Betting Odds - Types and Calculations

If you want to place a bet on a sports game between teams A and B, the first thing you want to know is how much you would win if you correctly predicted the outcome. In fact, the first thing that the bookmaker will show you is the odds since they are just that - numbers that tell you how much you will gain if you win the bet. However, although they all translate to the same amount, you'll not find a consistent number at different sportspooks since each one adopts a certain method of specifying the odds. This article describes the different types of betting odds specifications and how to calculate the gains to be expected in each case.

There are three different types of odds specifications, they are: Decimal Odds also know as European Odds, Fractional odds also know as UK odds, and American odds. Perhaps because of their correct representation of the situation, the Decimal forms are viewed as the standard specification method. The purpose of odds specification, in whatever form they are given, is to relate the the amount of money a bettor wagers to the amount he/she wins. For this purpose, one has to be familiar with three terminologies: stakes, winnings, and pay-outs. Stakes are the amount of money wagered, winnings are the amount won in a bet, and pay-outs are the total amount paid when a bet is won. Obviously, pay-outs are winnings plus stakes. Although these terminologies may seem trivial, they are heart and soul of odds calculations.

Also, it is important to know three more terminologies regarding the strength of the teams in a match; they are Evens, Odds-on, and Odds-against. Evens are when the two contestants are equally strong and thus there is no favorite or underdog; you bet $1 to win $1, if no commissions are involved. Odds-on is the odds of the favorite and in this case winnings are less than the stakes. Odds-against is that of the underdog, where winnings will usually be more than stakes. For example, in the most common case of sports betting on a match between two competitive contestants (evens odds), the odds assigned to both will be 1.90 in Decimal odds, 9/10 in fraction, and -111 in American odds, all of which mean the same thing: "bet one dollar to win 90 cents". In fact, if there were no commission involved, or if the bets were just between friends, these odds would have been 2.0, 1/1, and, 100, respectively, for the three types of odds; they mean "bet one dollar to win one dollar".

1. Decimal odds (European)
   

   These are simply factors that indicate how-many-times-the-stake will the pay-out be. For example, odds of 2.50 mean that the pay-out will be two and a half times the stake, or for each dollar wagered, the pay-out will be $2.50.
   

   • Pay-out = Stake * Decimal Odds
   • Winning = Stake * (Decimal Odds - 1)


2. Fractional odds (UK)
   

   The fractions here represent that a stake equal to the denominator will result in a winning equal to the numerator. For example, odds of 10/11 mean that 10 units will be won with a stake of 11 units, or for every $11 wagered, the winning will be $10.

   • Winning = Stake * Fraction Odds
   • Pay-out = Stake * (Fraction Odds + 1)


3. American odds (US)

   American odds are denoted by numbers always greater than or equal to 100 preceded by a '+' or '-' sign. These signs are not mathematical signs; they are simply symbols that point out whether your winnings are more than or less than your stakes. The positive sign is used to indicate an underdog where winnings are greater than stakes, or that it is an odds-against betting; and the negative sign is for favorites or odds-on betting. These two odds have completely different definitions and thus use calculations that are unrelated.

   Negative odds represent how much to wager in order to win $100. For example, odds of -110 mean that in order to win $100, the wager must be $110.

   • Winning = Stake * 100/negative American Odds
   • Pay-out = Stake * (100/negative American Odds + 1)

   Positive odds represent how much the winnings will be when $100 are wagered. For example, odds of +110 mean that $110 will be won, when $100 are wagered.

   • Winning = Stake * positive American Odds/100
   • Pay-out = Stake * (positive American Odds/100 + 1)

Some outstanding features of these odds.

• Decimal odds are always greater than 1.0 since '1' represents the stake.
• American odds are always greater than or equal to 100 (recall that + and - are just symbols, not mathematical signs).
• Fractional and American odds are indicative of winnings, while decimal odds indicate pay-outs.
• Even odds, with respect to a fair bet, are when you win exactly the same amount as your stake. So, evens are represented by 2.0 in decimal, by 1/1 in fractional odds, and by 100 in US odds(-100 and +100 are the same).
• In cases of odds-on, that is, when winnings are less than stakes, which is normally the case of a favorite team, the decimal odds fall between 1.0 and 2.0. In fraction odds they are identified by the fact that the numerator (winning) is less than the denominator (the stake), and In US odds they are the negative odds.
• In cases of odds-against, that is, when winnings are greater than stakes, which is normally the case of an underdog team, the decimal odds will be greater than 2.0, the numerator will be greater than the denominator in fraction odds, and they are the positive odds in US odds.

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