In a typical betting scenario, you will open a betting site, select one or more matches you are familiar with, enter a bet amount and click “Bet”. While this is the standard process for wagering online, turning it into a profitable one takes more effort. Besides a basic understanding of the games, you must be adept in reading and calculating sports betting odds. Here is a breakdown covering how you can calculate odds to determine your payout in all formats.
What is Probability?
Before you calculate betting odds, it is crucial to understand probability. Probability is the likelihood of a predicted event occurring. Probability is like a coin toss, where heads or tails determine the possible outcome. The possibility of heads or tails showing is one in two chances, and the likelihood is presented mathematically as 1/1. These odds show there are equal possibilities for both outcomes.
Calculating Implied Probability with Betting Odds
Implied probability is the chance of a team winning according to the betting site and is shown in percentage. Analysing the decimal, american and fractional odds help bettors determine their favourite and implied probability with simple maths.
- Decimal Odds
When using decimals to calculate betting odds, the preferred outcome is always the one with the lowest odds. For example, in a cricket match, Team A has 1.51 odds, and Team B has 5.70 odds. Team A will likely win the match, and you can use these odds to calculate implied probability.
The equation is broken down as follows –
(1/decimal odds) x 100 = Implied Probability
Therefore, the implied probability for Team A is (1/51) x 100 = 66.3%.
- American Odds
How are odds calculated for American odds? This format uses positive (+) or negative (-) signs to denote a favourite and underdog team. Calculating the implied probability for American odds takes a different approach from decimal odds.
The equation for negative odds is – odds/(odd-100) = Implied probability. Therefore, if Team A has odds of -196, the formula is -196/(-196-100) = 66.2%.
The equation for positive odds is; 100/(odd + 100) = Implied probability. Therefore, if the odds for Team B to win are +470, the formula is 100/(470 + 100) = 17.5%.
- Fractional Odds
It is advisable that players first calculate the implied probability to determine the winning team when using fractional odds. After that, they pick the outcome with the highest percentage chance as the favourite. Using the same example mentioned above, here is a representation of how to calculate the fractional betting odds –
Team A 0.51/1 and Team B 4.7/1, and only one equation is used in calculating the probability;
Denominator/(numerator + denominator); for Team A, 1/(0.51+1) = 66.2% and for Team B, 1/(4.7+1) = 17.5%.
Calculating Potential Winnings with Betting Odds
Now that you understand how to calculate betting odds and determine the preferred team by calculating implied probability, it is time to calculate potential winnings.
- Decimal Odds
To determine your total payout in the decimal odds format, multiply your stake amount by the odds. Subtract your initial stake from the total winnings to determine profits. For example, if you wagered Rs 1000 on Team A, multiply your stake by 1.51 to get Rs 1510. Your total profit after subtracting the stake is Rs. 510.
- American Odds
American odds represent how much amount you must stake to win Rs 100 or how much you may lose if you bet the same amount. How are odds calculated? If this is your question, the (+) or (-) before the odds show you the formula to follow. Here is the payout calculation process as per the above-mentioned example.
Team A has -196 odds, meaning you must wager Rs 196 to win Rs 100 plus the original stake. Now let us calculate the winnings using a Rs 10,000 stake.
Cross multiply 196/100 = 10,000/X to get 196X=1,000,000, then calculate to find “X”.
X = 1,000,000/196
X = 5,102
Therefore, if you bet Rs 10,000 on Team A, your total payout would be Rs 15,102, which gives a profit of Rs 5,102.
If you bet on Team B with 10,000 and it has a positive (+) sign on the stake, use this formula –
Cross multiply 100/470 = 10,000/X to get 100X = 4,700,000 and solve for “X”
X = 4,700,000/100
X = 47,000
Therefore, if you bet on Team B to win, your total payout would be Rs 57,000, where the profit is Rs 47,000.
- Fractional Odds
How are odds calculated for fractional odds? If the betting site uses fractional odds, multiply the quotient of the odds (numerator/denominator) by your stake. Using the same example of Team A and Team B, your odds would look like this; Team A 0.51/1 and Team B 4.7/1.
If you bet Rs 10,000 on Team A: 10,000 (0.51/1) = 5,100, your total payout will be Rs 15,100 with a profit of Rs 5,100.
Understanding betting odds, implied probability, and their correlation to payouts puts you in a better position to create value betting on sports. While you calculate betting odds to determine your winnings, bookies do it to improve their profits. They hand these jobs to professionals who ensure the business does not suffer losses.