Sports betting is taking off across the United States. Since the end of the federal prohibition on sports wagering, several states have legalized sports betting. Providers in these states are already offering betting odds on all of your favorite events.
But if you’re new to sports betting, all the information may seem a bit overwhelming. You may be wondering how to read odds, or even how do odds work? Well, you’ve come to the right place. Check out our guide and have all of your questions on betting odds explained below.
How to Read Betting Odds
Betting odds are a measure of how likely or unlikely a sportsbook finds an event to be. The more likely an outcome is, the less you can make wagering on that outcome. Conversely, betting on the less likely outcome correctly pays much better.
Learning how to read odds is the foundation of developing a successful sports betting strategy. So how do odds work anyway? Let’s break it down in the next section with the basics of betting odds explained.
How Do Odds Work?
Betting odds are determined by a number of calculations factored in by sportsbook providers. Experts in sports betting know the answer to the question, “how do odds work?” and can use that information to decide which outcome the bookie considers more likely.
Learning how to read odds and what to use that information for will help you make successful wagers. Let’s take a closer look at some of these basic principles of odds.
Why Do Odds Matter in Sports Betting?
Betting odds matter because they tell you how much you could potentially win on a particular wager. Learn how to read odds correctly and you will be able to calculate what your exact return will be if your bet is correct.
Along with determining your payout, knowing the answer to the question “how do odds work?” will also give you some insight into how likely a sportsbook thinks a particular outcome is. There is more on that subject in the following section where we have implied probability and betting odds explained.
What’s the Most Commonly Used Format of Odds?
The standard format for printing betting odds varies depending on the sport. Football will most often be displayed with American odds, while soccer is more likely to show with fractional odds. However, on most American sports betting websites, you’ll have the option to display these odds in several formats, with American being default.
Read on to see an explanation of how to read odds in any of these formats. The variations can take some getting used to, but we’ll give you a breakdown on each format of betting odds explained.
How To Calculate Implied Probability Using Odds
By learning how to read odds, you can read between the lines and figure out how likely a particular sportsbook has determined an outcome to be.
Learning this method of how to read odds is a crucial skill in sports betting. By placing wagers on outcomes that you have determined are more likely than the sportsbook sees the outcome, you increase the value of your bets and increase your chance of getting a return on your investment.
The chance of a particular outcome occurring that a sportsbook has calculated is called the implied probability. To determine the implied probability, you must convert the betting odds into a percentage. See how to convert each format of odds to an implied probability in the following section, where you’ll see each type of the betting odds explained.
American betting odds display with a plus or minus sign followed by a number. Negative numbers indicate the favorite, while positive numbers indicate the underdog. NFL games are one sport often listed with American odds.
How to Read American Odds
So how do odds work when it comes to the American format? As stated, a negative number means the bookie sees the outcome as more likely. The number gives you how much you would need to bet to win $100 in profit.
A positive number indicates the underdog. The number shown in the betting odds tells you how much you would win if you bet $100.
To figure out the implied probability from American odds with a positive number, use this formula:
Implied probability of an outcome = 100 / (positive American odds + 100)
But how do odds work for the implied probability on negative American odds? Follow this equation instead:
Implied probability of an outcome = negative American odds / (negative American odds + 100)
Calculating Payouts from American Odds
There are two different equations to calculate your payout with American odds. Calculate your winnings on a positive American odds payout, solve for x with the following formula:
100 / odds = wager / x
If the odds are negative, use this equation instead, where x represents your winnings:
Odds / 100 = wager / x
Fractional odds, as you might expect, display with one number over another number. The numbers are separated by a slash or hyphen. UK and Irish bookmakers favor this format, making it a common sight on soccer betting odds.
How to Read Fractional Odds
If you’re wondering, “how do odds work with the fractional format,” the top number indicates how many times a bookie predicts the outcome will fail. The bottom number shows how many times they expect it to succeed.
For example, if the Patriots are given 1/2 odds, the bookie predicts they will win the game two times out of three.
Determine the implied probability of an outcome using fractional odds with the following formula:
Implied probability = denominator / (denominator + numerator)
Calculating Payouts from Fractional Odds
Want to know how do odds work for payouts with the fractional format? Use this equation:
Winnings = wager x (numerator / denominator)
Decimal odds appear with a whole number followed by a decimal. This format is used in many sports internationally. You may see these odds on global events like the PGA tour, tennis tournaments, or the Olympics.
How to Read Decimal Odds
Seeing just a decimal number may seem confusing if you’re still figuring out how do odds work. However, this format is really the most straightforward when it comes to how to read odds.
The decimal shows how much profit is paid for every dollar on a correct bet. Favorites have a lower number, while underdogs have a higher number.
Here is the equation for calculating the implied probability on decimal betting odds explained:
Implied probability = 100 / decimal odds
Calculating Payouts from Decimal Odds
So how do odds work when it comes to payouts on decimal odds? Use this simple formula to calculate your winnings:
Your winnings = (wager x decimal odds) - wager
Where to Place a Sports Bet?
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Types of Betting Odds
Now that you know how to read odds a little better, let’s take a look at the different types of wagers. So how do odds work when it comes to these different types of bets? Read on to see each type of betting odds explained.
A moneyline is one of the simplest kinds of betting odds explained in this guide. Here you are simply betting on a result of a match, whether that is one team winning or the game ending in a draw. As long as you pick the correct outcome, this bet will payout for you.
These bets can be found for any sport, but are most common in low-scoring games like baseball, hockey, or soccer.
Point spread bets are popular for many sports. With these betting odds, you are wagering on whether the favored team in a matchup will not only win, but win by more than the number of points that the provider is estimating. This estimate is called the spread.
You can figure out how to read odds with point spreads by taking a look at the number shown next to the odds. For instance, if you see Dallas Cowboys +7, you are betting on whether or not the Cowboys will win their game by more than 7 points.
Sometimes referred to as an over/under, these betting odds are wagers placed on whether the total score between both teams in a game will be higher or lower than what the provider predicts.
You place a wager on whether the total score between the two teams will be higher or lower than the total offered. Learning how to read odds like these and predicting what games will be high scoring are crucial skills as a sports bettor.
All of the previous wager types are bets placed on single events. Parlays involve taking multiple bets and bundling them together. This increases the potential payout for each wager, but also comes with an added risk. If even one of your bets is incorrect, you lose the entire parlay wager.
Just like in all the betting odds explained in this guide, the higher your risk, the higher your potential payout. Use parlays to string together several bets and, with a little luck, you could be in for a big payday.
Teasers are similar to parlays in the sense that they bundle multiple wagers together, affecting your overall betting odds. However, while parlays are for moneyline bets, teasers allow bettors to “tease” the point spread by a few points across the board, which can adjust your risk and make for a easier-to-hit multiple.
So far, the different types of betting odds have all been wagers on single events within the upcoming week or two. Futures are wagers placed on, you guessed it-- future events. For instance, you might place a future bet on the Red Sox winning the World Series or The Lakers bringing home an NBA championship ring.
Predicting these events so far in advance is difficult, so learning how to read odds like these can give you some of the most lucrative payouts in sports betting.
Wondering how do odds work? Here’s a quick reference for some common questions on betting odds explained.
Are the odds different depending on the sport?
Odds may be displayed differently depending on what the standard is for a particular sport. Refer to our guide’s section on American, fractional, and decimal odds to see different types of betting odds explained.
So how do odds work in different sports? Though the format they’re shown in and the calculations that determine your winnings change, betting odds are always a measure of how likely a sportsbook finds an outcome.
How can I calculate my potential winnings?
Having knowledge about the raw math behind betting odds explained is useful, but of course you want to know about your potential payout too. But there’s no simple answer. Each different format for betting odds will have a different formula for calculating your winnings.
Check out the earlier parts of this guide to see the different formats of betting odds explained and learn how to estimate your potential winnings.
Who sets the odds for sports betting?
After all these complex calculations, it’s common to wonder how do odds work anyway? The truth is each individual provider sets their own odds, with the advice of expert statisticians and their data.
Because each provider will have different offers, it’s important to learn how to read odds. This way you know what to look for when you’re shopping around for the best odds.
Having these fundamental principles of betting odds explained is the first step to making successful wagers.
Following the tips in this helpful guide can take you from wondering, “how do odds work?” to understanding how to bet successfully. Remember how to read odds and the formulas for determining the implied probability from each. Once you have that implied probability, you can place your wagers accordingly.
There’s always luck and chance involved in sports betting, but understanding how to read odds helps you make an informed bet. If you believe an outcome is more likely than the implied probability, you have an optimal chance of winning a return on your wager.
Now that we have the different aspects of betting odds explained, the only thing left to do is to start placing your wagers. Good luck and happy playing.
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