How Betting Odds Work – Ultimate Guide

how do betting odds work
  • Learn the basics of sports betting from this user friendly guide.
  • Knowing how to read odds and understand them is essential.
  • We list the different types of odds, including Fraction, American and Decimal.
  • Learn how to calculate odds and how to convert odds to probability.
  • Odds are important to indicate the chances of your placed bet winning or losing.

If you are new to gambling or would like to brush up on your current knowledge this comprehensive guide is an important place to start. It’s crucial that all gamblers understand the different types of betting odds and how to read betting lines correctly. Then they can be applied to individual sports via our sports betting guide section.

How To Read Betting Odds

First off, odds can be displayed in a number of different ways, depending on your region or sport. The main three odds tend to be American (+250), Fractions (2/5), and Decimal (3.50), the implied probability of these odds when converted equates to 28.57%.

Here is a table that highlights the difference between American, Fraction & Decimal displayed odds.

AmericanFractionDecimalWhat does this mean?
(+250)5/23.50Place a $1 bet to return $2.50 winnings + $1 stake you put down.
(+300)3/14.00Place a $1 bet to return $3 winnings + $1 stake you put down.
(+550)11/26.50Place a $1 bet to return $5.50 winnings + $1 stake you put down.

Know we know how odds work let’s see what the differences are between American vs Fraction odds.

American Odds Explained

American Odds as the name suggest are most popular among American sports and sportsbooks located in the US. They can also be referred to as Moneyline odds in particular for UFC, Boxing and NFL lines .

The simplest way to know who’s a favourite vs an underdog with American Odds is indicated by a minus (-) and plus (+) symbol.

FighterMoneyline odds
Conor McGregor-185
Donald Cerrone+155

Since there is a minus next to the moneyline for Conor McGregor he is the favourite. The easiest way to calculate how to make $100 profit, is to bet $185 which would payout $100 plus the $185 stake you put down.

For Cerrone as an underdog we prefer to operate in $100 or $10 units. Bet $100 on Cerrone to make $155 profit, for a total payout of $255.

Fraction Odds Explained

Fraction odds are more common among Irish and British bookmakers. They are typically represented with a “/” or “-“. A simple way to calculate fraction odds is.

Total Return = [Stake x (Numerator/Denominator)] + Stake.

TeamFraction Odds
Tottenham Hotspur5/1

In the case of Liverpool who are heavy favourites you would have to wager $20 to make a profit of $10 plus your stake back for a total of $30.

Tottenham Hotspur are the underdogs here, that means you get a higher return for the amount you bet on. A $10 bet on Tottenham would result in a $50 profit, plus your $10 back for a total of $60.

Decimal Odds Explained

Decimal Odds are the rarest form of betting odds you will see. However they are pretty simple to calculate. The decimal odds number represents the amount one wins for every $1 wagered. For decimal odds, the number represents the total return, rather than the profit.

FighterDecimal Odds
Andy Ruiz Jr3.25
Anthony Joshua1.36

Andy Ruiz Jr is the betting underdog at 3.25, bet $10 on Ruiz to win 22.50 for a total payout of $32.50.

Anthony Joshua is the favourite here at 1.36, that means for every $10 bet you can profit $1.36. That may not seem much but think about it if it’s a $100 bet that’s a $36 profit.

Below is an example of how decimal odds can be calculated. The total (potential) return on a stake can be calculated as:

Total Return = Stake x Decimal Odd Number

Implied Probability Explained

Now we are making progress! Let’s go one step further to complete the picture on how to understand betting odds with the fundamental concept of odds vs probability. Implied probability in sports betting is simply the conversion of traditional odds into a percentage.

Converting odds to probability is one of the most useful tools for knowing the likelihood of an event occurring. For example if you were to bet on the outcome of a specific number showing up on a dice roll, it would be one in six chances of that occurring. That’s 6/1 in Fraction Odds or +600 in American Odds, converting those odds to probability equals to 16.67%.

Converting Betting Odds to Calculate Winnings

It’s important to know that implied odds recognize bookmaker margin to express the expected probability of an outcome occurring.

Converting American odds to implied probability

When converting American odds to a percentage for implied probability, there are two instances one for the positive and for negative which require separate calculations.

Formula for Converting negative American odds
Negative American odds / (Negative American odds + 100) * 100 = implied probability

To calculate a negative American moneyline of -250. Simply add 250 and 100 and divide the total sum from 250, which equals 0.71 and multiple by 100 = 71%.

Formula for Converting positive American odds
100 / (positive American odds + 100) * 100 = implied probability

To calculate a positive American moneyline of +250. Simply add 250 and 100 and divide the total from 100 which equals 0.28 and multiplied by 100 = 28%.

Converting fractional odds to implied probability

Manually calculating fraction odds to implied probability is quite simple with the use of this useful formula below.

Formula for converting fraction odds to implied probability
denominator / (denominator + numerator) * 100 = implied probability

If you had a team at 5/2 odds, add the two numbers together 5+2 = 7 and divide that by the number on the right 2, then multiple that by 100. For example 2 / (5 + 2) * 100 = 28%.

The Bottom Line

All betting odds including American, Fraction and Decimal ultimately serve the same purpose. Implied probability is an essential aspect of sports betting, once you have the odds you can figure out the implied probability of an event happening. 

We hope this guide helps explains how to read betting lines in a more user friendly way. If you have any further questions please drop us a line via out contact form and be sure to check out our list of online sports betting sites prior to gambling.

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