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How do Betting Odds Work 2023

Last Updated on 01/20/2023
Fact checked by: Mike Goodpaster

How to Read Odds?

If you are new to the world of betting and are confused about gambling odds, fret not! Our betting odds explained guide would help you understand all the definitions, from basics to advanced.

We have got your back. Our detailed guide on betting odds will let you know what they are and how to read them effectively. Our experts have covered all your doubts in detail to help you achieve that coveted betting edge. Soon you’ll count yourself as an expert punter.

How to read betting odds?

After the removal of the federal prohibition on sports betting, several US states started legalizing sportsbooks. Hence, with sports betting starting to take off all across America, many people were introduced to this exciting world of sports betting. So, if you are among these new entrants in this arena, all the terms surrounding sports betting might sound a bit overwhelming for you.

However, understanding sports betting simply begins with learning how to read odds and how they work. In simple terms, betting odds measure the likely outcome. But it is also vital to keep in mind that the more likely it is to win, the lesser your payout and vice versa.

How do betting odds work?

Several complex calculations go into determining these odds, which are basically done by the oddsmakers using their advanced statistical tools and understanding of a particular game or sport. However, you do not have to worry about how it is determined, only how they work. Understanding how odds work is the first step towards your gambling journey. In this comprehensive sportsbook guide, our betting experts ensure to explain the whole process in the easiest way for new punters.

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Importance of odds

With betting odds explained, you will know how to calculate how much you are potentially winning in a particular wager. Along with determining your payout, you will also have an insight into the likeliness of an outcome. Also, you may find odds being represented in different formats in different sportsbooks, but in effect, they are effectively the same. It’s just a matter of preference.

For example, most gamblers in the USA prefer the American odds format. In contrast, fractional and decimal odds formats are prevalent across Europe. But you don’t need to worry about this aspect, as most online operators provide you with an option to display the odds in different formats. However, to help you understand everything better, in this betting odds explained guide, we also have a breakdown of each format below.

American odds:

When you see a display board with a plus or minus sign, it means the sportsbook is showing you the American odds. A negative number or minus sign against a team indicates the favorite team. In contrast, a positive sign indicates the underdog of the match.

A negative number means that a team is likely to win, and the number will show you how much you need to bet to win $100. Similarly, a positive number will show how much you win with each $100 wager.

To calculate the profit from American odds, you can use the following formulas:

If you have positive odds, 

wager x (odds / 100) = Y

If you have negative odds, 

wager x (100 / odds) = Y

Where Y indicates only your profit (the total payout will be Y + your wager)

Fractional odds:

As you might have guessed from the name, the term fractional odds displays numbers in fraction form. This format is usually mostly used in Ireland and the UK, as it is a standard odds format used to show the favorites in soccer games.

You might think it is difficult to read the odds in the fractional format. However, we can assure you that it is pretty straightforward. The top number indicates the number of times the favored outcome will fail, while the bottom number will show the number of times they will succeed.

For instance, take the match between Miami Heat and La Lakers. If the Lakers are given an odds of 2/3, then the sportsbook is predicting that the team will win the game two times out of three.

You can calculate your payout using the formula, which is as follows:

winnings = wager x (numerator / denominator) + wager.

Decimal odds:

Although decimal odds are not quite commonly used for gambling in America, you can find this format prevalent among many international sports to show the favorites and odds. Decimal odds are probably the easiest to determine your winnings among the other formats described in this betting odds explained guide.

The decimal will show you the amount of payout you will make for every dollar you pay. The crowd’s favorite team will always have a lower number, while the underdog will have a higher number. The formula for calculating your payout for decimal odds is as follows:

Winnings = wager x decimal odds

Calculating implied probability – the right steps

Implied probability is the calculated chance of an outcome occurring in a sports match. The betting odds are converted into a percentage to determine the probability. If you are interested in understanding odds in-depth, calculating implied probability is a crucial skill to learn. Moreover, you can enhance your betting approaches and your chance of getting a return on your investment by determining the probability of winning a wager.

The following are the ways to calculate implied probability:

American odds

Positive odds: 100 divided by (the American odds + 100) x 100 to give a percentage

e.g. American odds of 300: (100 / (300 + 100)) * 100 = 25%.

Negative odds: Firstly, multiply the American odds by -1 and use the positive value in the following formula:

American odds divided by ( American odds + 100) x 100 to give a percentage

e.g. American odds of -100: (100/(100+100)) * 100 = 50%.

Decimal odds

1 divided by the decimal odds x 100 to give a percentage

e.g. decimal odds of 4: (1/4) * 100=25%.

Fractional odds

1 divided by (the fractional odds + 1) x 100 to give a percentage.

e.g. fractional odds of 3/1: (1 / ((3/1) + 1)) * 100=25%.

Types of betting markets

Now that you know in detail about the betting odds and the various formats in which they are expressed, let’s take a closer look at the different types of betting options available on sportsbooks.

Moneyline

In this Moneyline explained guide, you’ll know that it’s actually the simplest type of betting. It is pretty simple and displays the crowd’s favorite and the underdog along with their betting odds. When you are betting, you are backing the outcome of one team to win or lose, and you can even bet on the game to draw. If your prediction is correct, you will make a profit. To explain, we have taken the example of LA Galaxy versus Inter Miami FC.

  • LA Galaxy -400
  • Inter Miami FC +250
  • Draw +100

Here, the match coming to a draw is the second most favored outcome. This effectively means Inter Miami FC is given a low chance of winning the match.

Point Spread

Sports betting point spread is quite popular as the payout is often high. Here, you wager on a team to not only win but also predict the team to win by more than a certain number of points. The estimate provided by the provider is called a spread, and you can read the odds here by looking at the number displayed near the odds.

Let’s take the LA Lakers versus Miami Heat as an example. If you see a -5.5 spread against LA Galaxy, it means that you are betting on Galaxy to win the game by 6 or more points.

Totals

Next comes the total bet. Also known as over/under betting, you have to decide whether you will bet over or under the estimated score displayed for a particular statistic under this bet type. Usually, it indicates the total number of goals, touchdowns or points, and even niche stats like the number of interceptions or fumbles made in a football game.

Here, we can take the example of a basketball match between the LA Lakers and Knicks.

  • Over 200 points: -200
  • Under 200 points: +150

In this bet, you do not have to worry about the underdogs or favorites. However, remember that the points displayed here are the combined score of both teams, and you are predicting the points total of the game.

Parlays

All the types that we have shown in our betting odds explained guide are bets that are exclusively placed on a singular event. But parlays refer to multiple bets bundled together to increase the total payout. Remember, it comes with a massive risk as you’ll lose the entire wager even if one of your bets is incorrect.

The simple gambling rule always remains the same – the higher the risk, the higher the reward. So with a little luck, your parlay wager can land you with a huge payout. However, we recommend it for experienced gamblers who understand the importance of effective betting bankroll management.

Futures

Most of the bets that you will come across will be for events happening on the same day or will be held in the upcoming week or two. However, as the name indicates, the future bet is placed on future events like the Lakers bringing home the NBA championship ring. As these predictions are often difficult to make, there are some serious payouts involved. Hence, we recommend novice bettors to avoid playing on this bet type initially.

Conclusion

Now that you’ve gone through the fundamental principles detailed in this betting odds explained article, you can easily step into the betting world and enjoy gambling on your favorite teams or sports. Moreover, you can certainly enhance your gambling experience by reading the odds accurately and determining your payouts and the implied probability of your bets. However, do not forget that chance plays an essential role, and our guidebook will only help you make an informed choice.

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Betting Odds Explained – FAQs

💡 What are betting odds ?

There are a lot of factors that go into determining the betting odds, and they are not easily revealed by oddsmakers. Check out our complete betting odds explained guide to know more about betting odds and how they affect your gambling.

🎲 What is the difference between American and decimal odds formats?

The sportsbooks display odds to show the probability of an event occuring and there are 3 main formats for representing odds. You can read our comprehensive guide books at TheGruelingTruth.com to learn more about betting odds, betting strategies, and much more.

💵 How can I calculate my potential winning through betting odds?

Your potential winnings depend on various formulas as each odd format is different. Please go through our detailed betting odds guide when asking ‘how do betting odds work’ and calculate your possible winnings.

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