10 Things Every Sports Bettor Needs To Know About Odds

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If you’re new to the world of sports betting then the first thing you need to get your head around are the odds — also referred to as the “prices”.

Betting odds determine how much you’ll get paid if you win your bet. More importantly they represent the estimated chance of an event occurring. Treating odds as probabilities is the first big step into successful, profitable betting.

Here’s the 10 things you need to know about sports betting odds.

 

1. Every Outcome Has A Chance

Some sporting outcomes may seem too far-fetched or implausible to ever really happen.

But cast your mind back to some of the biggest upsets in world sport. Has a result ever shocked or surprised you? Has there ever been an outcome that you never thought was possible until it happened?

Leicester winning the Premier League is arguably the biggest sporting upset of all time, because they won the title over a 38 game season rather than a standalone event.

As a punter you always have to stay open-minded. Anything can happen in sport. Thus no bet is ever a “sure win” or “certain loser”. That’s the first thing you need to know before you even begin look at the odds on offer.

 

2. Odds Determine Your Payout

When you place a bet, the odds you accept determine your potential payout if you win.

Example 1

A £10 bet at fractional odds of 4/1 (decimal 5.0):

Total Outlay Total Return Total Profit
10.00 (1 bet of 10.00)
50.00
40.00
  • 4/1 means “for every £1 staked, you stand to win £4”.

Example 2

A £10 bet at fractional odds of 7/2 (decimal 4.5):

Total Outlay Total Return Total Profit
10.00 (1 bet of 10.00)
45.00
35.00
  • 7/2 means “for every £2 staked, you stand to win £7”.

Example 3

A £10 bet at fractional odds of 1/3 (decimal 1.33):

Total Outlay Total Return Total Profit
10.00 (1 bet of 10.00)
13.33
3.33
  • 1/3 means “for every £3 staked, you stand to win £1”. This is not to be confused with 3/1 (decimal 4.0).

Learn more on betting odds:

 

3. Odds Imply The Probability Of An Outcome

The odds you bet at reflect, to varying degrees of accuracy, the real life chance of an outcome occurring.

  • Low (“short”) prices mean the outcome is likely to occur.
  • High (“long”) prices mean the outcome is unlikely to occur.

You can easily convert decimal odds into its implied probability %. The formula is:

Implied Chance (%) = 1 / Decimal Odds

So, if the decimal odds are 14.0 then the implied chance of that outcome winning is 1/14 = 0.071 = 7.1%. 

Learn more about implied probabilities.

The key to successful betting is working out when those implied percentages are inaccurate. If you believe there’s a significantly greater real life chance of the outcome occurring than the implied odds suggest, then this is known as a value betting opportunity.

Learn more on value betting from my posts:

 

4. Odds Vary Between Betting Sites

Sports betting odds can vary significantly between different betting sites, so it’s important for bettors to be aware of this when placing their bets.

Betting exchanges usually offer the most competitive odds and greater value compared to bookmakers. However, to make sure you’re getting the best possible odds, consider using an odds comparison site. These sites allow you to compare the odds, so you can quickly and easily find the best available price for your chosen bet.

Here’s where you’ll find a list of odds comparison sites:

 

5. Odds Come in Various Formats

No matter what odds format you use — fractional, decimal, or American (as found on US sportsbooks such as TwinSpires Edge) it always represents a probability.

So which odds format should you use?

Throughout this website I recommend using decimal odds. I personally believe they’re the most transparent, easiest-to-use odds format. Interpreting decimal odds is easy: the higher the value, the bigger the potential payout.

There’s a simple formula to work out winnings from any decimal odds bet:

  • Potential Return: Stake x decimal odds
  • Potential Profit: Stake x (decimal odds -1)

These two formulas were used to produce the figures in the three above examples in #2. Decimal odds are supported by all major Bookmakers, and can be set as the default in your account preferences.

For more on odds formats:

 

6. Bookmakers Specialise in Selling Odds

Bookmakers are here to profit from odds. Their aim is to accept bets at prices that’ll generate an income.

The Bookies’ business model is very similar to insurance. With insurance, the provider estimates each of their customers’ chances of making a claim over the coming year, and prices their premiums high enough to cover expected payouts.

The same principle applies to selling a bet. The Bookmakers manage their risk by selling odds with reduced payouts. Sure, some customers will win. But the losses of other customers will more than cover that.

For more on Bookmakers read my posts:

 

7. Betting Exchange Odds Are The Most Accurate

At this point you could (and should) be wondering how you can avoid betting at low priced odds that’ll lose you money.

The easiest way to avoid accepting poor value odds is to head over to a betting exchange. As with any active market (where there are multiple participants), the prices are efficient. This means that betting exchange odds are, on average, accurate and fair.

Fair, accurate odds mean you’re much less likely to incur losses. But at the same time, the exchange odds are sharp and difficult to find value from.

Bookmakers, on the other hand, are often slow to replicate the more accurate odds available on the betting exchanges. Their odds are said to be “soft”, as opposed to “sharp” like the exchange. As a result, Bookmakers provide plenty of value betting opportunities for savvy punters to snap up.

Check out my posts:

 

8. Odds Shift As We learn More Information

In many situations there’s simply not enough information about an upcoming sports event to formulate accurate probabilities on it. So there’s a certain amount of guesswork that goes into creating the odds — both on the Betting Exchange and at Bookmakers.

As more information becomes available — for example a horse withdrawing from a race shortly before the off, or the team lineups of a football match — the odds will sharpen. The prices become less speculative.

You need to keep in mind that odds aren’t static. Over time prices shift according to the changes in circumstances, rumours, news reports and other influences (e.g. pundits and populist opinions).

Learn more on how odds shift:

 

9. Odds Are Most Accurate Right Before An Event

At the moment before a sports event starts, the odds are their sharpest. There’s a few reasons for this:

  • All pre-event information has been released. The conditions are set, and there’s no more changes to occur.
  • It’s the point when the most total money has been matched. The activity of the public shapes the prices. By the event start time, the odds are fully formed.
  • Most money enters the betting markets close to the event start time. This quickly chisels the odds into line right before it begins.
Matched Money Cold Trading
This graph shows how the total money matched for a horse race drastically increased right before the off.

Inaccuracies do exist, though. They’re constantly exploited by smart punters to the point where the true price is discovered. So you should monitor the odds on the lead up to an event, with a view to snap-up value before it disappears.

Learn more on the start price of an event:

 

10. Profitability Hinges On The Value Of The Odds

Sports punters should learn to judge a bet by its price — not whether it won.

You could place a bet on a sporting outcome and win, yet it was still a bad bet. Or on the flip side you could place a bet and lose, but it was a good bet.

This entire concept will sound ridiculous to some of you. But successful betting is all about obtaining value odds; not trying to guess outcomes correctly. Let me explain.

Imagine you placed a bet on Heads for a coin flip at decimal odds of 1.5. Even if you win that bet, it’s still a bad bet.

“Why so? You won didn’t you?”

Given the odds of 1.5, the implied chance of Heads winning was 66.66%. However in reality the outcome had a 50% chance. The fair price for Heads is 2.0 (1/2.0 = 50%). Therefore the 1.5 price accepted was too low. This is precisely the type of bet that’ll be sure to eat into your bankroll over the long-run.

Remember that anyone can bet on an event and strike a win, but very few can consistently place thousands of bets and stay in the green. That’s because profiting from betting requires a refined method for estimating probabilities and capitalising on price discrepancies/inaccuracies. Learn more on value betting to gain a greater understanding.

Also check out the following:

That just about covers everything you need to know about sports betting odds. Armed with this knowledge you’ll be in a better position to pursue a profitable pathway in the world of online betting.

Toby @ Punter2Pro
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