- Understanding odds is the key to figuring out which bets are worth taking
- Odds are displayed in a variety of different formats, but all are easy to understand
- You can use odds to calculate the implied probability of a certain outcome in a sporting event
Understanding how to read odds is a crucial step to becoming a successful sports bettor. From determining how much money you want to wager to figuring out which bets offer the most value, it all starts with a solid understanding of the odds.
What Are American, Decimal, & Fractional Odds?
Odds are displayed in either American, Decimal, or Fractional formats, and serve two purposes:
- They signal the implied probability of the outcome they are attached to
- They indicate how much money you could win betting on that outcome
*Be careful relying on the odds alone when evaluating the probability an event will occur. Odds are influenced by more than the factors actually relevant to the outcome of the event.
Your sportsbook may manipulate the odds to incentivize bets on a certain side, and the sum of the probabilities for a single event will always surpass 100 percent because the sportsbook takes a cut that is baked directly into the odds.
Odds also reveal how much the book is charging to take your bet. You may hear bettors refer to this amount as “the juice” or “cut” or “vig(orish).”
American Odds Explained
When you see -150, +230, or any other three-digit number with a +/- in front of it, you’re dealing with American betting odds.
What Do the + and – Mean in Sports Betting?
The – and + on a sports betting line indicates both your prospective payout and whether you’re betting on the favorite or the underdog.
Negative numbers signify the favorite on the betting line. The negative number indicates how much you’d need to bet to win $100.
If the number is positive, you’re looking at the underdog, and the number refers to the amount of money you’ll win if you bet $100.
For example:
Calculating Payouts with American Odds
In order to win $100 on the Penguins (favorites), you’ll need to wager $130. If you wagered $100 on the Senators (underdogs), you’d be set to win $110.
You can use the formula below to calculate the potential payout for any value you wish to wager.
If you bet $40 on Pittsburgh (-130), your equation would look like this:
- Cross-multiply to get 130x = 4000, and then solve for “x”
- x= 4000/130
- x = 30.77
Therefore, if you wager $40 on Pittsburgh, you will win $30.77, and your return would be $70.77 (your original wager plus your winnings).
If you bet $40 on Ottawa (+110), your equation would look like this:
- Cross-multiply to get 100x = 4,400, and then solve for “x”.
- x = 4400/100
- x = 44.00
Therefore, if you wager $40 on Ottawa, you will win $44.00, and your total return would be $84.00.
Calculating Implied Probability with American Odds
Implied probability refers to the likelihood of a particular outcome suggested by the odds. Figuring it out involves converting odds into a percentage, which indicates the likelihood that event will happen vs. the alternative.
Implied probability is useful because if your estimate of the probability of an event occurring is different than a sportsbook’s you can and should adjust your bet accordingly.
Implied probability is useful because if your estimate of the probability of an event occurring is different than a sportsbook’s you can and should adjust your bet accordingly.
Say you thought one team had a 60% chance of winning, and it was available at 52.4% implied probability. This would be a smart bet.
Of course, if you convert the odds available at your sportsbook into a percentage, they will include the “juice” or the “vig.” Factoring in the “vig,” the implied probability of all possible outcomes of a game will be above 100%. This is called overround, and it explains why you need to remove the vig from betting lines if you want a more accurate picture of what the oddsmakers expect to happen in the game.
Calculating implied probability can be a tad tricky, but the formula is simple in theoretical terms:
Risk/Return = Implied Probability
Let’s take a look at what this looks like with American odds. We’ll start with positive odds because they are the easiest to work with.
Use this Formula with Positive Odds:
We can calculate Ottawa’s (+110) implied probability of winning the game using this same formula. We cannot use this to calculate Pittsburgh’s, however, because they have negative odds.
Let’s put Ottawa’s odds into the formula:
Ottawa, therefore, has a 47.6% chance of winning according to the bookmaker. If you think their chance of winning is higher than that, this bet is worth serious consideration.
How Do Negative Odds Differ?
Don’t get confused by all the brackets and parentheses. Their purpose is to flip the sign on the negative US odds. Here’s the formula:
When we use actual numbers, it appears far simpler. Using our example from above, we can calculate Pittsburgh’s (-130) implied probability of winning the game. Remember: We cannot use this to calculate Ottawa’s because they have positive odds.
Pittsburgh has a 56.5% chance of winning the game according to the bookmaker.
Let’s See What You’ve Learned
This time, you do the leg-work. Plug the numbers below into the formulae laid out above to answer the following questions, then check your results against the answers further down the page (no peeking!):
- Probability of San Antonio winning
- Probability of Golden State winning
- Winnings if betting $40 on San Antonio
- Return if betting $40 on San Antonio
- Winnings if betting $40 on Golden State
- Return if betting $40 on Golden State
Answers (all percentages are rounded to one decimal place):
- Probability of San Antonio winning: 12.1%
- Probability of Golden State winning: 92.9%
- Winnings if betting $40 on San Antonio: $290.00
- Return if betting $40 on San Antonio: $330.00
- Winnings if betting $40 on Golden State: $3.08
- Return if betting $40 on Golden State: $43.08
Decimal Odds Explained
Of the three types of odds you’ll encounter in your betting endeavors, decimal odds are the easiest to work with. Decimal odds are displayed like this:
Calculating Payouts with Decimal Odds
Determining how much you will win with decimal odds is straightforward: simply multiply your wager by the odds associated with the team you are betting on. Let’s take a look:
Calculating Implied Probability with Decimal Odds
To figure out the implied probability, follow this formula:
Implied Probability: 1 / Decimal Odds
Using our example from above, the following equation provides Tampa Bay’s implied probability of winning:
Implied Probability: 1 / 2.40 = 41.7%
And Cleveland’s chances of winning:
Implied Probability: 1 / 1.61 = 62.11%
Fractional Odds Explained
Let’s finally move onto fractional odds, which are commonly used in the UK and when betting on horse racing.
These are the funny-looking odds – like 9/5 or 1/2 – that you see when you flip on the Kentucky Derby.
These are the funny-looking odds—like 9/5 or 1/2—that you see when you flip on the Kentucky Derby. Pro tip: if you want to say fractional odds aloud, like 9/5 or 1/2, you would say “nine to five” or “one to two.”
The number on the left (9) dictates how many times the book expects the relevant outcome to fail; whereas the number on the right (5) tells us how many times the outcome is expected to succeed.
Fractional Odds in Action
Let’s say boxer Gennady Golovkin receives 8/13 odds in an upcoming fight with Canela Alvarez. These odds suggest that if this fight happened 21 times (8 + 13), Golovkin would lose 8 bouts and win 13.
To calculate the implied probability of Golovkin winning the fight, take the number of times he is expected to win (13) and divide it by the total number of trials (21). This results in a 61.9% chance Golovkin will win the fight.
Let’s take a look at the simple math:
To calculate Alvarez’s probability of winning the match, we do the same thing. Let’s say, hypothetically, odds are 11/8, meaning if the fight happened 19 times (11 + 8), Alvarez would lose 11 times and win 8 times.
Therefore, the probability of Alvarez winning the fight is calculated by dividing 8 (the number of times he would win) by 19 (the total number of trials). Alvarez has a 42.1% chance of winning the fight.
Our formula would look like this:
Remember what we said earlier about the “juice” or the “vig”? It doesn’t go away just because the book displays their odds differently. We haven’t even factored in the probability of a draw yet, and the sum of the probabilities is already over 100% (61.9 + 42.1 = 104).
The implied probabilities of both outcomes added together is going to be greater than 100% regardless of the odds format. You’ve got to pay to play, unfortunately.
If you want to bet on Golovkin to win the fight (8/13 odds), calculate your winnings by multiplying your wager by the quotient of 8 ÷ 13 (0.615). If you bet $10, your winnings would be $6.15 (10 x 0.615). In this case, you’ll receive $16.15 back ($10 bet + $6.15 in winnings).
Here’s the formula:
If you want to bet your $10 on Alvarez, multiply that sum by the quotient of 11 ÷ 8 (1.375). Your winnings would be $13.75 ($10 x 1.375).
Your return would be $23.75 ($10 initial stake + your winnings of $13.75). Below is how to solve that using the formula.
The payout is greater when betting on Alvarez, the “underdog” in this fight. Betting on underdogs in any sport typically allows you to risk less in order to win more. Remember, however, that there’s a reason they are the underdog, whether it’s a rookie season, there’s been a recent injury, or they face serious competition.
If you side with Golovkin, the “favorite,” you’ll need to risk more to get the same return.
Let’s See What You’ve Learned
Use the formulas you’ve learned (and the fractional odds below) to answer the following questions:
- Probability of Real Madrid Winning:
- Probability of a Draw:
- Probability of Juventus Winning:
- Winnings if betting $10 on Real Madrid:
- Return if betting $10 on Real Madrid:
- Winnings if betting $10 on a Draw:
- Return if betting $10 on a Draw:
- Winnings if betting $10 on Juventus:
- Return if betting $10 on Juventus:
Answers (all percentages are rounded to one decimal place):
- Probability of Real Madrid Winning: 36.4%
- Probability of a Draw: 31.3%
- Probability of Juventus Winning: 35.7%
- Winnings if betting $10 on Real Madrid: $17.50
- Return if betting $10 on Real Madrid: $27.50
- Winnings if betting $10 on a Draw: $22.00
- Return if betting $10 on a Draw: $32.00
- Winnings if betting $10 on Juventus: $18.00
- Return if betting $10 on Juventus: $28.00
What Is a Push?
While not technically related to odds, a push will definitely affect your payout. Every bettor should be aware of the possibility of a push before they lay their first wager on sports.
Simply put, a push is a tie.
You will not see pushes when betting on the money line. If a sport allows a game to end in a tie, that’s an outcome you can bet on. You only need to consider the possibility of a push when betting against the spread or placing a totals bet.
If a push does occur, you will simply be refunded your money. It will not count as a win or a loss.
If this game were to end 20-18 for Cincinnati, neither team covered the spread and will be considered a push. In this circumstance, you’d be given your money back like the bet never happened.
Ready to Find Some Favorable Odds?
Now that you’re an expert in reading sports odds, get out there and start winning some money! Sharp bettors are informed bettors, and not all sports are created equal.
