Understanding odds and the value offered is a key part of the enjoyment of betting. Odds can be presented to you in different formats and enable you to determine the probability of a winning outcome which is important in the decision to play or just watch. Our guide will help you to understand how odds are formed.
A simple way of looking at fractional odds is:
______ = _____
A price of 4/1 would return £4 profit from a £1 bet, with your stake being returned.
It is easy to work the simple fractions out but when we look at odds of 11/4 or 28/5, not only does it become harder to work out the return from a £1 bet it can also be harder to understand which price is actually bigger. Using decimal odds can make this process easier and his now the most widely used format.
For many, decimal odds are easier to understand. This is because you simply multiply the odds by your stake to see what the return would be. You then deduct your stake, and you are left with the profit. Using the previous examples
4/1 as a decimal is 5.0 and 11/4 as a decimal is 3.75
3.75 – £1 x 3.75 would return £3.75, giving you a profit of £2.75
American odds always use a baseline figure of $100.
A minus sign ( – ) represents the favourite with a plus ( + ) for the underdog. When backing a favourite the number represents the stake you would need to risk in order to win $100. If you chose to back the underdog the number shown represents the amount you would win if you staked $100.
You do not have to stake $100 when using American odds, it is simply a baseline figure used to help you calculate your potential returns.
Odds represent the probability of an outcome. Understanding the chance you have of winning is an important part of betting.
Implied Probability = 1 / decimal odds
Let’s look at the probability of a 7.0 (6/1) shot has of winning:
1 ÷ 7 = 0.142 x 100 = 14.2%
We can now see the bet has a 14.2% chance of winning. Now you know the chance you have of winning you are better placed to decided how much you wish to stake on it.
When placing a bet, you are spending money with the chance of winning more in return. This is what makes gambling exciting. To maintain that excitement, we must make sure the risks we take are balanced out with an understanding of the likelihood of the bet winning and whether you should play or simply watch the event unfold.
Staking should be in line with the risk factor that you have identified. Ask yourself this. Would you go into a restaurant and pay £100 for a meal you were told had a 60% chance of giving you a positive experience?
The answer is probably no, however £5 may represent a risk worth taking. This can be applied to betting and is a great way to control your bankroll.
When you think something is a certainty you will rightly be disappointed if it doesn’t win, the problem comes when we place a much higher expectancy on something winning than the actual probability of the odds we have backed it at.
When we view a bet as if it can’t lose this can lead to making poor decisions with your stakes which could result in you losing more than you intended to play with.
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