If you’re new to betting, one of the first things you should do is learn how probability works (and influences betting odds).
It’s critically important because it allows you to understand how likely an event is to happen, and what your potential winnings will be. At first, it may appear confusing, however, read this guide and all will come clear…
What is Probability?
On the most basic level, the probability is a reflection of the chance something will happen. Betting odds are usually a close reflection of probability.
For any given event, there are a certain number of outcomes. Take rolling dice for instance. If someone rolls a dice, there are six possible outcomes. Therefore, if you bet that the person rolls a ‘one’, there is a 16.67% chance that will happen (1/6). What betting odds merely do is present how likely the event is to happen (less their profit margin).
Bookies in the UK generally do this as a fraction, i.e. 4/7. However, the vast majority also offer the ability to view them as decimals now.
Let’s talk through some probability comparisons…
Betting Odds Converted into Probability:
Whenever you see two numbers separated by a trailing slash, i.e. 10/1, this is known as fractional betting odds. From this, you can calculate how likely a given event is to happen with a calculation. For ease of explanation, let’s replace the numbers with letters i.e. 4/1 becomes A/B.
Here is the calculation:
Probability (%) = B / (A+B).
- 9/1 can be calculated as 1 / (9 + 1) = 0.10 – a 10% chance that the event will happen.
- 4/1 can be calculated as 1 / (4 + 1) = 0.20 – a 20% chance that the event will happen.
- 1/1 can be calculated as 1 / (1 + 1) = 0.50 – a 50% chance that the event will happen.
- 1/4 can be calculated as 4 / (4 + 1) = 0.80 – a 80% chance that the event will happen.
Hooray! We’re making progress. Given a fraction, you now know the conversions between fractional betting odds and probability.
Now let’s see how much money can be won using betting odds…
How Betting Odds Are Used to Calculate Winnings:
Betting odds allow you to calculate how much money you will win if you make a bet. Let’s use the same examples as before, with the same replacement of numbers for letters, i.e. 4/1 becomes A/B. Quite simply, for every value of B that you bet, you will win A, plus the return of your stake.
- 9/1 for every £1 you bet, you will win £9.
- 4/1 for every £1 you bet, you will win £4.
- 1/1 for every £1 you bet, you will win £1.
- 1/4 for every £4 you bet, you will win £1.
What About Other Formats?
Decimals are far more common on exchanges, such as Betfair, but all leading betting sites do give you the option to view betting odds in this format. They are an alternative to seeing betting odds in the fraction format, and in our opinion, are easier to work out.
Here is the calculation:
Winnings = (odds * stake) – stake.
Let’s illustrate the point with some examples…
- 9.0 can be calculated as (9.0 * £10 stake) – £10 stake = £80 winnings.
- 4.0 can be calculated as (4.0 * £10 stake) – £10 stake = £30 winnings.
- 2.5 can be calculated as (2.5 * £10 stake) – £10 stake = £15 winnings.
- 1.25 can be calculated as (1.25 * £10 stake) – £10 stake = £2.50 winnings.
What Betting Odds Format is Best?
There’s a quick article specifically about decimal odds here.
In truth, one isn’t better than the other but there is certainly a trend emerging towards decimal odds. Historically fractional odds were used in the UK, especially on racetracks and on the high street. There are two key differences. Generally, decimal odds are easier to understand. Based on this, there has a movement to attract more people to horse racing by making it more accessible to the average punter. Ten years ago, if you were going to Cheltenham, all the odds would be displayed as fractional odds. Now, they’re regularly all in decimals across the internet.
The second difference between the formats is that fractional odds only represent winnings, and do not include the returned stake compared to decimals which do include the stake. The transition from fractional odds to decimals largely kicked off with the growing popularity of the betting exchanges such Betfair. For odds to change slightly, it’s really difficult to marginally increase or decrease the probability without creating large fractions which are hard to compute for the punter.
SUMMARY: Betting Odds & Probability
It doesn’t really matter which format you prefer, but betting odds are a direct implication of an event’s probability. On a betting exchange, the winner pays a small commission which is what makes them a better proposition that a bookmaker in the vast majority of cases. Either way, if you want to beat a bookmaker (or anyone on an exchange) you need to get your bets matched at prices superior to the events true probability.
Reality is; you don’t need to be the next Einstein and start crunching probabilities to win – it’s far easier if you get busy on the bonuses they offer!
That’s it! Hopefully, that clears up betting odds. You should now have the knowledge to read betting odds, understand how likely it is to happen, and how much you could win…