How to read odds
Understanding betting odds is key to successful betting. If you do not understand betting odds and the probabilities that they imply, you will struggle to succeed in betting on sports long term.
You don’t need to be a math genius to succeed in betting on sports, but if you do not understand what betting odds reflect, you are setting yourself up for failure.
What are betting odds?
Betting odds represent the probability of an outcome occurring and the return (profit) you will receive if your bet is a winner. The probability represented by betting odds is often referred to as the ‘implied probability’. Understanding the implied probability is crucial. Why? Because you should only bet when you believe the probability of an outcome occurring is higher than the implied probability.
Let’s consider an example. Let’s say the New York Giants are facing the Washington Redskins in a regular season NFL game. The Giants are at odds of -110 to cover the betting line of -3.5 points. The probability implied in the odds -110 is 52.4%. You’ve done your research and have determined the Giants are a 60% chance to cover the -3.5 betting line. As 60% is greater than 52.4%, you have found what is commonly referred to as a ‘value bet’.
However, if following your research you determined that the Giants are only a 45% chance to cover the -3.5 points betting line, the implied probability of the odds is greater than your determined probability. You have not found a value bet and should not place a bet on the Giants.
Shortly we will show you how to calculate the implied probability reflected in betting odds, but first let’s discuss the most popular odds format in the U.S, American Odds.
How to read American odds
There are three popular odds formats:
- Fractional Odds
- Decimal Odds
- American Odds
For the purposes of this article, we will focus on American odds. But if you would like to learn more about betting odds and alternative odds formats, read the bettingexpert guide to converting betting odds.
American odds are presented as either positive or negative odds. The following is an example of American odds for an NBA game between the Boston Celtics and Chicago Bulls.
Positive American odds reflect your profit should you bet $100 and are displayed as:
In this instance, if you bet $100 on Boston to win the game and they win, you will receive a profit of $130.
Negative American odds reflect the amount of money you would have to bet in order to win $100 and are displayed as:
In this instance, if you bet $140 on Chicago to win the game and they win, you will receive a profit of $100.
How to calculate implied probability
As previously stated, understanding and calculating the implied probability in betting odds is key to long-term betting success.
So how do we calculate the implied probability in American odds?
Calculating the implied probability in positive American odds is quite simple:
|Implied probability = 100 divided by (positive odds + 100)|
So in our example, the Celtics are at odds of +130 to win the game. What is the implied probability of these odds?
|Implied probability = 100 divided by (130 + 100)|
|Implied probability = 100 divided by 230|
|Implied probability = 0.4348|
So the implied probability of the Celtics winning the game is 0.4348 (or 43.48%). In this instance, the bookmakers believe the Celtics are a 43.48% chance of winning the game.
Calculating the implied probability in negative American odds is fairly straightforward:
|Implied probability = negative odds divided by (negative odds – 100)|
So in our example, the Bulls are at odds of -140 to win the game. What is the implied probability of these odds?
|Implied probability = -140 divided by (-140 – 100)|
|Implied probability = -140 divided by -240|
|Implied probability = 0.5833|
So the implied probability of the Bulls winning the game is 0.5833, or 58.33%. In this case, the bookmakers see the Bulls as a 58.33% chance of winning the game.
As stated earlier, the key to successful betting is to bet only when there is value. In our example, we should only bet on either the Bulls or Celtics if we determine that they are a better chance to win the game than what the odds represent.
If we believe the Celtics are a better chance to win than 43.48%, we should bet on them. If we believe the Bulls are a better chance to win than 58.33%, then likewise, we should bet on them.
Understanding betting odds is crucial to long-term betting success. Possessing an intimate grasp of betting odds and their implied probabilities is fundamental to profitable betting.
Betting Against The Odds
When you bet for the underdog, it is called betting “against the odds.” For example, if odds are +300 for the Bears this Sunday, then it is three times more likely that they will lose than win. Odds of +300 indicate that if you bet $100, you will win $400, the original amount of your bet plus the profit.
Betting odds represent the probability of an event to happen and therefore enable you to work out how much money you will win if your bet wins. As an example, with odds of +400, for every $1 you bet, you will win $4. There is a 20% chance of this happening.