An introduction to how betting odds work
Do you know how odds work? Bet with confidence. Discover the secrets of sports betting. Read more to leap from betting novice to knowledgeable bettor.
Published on 28 January 2017
Updated on 29 January 2017
The world of betting revolves around the idea of how betting odds work. After all, how odds work dictates the amount of your winnings. Both the bookmaker and the bettor watch out for the odds that an event will likely occur. Once you gain the understanding of how odds work in football, you have bigger chances of winning bigger prizes and returning larger profits.
How betting odds work
In this section, you will gain a better understanding of the concept of betting odds and the different terms, of which you need to become familiar.
When it comes to odds, chance is the first thing that you need to consider. Chance and odds are directly related:
* Chance is the possibility that an event will likely to occur.
* Odds are the ratio in which we measure a player’s chances of losing against his chances of winning.
Let us take an example. You live in a village of 5 people (which also includes you). You're going to take part in a local lottery where there are only 5 lottery tickets and one ticket is the winning ticket. Each individual lottery ticket is handed out each of the 5 people within your village, so every village member has 1 lottery ticket.&nbsp;
Therefore, you have 1 ticket out of the total of 5 tickets. This means that your probability of winning the lottery is 1 out of 5. But when we consider your odds; your chance of losing is 4 while your chance of winning is 1.
In gambling, odds do not always refer to the mathematical calculation of winning. Most of the time, odds refer to the perceived estimation of the odds. There are many factors affecting the odds in gambling and sports betting.
Some of the most important factors that bookmakers consider when quoting the odds for each unit bet is the favourability of a team winning or if a team is an underdog or long shot. A long shot refers to the low probability of a specific team to win. With this in mind, bookmakers may perceive each unit bet differently. There is a bigger risk in betting on a long shot winning an event, but this underdog option will usually come with higher rewards. Although, the outcome is considered less likely to occur.
If we consider another example and imagine that, you place a bet on an event occurring where you can profit £5 for every £1 bet. It means that you win £5 plus your £1 wager. When it comes to the favourite team, the risk increases with the amount of the wager. Usually, the wager on the favourite team is more than how much you can profit. For example, you can win £1 profit for every £5 wager. Bookmakers are able to equalize the risk by adjusting the amount of the wager and the amount of the profit with the team’s probability of winning.
A bookmaker may post odds that are not true mathematical representations of the winning odds. Bookmakers will generally pay out odds affected by subjective chances of winning. The “true odds” are the players’ actual chances of winning, without taking into consideration how well they play. The “pay out odds” refers to the winning that a bookmaker assigns to a specific unit bet, while considering the probability of the outcome occurring.
To make things clearer, a bookmaker may quote odds of 2 to 1 for a favourite team. Mathematically speaking, this means that the true odds of losing against winning is 33%.
However, in sports betting, the winning odds means that you will get a £2 winning for every £1 risked. However, if a bookmaker places 18 to 1 odds on an underdog beating a heaving favoured team with a very low probability of winning, this means that you can get £18 profit from a £1 risked. Mathematically, the true odds of this probability is 5.3%, which demonstrates the significant difference between the perceived probabilities from a bookmaker perspective.
Looking at our example, the winning odds is straightforward and does not require a lot of calculation. However, the winning odds are more subjective and you need to consider several factors before you place your bet.
Section: Betting Fundamentals for beginners