dive deeper into how they work. We will use this example to discuss the theory behind American odds:

Looking at our example above with Golden State as the favorite and New York as the underdog (sorry, Knicks fans), if you want to bet on the Warriors (favorite) and want to win $100, you must wager $130. Alternatively, if you wager $100 on the Knicks (Underdog), you will win $110 back.

There is no doubt that American moneyline odds can be confusing. However, once you read through this guide and get a better understanding of these betting odds, you’ll be wagering on your favorite teams in no time. An easy way to look at them would be like this:

• Negative (-) betting odds tell you how to bet to win $100 (plus your wager back).
• Positive (+) betting odds tell you how much profit you make on a $100 (plus your wager back).

So, let’s say you put a $20 bet on Golden State (-130). The calculation would look like this:

Multiply the betting amount by 100, then divide the result by the odds (130).

• 100 x 20 = 2,000
• 2,000/130 = 15.38

In this example, a $20 bet on the Warriors will net you $15.38 in profit, and the total payout would be $35.38 (including recouping your initial wager). The proportion of profit vs. wager scales up or down depending on the odds.

What about if you want to make the same $20 bet, but this time on the New York Knicks (+110)? It would break down like this:

The betting amount is multiplied by the odds, then divided by 100:

• $20 x 110 = 2,200
• 2,200/100 = 22.00

Here, a wager of $22 on the Knicks with a successful outcome will result in a $22 profit and a total payout of $42 (which includes your initial $20 wager).

Therefore, if you wager $40 on the Knicks, you will win $44.00, and your total payout will be $84.00 (including recouping your initial wager).

And just in case you are in a hurry, we have the best online odds conversion calculator that allows you to convert between fractional and decimal betting odds seamlessly. Simply enter your odds, and our innovative tool will do all the hard work for you.

Calculating Implied Probability: Positive/Negative Betting Odds

Implied probability is a conversion system that highlights the likelihood that the outcome of a wager will be what the betting odds suggest. It is possible to find the implied probability by converting the betting odds into a percentage.

All this may sound pretty confusing, but it is actually a super helpful metric. That’s because you can leverage implied probability to estimate the chance of an event occurring differently from the sportsbook odds. If you can figure out this information, you can make betting adjustments that stack more in your favor.

Let's say you give a team a 70% chance of winning, but the sportsbook has it at 60% through implied probability, this could be a bet worth taking.

Although, a standard betting odds conversion into a percentage will also include the vigorish or “vig”, which is just a jargon name for the house edge. When the “vig” is included in implied probability, it will push the result above 100% (known as an overround). You can only get an accurate idea of the implied probability by calculating without the vig.

So, what about calculating the implied probability on American odds? Well, this can be tricky to do, but there is a simple formula that works in theory:

Again we’ll be using the same example as above, with the Golden State Warriors as the favorite at -130 and the New York Knicks as the underdog with betting odds of +110. Calculating implied probability is much easier with the + odds, so let’s start there.

The formula is 100 divided by the positive odds + 100, which in this example is 100/110 + 100. The answer to this formula is 0.476, which becomes 47.6%. In other words, the sports betting site would give the Knicks a 47.6% chance of winning.

On the other hand, negative betting odds are a little harder to convert into an implied probability percentage. The formula is the negative odds divided by the negative odds + 100. Yes, the negative number does appear twice in this method.

In this example, the formula becomes 130/130 + 100 and returns an answer of 0.565. Therefore, the bookmaker gives the Warriors a 56.5% chance of winning.

How Do Fractional Odds Work?

Arguably an easier way to display and understand betting odds is to use fractions. Also known as UK odds, you will find fractional odds at sportsbooks in the United Kingdom and Ireland. When using fractional odds, there will be one number on the left and another number on the right, both separated by “/”.

2/5 is an example of what factional betting odds look like. Here, the number on the right (5) represents the amount the player bets, while the left number (2) represents potential winnings. Looking at it in terms of cash, if you spend $5 on a stake, you could win $2 should the wager be successful. A $10 bet would provide winnings of $4, and so on, as you scale up or down.

If you want to be technical and use math terms, the number on the left is the numerator, while the number on the right is the denominator. Just like you would when reading regular fractions, you say fractional odds from left to right.

So, in our example, it would be 2 to 5. Another example would be 4 to 1 or 4/1, but the possibilities are endless. UK odds of 1/1 as known as “evens,” meaning you can win an equal value to your bet.

Another important rule of fractional betting odds is that they will always be whole numbers, so, you will never see 4.5/1 as the bookie would simply list it as 9/2.

How To Calculate Fractional Odds Payouts

Some may say that calculating fractional UK odds is easier than American odds, although there are still some rules you need to learn. We will use the following example to showcase the calculations:

You want to bet on the MLS’ biggest match and have your eye on Los Angeles FC, the favorite. The US sportsbook has put a price of 4/5 on Los Angeles FC in factional odds. All you need to do to work out the potential winnings is plug in this formula:

You need to multiply the number on the left (numerator) by the amount you want to bet and then divide the amount by the number on the right (denominator). Let’s say you have a good feeling about Los Angeles FC’s chances in the game, so you stake $100 on them winning at betting odds of 4/5.

This means (100 x 4)/5 = $80.

So, if you bet on Los Angeles FC as the favorite, you will win $80 in profit plus your initial bet for a total payout of $180.

Now we can flip it and look into how you calculate winnings when betting on the underdog using fractional odds. You are taking a chance on Atlanta United, causing an upset, and making a $100 wager with betting odds of 5/4.

The great news is you use the exact same formula: Bet amount x Numerator/ Denominator = Winnings.

This means (100 x 5)/4 = $125.

A successful $100 bet on Atlanta United would give you $125 in clear profit, as well as the sportsbook site returning your $100 wager for a total payout of $225.

Of course, the sports betting operator will automatically handle all odds and potential payout statistics. Still, having the ability to quickly calculate fractional betting odds is a handy skill to have. Once you do it enough, you’ll be able to instinctively work out odds without needing to use the formula.

Calculating Implied Probability: Fractional Odds

We already know that implied probability is the percentage that highlights how likely an event is to happen and how that compares to the sportsbook odds. It is possible to use implied probability for fractional betting odds. When there is a greater chance of something happening, there will be a higher percentage, while a low probability percentage means an event is less likely to happen.

While it can be tempting to bet when you understand something is more likely to happen, even so, there are other factors you must consider.

Firstly, getting an implied probability from fractional odds is much easier than American odds. There is a single-version formula you need to learn to find the probability percentage. That formula is:

• Denominator/Denominator + Numerator = Implied Probability

Essentially, you take the denominator and divide it by the denominator and numerator added together. We can now use this formula in our example above, where Los Angeles FC are favorites with odds of 4/5 and underdog Atlanta United has betting odds of 5/4.

• 4/5 Los Angeles FC: 5 / 4+5 = 0.55 or 55%

The odds essentially mean if the game between Los Angeles FC and Atlanta United happened nine times (4 + 5), the sports betting site believes Los Angeles FC will win five (denominator) of the matches.

• 5/4 Atlanta United: 4 / 5+4 = 0.44 or 44%

As for Atlanta United, the sportsbook is saying the club would lose five and win four from the nine games. While the calculations are good, it is worth remembering the “vig” we talked about earlier. This is the house edge, and it doesn’t go away on fractional odds. When the “vig” is included, the implied probability of outcomes goes over 100% when the possibility of a draw is also included.

How Do Decimal Odds Work?

Of the three types of betting odds, decimal odds are arguably the most straightforward to understand and work with. Also known as European odds, the decimal representation makes it much easier to see which odds in a market have the best price.

For example, when you see fractional odds (such as 4/5 and 5/4) or American odds (-130 and +110), it is not easy to know which is offering the better price. However, you can instantly see which is bigger when you see decimal odds like 1.71 and 1.47.

If you put fractional odds on the toss of a coin, it would be 49/51. This means that when the coin is thrown, it has a 51% more chance of landing on the side it started from and a 49% chance of landing on the opposite side. If we convert the fractional odds to decimal, they become 1.98. If a bettor wagers $10 on the result and wins, they will receive $19.80 — a profit of $9.80, and the original stake back.

Admittedly, the fractional odds for a coin toss may be easier to grasp than decimal odds. However, when the betting odds change, decimal odds are less confusing. For instance, it is much harder to understand the risk and winnings of 14/25 than 1.46. Both are identical odds, but you know you stand to win 46% back on every $1 spent with decimal odds.

There is also an easy way to compare decimal odds to American ones. Specifically, if the decimal line is 2.0 or above, these are positive odds (underdog) that can return more than your wager in a payout. Alternatively, decimal odds under 2.0 are negative odds (favorite), and the potential return is lower than your bet.

How To Calculate Decimal Odds Payouts

Calculating decimal betting odds is easy enough, so let’s do so using the following example:

To find the payout for decimal odds, just multiply the amount you bet by the odds for the team/player you’re betting on. Next, subtract the original wager from the payout amount. So, if you want to bet $20 on the Patriots to defeat the 49ers, the formula would be:

• (Wager x odds) = payout amount – wager: $20 x 2.10 = $42 – 20 = $22

So, if you bet $20 on the Pats and are successful, you will make $22 in profit on a total payout of $42 once the bookie returns your bet.

Importantly, you use this exact same formula when calculating the payout for the underdog. Let’s make another $20 bet, this time on San Francisco at odds of 1.71:

• (Wager x odds) = payout amount – wager: $20 x 1.71 = $34.2 – 20 = $14.2

Here, your $20 bet on the 49ers will give you a profit of $14.2 and a total payout of $34.2 if your wager is successful.

Calculating Implied Probability: Decimal Odds

Discovering the implied probability of decimal odds is easier than fractional or American betting odds. That’s because the formula is much simpler — all you need to do is divide 100 by the decimal odds number:

If you look at New England from the example above with odds of 2.10, we must divide 100 by this number to find the following result:

• 100/2.10 = 47.6%

This means the sports betting site is giving the Patriots a 47.6% chance of winning the game, placing them as the underdog.

Looking at the 49ers with odds of 1.71, you will get the following implied probability:

• 100/1.71 = 58.4%

This shows the bookmaker is placing San Francisco as the favorite with an implied probability of 58.4%.

Which Odds Option is the Best?

Betting odds can be daunting, especially for beginners; however, the information above shows that with a little bit of practice, it is easy to understand all types of odds.

Decimal odds are the easiest to use because calculating payouts, probability percentages, and favorites/underdogs is simple. Fractional odds are efficient but can become confusing if you do not understand them properly. And then there are American odds, which are kind of their own thing and take some getting used to.

Even so, the betting odds you choose will mostly come down to personal preference or where you are from in the world. For example, most sportsbook brands in the USA like DraftKings and BetMGM use positive/negative American odds, which many people will already be familiar is.

Alternatively, if you are in the UK or Ireland, you will swear by fractional odds, while Europeans will appreciate decimal odds.

ThePuntersPage Final Say

By following this handy guide, you don't need to worry about landing on a sportsbook with different odds. And the great news is most sports betting sites allow you to switch between odds formats easily, so you can make better wagering decisions — and hopefully a decent profit.

Also, keep in mind that if you do not feel like calculating yourself, our automatic odds conversion calculator will convert fractional odds into decimal odds or vice versa instantly.