Betting Odds Explained: Calculaton, Probability and How to Read Odds

Betting Odds Explained: Calculation, Probability and How to Read Odds

You need to gain a thorough understanding of how to read betting odds before beginning your sports betting journey. This guide breaks down the different odds formats, explains the concept of implied probabilities and teaches you how to calculate your potential profit. Read on to become an expert in betting odds.

What are Betting Odds?

Betting odds serve two key purposes. They tell you the profit you would earn by placing a particular bet on a sporting event or a horse race, and they also highlight the implied probability of each bet succeeding.

Let’s say you want to bet on an NRL game. The oddsmakers at TopSport will assess the relative strengths and weaknesses of both teams. They will factor in home advantage, form, head-to-heads, injuries, motivation and other concerns. We will then release betting odds on either team winning the match.

There is normally a favourite and an underdog, unless the teams are very evenly matched. You will also find betting odds on a wealth of additional markets, such as total points, the handicap line, try scorers, correct scores and much more.

You can check out the betting odds to see what sort of profit you would earn by putting your money on any of the available betting options. They will also give you an idea of how strong each team is deemed to be.

How to Read Betting Odds & Calculation

The odds at TopSport will automatically be displayed in the decimal format. This is by far the most common format in Australia. American odds are only used in the United States, while fractional odds are mainly found in the UK.

All you need to do is multiply your stake – the amount you plan to spend on the bet – by the decimal odds to calculate your potential return if the bet wins. For example, if you place a $20 bet at odds of 2.50, you will be returned $50, as $20 multiplied by 2.50 equals $50.

The return includes your profit and the return of your stake. In this example, your profit would be $30, and you would get your $20 stake back, resulting in a total payout of $50.

If the odds were 1.90 and you were to place a successful $100 bet, you would be returned $190. That includes $90 in profit and the return of your $100 bet amount.

Odds Implied Probability

Betting odds tell you the implied probability of a wager succeeding. For example, let’s say you find betting odds of 1.60 on Richmond Tigers to beat West Coast Eagles, and 2.40 on the Tigers to win the match.

A successful $100 bet on Richmond would earn you a return of $160, whereas a successful $100 bet on West Coast would earn you a return of $240. The higher potential return on the Eagles tells you that they are the underdogs, while the Tigers are the favourites. The implied probability of Richmond winning the game is therefore higher than West Coast winning the game in this example.

However, it is also a little more scientific than that. An odds calculator will inform you of the precise probability of success that each set of odds implies. Betting odds of 1.60 carry an implied probability of success of 62.5%. Odds of 2.40 imply a 41.7% probability of success.

Essentially, the higher the number, the smaller the implied probability of success. Betting odds of 1.01 imply a 99% success probability, whereas odds of 101.00 imply a 1% chance of success, which is why $101 roughies generate so many headlines when they unexpectedly win big races.

Odds Formats

There are three main odds formats: decimal, fractional and American. Decimal odds are predominantly used in Australia, Europe and Canada. American odds are only used in the United States, as the name suggests, while fractional odds are mainly found in the UK.

However, you may see fractional odds used for horse racing, and American odds on basketball, baseball and American football broadcasts, so it helps to gain an appreciation of what they mean. 

Decimal Odds

Decimal odds are easier to read than their fractional or American counterparts. You simply multiply the amount you plan to bet by the decimal odds to calculate your potential return if the wager is successful. For example, if the odds are 2.25, you will receive 2.25 times your bet amount back if it pays off. 

The odds can change in the build-up to a sporting event. For example, Australia might be priced at 1.75 to beat England in a T20I cricket match, but the odds could move to 1.90 if news breaks that Josh Hazlewood and Aaron Finch are injured.

The odds can also change if one team proves very popular with punters. For instance, Penrith Panthers might be priced at 1.62 to beat South Sydney Rabbitohs, while Souths might have odds of 2.35. If most punters bet on Penrith, you might eventually find the Panthers at 1.54, while the Rabbitohs might drift out to 2.55. The betting odds essentially grow more appealing on the unpopular team to reflect public sentiment. This can provide punters with some interesting opportunities.

Fractional Odds

Fractional odds tell you the potential profit you stand to earn by placing a bet, as opposed to the potential overall return. You simply multiply your bet amount by the fraction to calculate your possible winnings.

For example, a $20 bet at odds of 5/2 will earn you a $50 profit. You also get your stake back on winning bets, so your total return will be $70. As another example, a $20 bet at odds of 10/1 would earn you a $200 profit. Your total return would be $220.

Calculating payouts from fractional odds is more time-consuming, as you have to work out the profit and then add the return of your bet amount on top to arrive at your total return. That is why most countries stick to decimal betting odds.

Fractional odds of 5/2 equate to decimal odds of 3.50, while fractional odds of 10/1 are the same as decimal odds of 11.00. The difference with decimal odds is that the return of your bet amount is baked in.

American Odds

American odds also tell you the potential profit you stand to earn from a bet, and not the total return. They begin with either a plus or a minus symbol.

If the odds begin with a plus, it tells you the profit you would earn by placing a successful $100 bet on that market. For example, if the odds are +175, you would win $175 by betting $100. You get your stake back, so the total return would be $275. American odds of +175 are therefore equivalent to decimal odds of 2.75 and fractional odds of 7/4.

You do not need to wager $100, as it is only a guideline. You could bet $10 at +175 and earn $17.50 if successful, or bet $50 in a bid to generate a profit of $86.50.

If the American odds begin with a minus, it tells you the amount you need to bet if you want to earn a $100 profit. For example, if the odds are -150, you need to bet $150 to win $100. As always, you get your bet amount back, so your total return would be $250.

American odds of -150 therefore correspond to decimal odds of 1.67 and fractional odds of 4/6. Once again, you do not need to stake $150. You could potentially stake $30 in an attempt to win $20, or bet $300 to win $200.

As you can see, decimal odds are a lot easier to calculate than American odds or fractional odds, but it helps to be well-versed in all three formats.

Betting Odds FAQs

What does odds mean in betting?

The odds refer to the probability of a bet succeeding, but they also inform you of the possible winnings you stand to earn. For example, if you place a bet at odds of 1.95, you know that you will be paid 1.95 times your stake if it wins. A $100 bet would therefore return $195, and the implied probability of success is 51.3%.

What is fixed odds betting?

Fixed odds betting tells you precisely how much you stand to win or lose from a bet, with no surprises. For example, if you bet $10 at odds of 2.50, you will either earn a $15 profit or lose your $10 stake. It is different to pari-mutuel betting on horse racing, whereby you do not know what sort of profit you will receive until the dividend is declared after a race. 

How are betting odds determined?

Oddsmakers at betting sites like TopSport publish odds on sporting events after assessing the respective strengths of the various contenders. For example, the odds compilers will study the previous form of each horse that enters a race, or they will assess the quality of both players in a tennis match. They then release betting odds based on the likelihood of each player, team or horse winning, along with odds on markets like total points and handicaps.