Betting Odds explained

On a rudimentary level, betting odds is the probability of what the outcome of a certain event will be according to the betting market or the bookmaker. The difference between the market and the bookmaker is something we will be talking about at a later point, but summed up it sounds a bit like this: The market decides the odds when there is a lot of money going back and forth, and the odds

The difference between the market and the bookmaker is something we will be talking about at a later point, but summed up it is like this: The market decides the odds when there is a lot of money going back and forth, and the odds swings thereafter. When the bookmaker decides the odds, it’s a low-volume market with little money on the sides, so you are essentially betting against the bookmaker only.

Odds represent what you will get back if you win a bet, but to really understand odds, you need to understand how to calculate them.

Probability:

Take an example of a football match. There are three possible outcomes:

Home win
Draw
Away win

These three possibilities together make up 100% of the probability. Bookmakers have a built in safety margin, meaning your odds will never make up 100% at one bookmaker, but it can if you shop around.

The more you bet, the more you will learn to understand these probabilities. A good exercise is to blindly price up a market. This means you should decide what percentage chance each potential outcome has, then convert it to odds, and subsequently compare it to the bookmaker prices.

Calculating the odds:

Note that we will be using decimal odds for this example. This is by far the easiest to understand and widely used odds format.

We know that the total probability is 100, so that is what we will be diving, and we will be dividing it by the percentage chance for the outcome. Say the home team has a 80% chance to win in your opinion. The odds would then be:

100/80 = 1.25

It really is that simple.

Now we need to use this to see how it stacks up with the bookmaker. If the bookmaker offers odds above 1.25, you have found value. In theory at least. Humans have a tendency to overvalue the likelihood of something happening that is perceived to be likely. In short: We think favourites are more likely to win than what they in reality are.

While practice is unlikely to make perfect, it will help you to perceive these things better. Good luck.