Most people start their gambling journey with the same question. How exactly do odds work? Understanding the answer to this question is the first step in becoming a successful gambler. It’s not necessarily easy, but it’s essential.
For example, online blackjack house edges range from 0.4% to 1.0% while most offline games range from 1% to 2%.
In this article, we’ll cover the basics of gambling and what you need to know to get started with betting on sports and playing your favorite casino games.
Betting involves predicting the outcome of a particular event. If you get it right, you will win money. Games are inherently complex math problems, where there’s a certain amount of possible outcomes.
For any given event while gambling, there are a certain number of specific results. Take a dice, for example. When you roll, there are six possible conclusions. If you bet that a person will throw a ‘one’, there’s a 16.67% chance that you’re correct.
In American gambling, the odds are shown as a ratio. Bookmakers will present these numbers either in the American format, in decimals, or with fractions.
Utilizing implied probability will help you compare odds between bookmakers. Once you can calculate and differentiate various probabilities, you’ll be able to make better decisions when it comes to placing a bet and how much you should stake.
May the Odds Be In Your Favor
So how do betting odds work? Understanding how to calculate probability and convert it into odds will help you develop an assessment of betting value. Once you know the basic math, turning the amount into odds is a straightforward process.
There are some key terms to note before we get into the specifics about calculating betting probabilities.
- Stake – The amount you will wager on your bet
- Payout – The expected return on your chance if it’s successful
- Odds – The ‘price’ you stake your bet at
Calculating Decimal Odds
For a simple explanation of calculating decimal odds, we’ll use the classic example of a coin toss, where the odds are 50:50.
The decimal odds for a coin landing on heads is calculated by dividing 1 (certainty) by the probability of it landing heads-up, in this case, we know that it is 0.5.
The formula is 1 / the probability of your chosen outcome.
You can simply inverse this equation and turn probability into odds. This way, you can work it out no matter what format you are shown. This would look like: 1 / decimal odds = probability.
Calculate a Bookie’s Margin
In betting, the odds don’t reflect the actual likelihood, and the exact probability can be determined by calculating the bookie’s margin. It is accessible and useful, especially since very few bookmakers choose to make these numbers public.
You can calculate the bookmaker’s margin to determine the amount by which the implied probability deviates from 100%. This can be a valuable piece of information as it will highlight the real cost of placing a bet.
Odds for Calculating Payout
You can also calculate odds and probability to open up a new world of foreseen value. To know what your payout will be if you win, you can multiply your stake by the decimal odds.
Take the coin toss example. If you bet $10 on heads with probabilities of 2.0, your return stake will be $20 (2.0 x $10= $20).
Reading Different Odds
Once you understand the three main types of betting odds, and how their calculation can be used in your benefit, you can use your newly found knowledge in different betting settings.
The odds are presented differently in betting environments, and some details can help you. You can read these numbers as the likelihood that one athlete, horse, or team will win. Betting agencies will use historical data and current statistics to make an initial prediction. Whoever has the highest is considered to be the “favorite.”
How Do Betting Odds Work in Horse Racing?
The probabilities in horse racing can tell you a lot when it comes to placing bets. They will tell you the amount of profit you’ll make per dollar you spend. For example, odds of 3-5 mean that your profit will be three-fifths of a dollar. For every $5 you spend, you could win $3 of profit.
To calculate this profit, you simply have to multiply the amount that you bet by the fraction. Take the example; if you bet $15 on a horse with 3/5 odds, the payout would be $24. The equation looks like this : $15 x [15 x 3/5 ].
How Do Betting Odds Work in Sports Betting?
If you’re betting on sports, Moneyline bets concern which team or player will win the game. The odds are either presented as a positive or negative number. A positive number means that the team is the underdog and negative means that they’re projected to win.
The positive number indicates how much money you will make per $100 spent. If you bet $100 on the Philadelphia Eagles, for example, rated at +135, you will make $235 if they win. If you bet $200, you’ll earn $370, twice as much.
Negative odds indicate how much money you have to spend to make $100. This is called the Moneyline. If you bet on the New England Patriots, rated at -135, you’ll need to pay $135 to make $100.
Over/under bets are more comfortable to place and are bets placed on the combined score of both teams or players. A bookie will set the over/under, and you’ll choose whether you think that the score is higher or lower than that mark.
This is usually made possible by using a 0.5 decimal. One good example of this is soccer, where you can bet on over or under 2.5 goals. Over is three goals, and under would be two, so there’s always a winning or a losing bet.
While it’s essential to have an understanding of how this math works, you don’t always want to focus on finding the highest odds. Generally, betting on the underdog or the less likely event will mean higher risk, but it’s also more reward if you win. The lower the odds, the higher the profit.
Understanding probability will make you a better gambler
The first step to becoming a savvy gambler is to understand the basics of probability and how odds are used in different games and sporting events. By following how to calculate the probability, you’ll be able to make better decisions and have an understanding of your return stake.