Understanding how sports betting odds is an obvious first step to becoming a successful bettor. Odds can vary from book to book and can shift in seconds, particularly when betting on live games. Though this can be intimidating at first, we'll cover the basics of the process so that you'll feel more comfortable when placing your wagers (whether via an in-person sportsbook or online betting app).
There are three types of odds bettors need to understand prior to placing a bet. These include American odds, decimal odds, and fractional odds.
As a US sports bettor, you will typically deal with American odds. These are what you will find when betting on NFL, NBA, NHL, MLB, and college football and basketball. That being said, decimal odds are easier to read and convert into probability, and most books will allow you to switch to decimal odds right from the website or app.
Fractional odds are much less common and most bettors only use them when betting on golf and horses.
Let's take a closer look at how each type of betting odds works.
How American Odds Work
Have you ever been in a sportsbook or glanced at the back page of the sports page to see the betting odds? You may have seen odds for an MLB game that read: Yankees -180 , Orioles +160. We'll explain exactly what this means below.
Calculating Probability with American Odds
American odds are the default odds shown on most US sportsbooks. Once you are used to reading these odds, you will inherently know exactly what the odds/probability is without having to break out a calculator. That being said, you will likely want one for this lesson, let's jump into how you calculate probability and payouts using American odds.
Calculating Payouts with American Odds
Using our Yankees -180 / Orioles +160 from above as our example, here's how the process works. Since the Yankees are the favorite, you'd have to risk $180 to win $100. That's a pretty steep risk but worth it if you think the Yankees should be priced well over -200.
If you like the Orioles to win, you can risk $100 to win $160. Since Baltimore is a steep underdog, the payoff is much greater.
Just how powerful is the juice? A +160 underdog only needs to win 38.5% of the time for you to break even. On the contrary, -180 favorites need to win 64.3% of the time just to break even.
How Decimal Odds Work
The good news is the tough part is over. It is important to understand how American odds work for several reasons. While you can choose to display odds as decimal odds on your sportsbook's website or app, often times odds are displayed as American odds when discussed, written about, or displayed inside of brick-and-mortar sportsbook locations.
That being said, decimal odds are a much simpler system, and are by far the most popular odds system on a global level. Let's take a look at how decimal odds work and how you can calculate probability and payouts using decimal odds.
Calculating Probability with Decimal Odds
As you can see in the graphic calculating probability with decimal odds is considerably easier than calculating probability with American odds. The formula is extremely straight forward, and does not need to be adjusted for what is considered negative odds in the American odds format.
Simply divide one by the decimal odds for that given bet. The closer odds get to 1, the higher the probability the bet will pay out. A heavy favorite may have odds of only 1.05 which would of course indicate a 95.23% win probability.
Calculating Payouts with Decimal Odds
Calculating payouts with decimal odds is considerably easier as well. Simply multiply your bet amount by the decimal odds, then subtract the bet amount out of the total payout to calculate your winnings.
As you can see in the example, a $10 bet with 2.3 odds would pay out a total of $23. When you subtract out your bet ($10), you are left with $13 in total winnings. Assuming you are betting even dollar amounts like $10, $20, $100... you should be able to calculate winnings in your head when placing bets.
How Fractional Odds Work
As we mentioned in the open, fractional odds are the least often used form of betting odds. Where you typically see this format is where you have a field of players, teams, or horses. Obviously this means you find fractional odds when betting on team futures like Super Bowl odds, player futures like MVP odds, PGA tournaments, and horse races.
While fractional odds look different, calculating probability and payout with them is a fairly straight-forward process. Here is exactly how you use fractional odds.
Calculating Probability with Fractional Odds
To calculate probability with fractional odds you simply need to memorize the quick formula shown on the left side of the graphic above. The formula for fractional odds probability is denominator divided by denominator plus numerator. So, given odds of 9/2, the formula would give you a probability of 2 divided by 9 plus 2, or or 2/11. Solving will give you a probability of 18.18%.
Again, you will find this format anytime you have a field of potential winners. If you think a boxer has a 75% chance of winning, but an odds probability of 60%, that would be a great bet to make.
Calculating Payouts with Fractional Odds
Calculating payouts with fractional odds is just about as easy as calculating payouts using decimal odds. Simply multiply your bet by the fractional odds. In the case of the given example, a $10 bet with 9/2 odds, would pay out $45 - ($10 x (9/2)).
Because these odds are used in events with a field, you will often find big payouts in events that feature fractional odds. Again, the most common bets you will make with fractional odds are futures like preseason Super Bowl odds, PGA bets (golfer vs the field), and horse racing bets.
Betting Odds Summary
Understanding how these three betting odds formats work is essential to becoming a profitable in sports betting. While all the numbers you see across sportsbooks may seem intimidating at first, with practice you will get really fast at calculating probabilities and payouts.
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