How Do Betting Odds Work?
Here at Honest Betting Reviews, we appreciate that some of you are experienced gamblers and know the betting world back to front.
For some of you who are newer to having a flutter however, we like to give you some help in understanding how things work and all the jargon that accompanies the betting industry. Today we have a look at how betting odds work.
Are you a little confused about how betting odds work? Perhaps you can’t quite get your head round the subtle differences between fractional and decimal odds. Maybe tote betting odds leave you out in the cold. And whatever is meant by money line odds, do I really need to know?
Here we explain in simple terms how they all work, so instead of worrying about betting odds you will be able to spend your time more lucratively picking winners.
Fractional betting odds
Traditionally, in the UK, betting odds have been, and frequently still are expressed as fractional odds. These are expressed in terms such as five to one (5/1); seven to two (7/2); and five to two (5/2). The first two of these are called ‘odds against’ bets, where the bookmaker will pay out a multiple of the stake. The third is an ‘odds on’ bet where the bookmaker will pay out a fraction of the stake. Even odds are 1/1 odds where the bookmaker will pay out exactly the same amount as the stake.
What is vitally important to remember with fractional odds is that you also get back your stake. So, if you place a winning bet of £10 at odds of 5/1, the bookmaker will pay you £50 (your winnings) plus £10 (your stake) giving you a total return of £60.
Similarly, a winning ‘odds on’ bet of £10 at 2/5 will return £4 (your winnings) plus £10 (your stake, a total return of £14.
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Decimal betting odds
Decimal odds have traditionally been used in continental Europe, Canada, Australia and New Zealand, however online betting has made them popular in the UK too. Many online bookmakers allow you to choose between decimal and fractional betting odds. A few years ago they were trialled at actual race meetings in the UK, but they proved unpopular with the punters.
The fundamental difference with decimal odds is that they already account for your stake being returned. Such odds are expressed in the format 5.20, 3.00, 1.98 and so on. Taking the first example, if you place a £10 winning bet at decimal odds of 5.20, your total return will be 5.20 multiplied by £10, which is £52.
Thus a decimal odds bet placed at 5.20 is the equivalent of a fractional odds bet of 4.2/1; a 3.00 decimal bet is the equivalent of 2/1; and a 1.98 is equivalent to 0.98/1.
- To convert decimal odds to fractional odds, simply subtract 1 and convert to a fraction. Taking the first example of 5.20, subtract 1 (5.20 – 1 = 4.2) and convert 4.2 to a fraction (42/100 or 4.2/1).
- To convert fractional odds to decimal odds, simply convert the fraction to a decimal and add 1. So, 6/4 fractional odds is equivalent to 6/4 + 1 = 10/4 = 5/2 = 2.25 in decimal odds.
If you can’t be bothered with doing the calculations yourself, just use an odds converter app on your phone.
Tote betting odds
Tote betting is an alternative betting system to the fixed betting system offered by the usual bookmakers. It is a pool betting system in which the winnings are paid out from a fund created by pooling all the money wagered on that particular type of bet at the event; generally a horse or greyhound race.
For instance, if a total of £10,000 is placed on win bets on a particular race then the pool is £10,000. Deductions are made from to pool to cover the expense of running the tote and of contributing to horse racing. Typically this is around 15%, leaving the pool with £10,000 – £1,500 = £8,500.
If a low odds favourite won, and say £3,000 had been staked on the winner, the pay-out would be £8,500 / £3,000 = £2.83 for each £1 staked. In other words, if your stake had been £10, your pay-out would be £28.30 which includes getting your take back. This is the equivalent of decimal betting odds of 2.83.
Taking another example: if an outsider won and only £400 had been staked on the winner, then the pay-out would be £8,500/400 = £25.25 for each £1 staked, which is equivalent to decimal betting odds of 25.25.
The main difference between tote and fixed odds betting is that you don’t know exactly what the odds are until after the race. While the odds are shown in decimal format on the betting screen, these are just an estimate of the final odds. In addition to betting on a win, you can also make place and each way bets.
Money line betting odds
Although rarely used in the UK, money line odds are the primary method used in the US. These simply state the actual amount you will win on a $100 winning bet, or alternatively the amount of money that must be staked in order to achieve a total pay-out of $100. In both cases your stake will be returned. In the former case the money line odds are stated using a positive number, while in the latter they are stated using a negative number, so:
Money line odds of +500 means that your winning would be $500 dollars on a winning bet of $100 which, is equivalent to fractional odds of 5/1
Money line odds of -500 mean that you would need to stake $500 for a chance of winning $100; equivalent to fractional odds of 1/5.
The important thing to remember is that:
- With fractional odds and money line odds, the fact that your stake will also be returned is implicit. They are both a statement of your actual potential winnings. Your return will include your winnings plus your original stake.
- Decimal odds already take account of the fact that your stake will be returned and are a statement of your potential total pay-out.
Be careful not to get them mixed up. Most online betting sites let you choose which to use, though it’s advisable to choose your preferred version and stick to it. If you need to convert between them, why not use an app on your phone?
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