Betting Odds Explained – What do You Need to Know?

Posted by Harry Kane on Friday, March 11, 2022

Despite continual talk about problem gambling in the UK, the average Brit wagers just £2.57 per week, with this equating to an annual spend of barely £133. While gambling largely remains a fun and casual pastime for the vast majority of gamblers, however, there is a serious side to this endeavour.

More specifically, even casual gamblers like to win once in a while and see some sort of return on the bankroll, but this can be challenging given that some 98% of players are thought to lose money regularly over time. To win once in a while, you’ll need to understand betting odds and how they function, in order to help determine value in listed prices and how they relate to probability. So, let’s get into it!

Probability and Odds – Understanding the Relationship

When you see the odds displayed by sportsbooks (especially in fractional form), you’re witnessing the ratio two that exists between two particular parties in relation to a particular bet, event or outcome. For example, let’s say that the Brazilian football side is priced at 5/1 to win the 2022 World Cup. In this case, the odds reflect that the sportsbook (or first party) is willing to lay five times the amount staked by a bettor (or second party) that this particular outcome won’t happen.

This ‘lay’ wager provides the necessary counter to your ‘back’ bet, while the sportsbook will pay out at the ratio of 5/1 if Brazil do win the World Cup and your selection is successful. If you lose, your stake will be lost and the wager removed from your bet slip forever. But how exactly are odds formulated by sportsbooks? In general terms, they’re based on the idea of probability, depending on the participating parties, home advantage (where applicable) and the number of outcomes in play.

Odds are then structured and balanced to provide an incentive to punters, as bookmakers strive to create equal betting volume in relation to both (or all) sides of a targeted wager and generate a premium of between 5% and 10% per bet.

Although this doesn’t provide a completely accurate insight into probability, the prices published by operators are somewhat useful and can be incorporated into a specific formula to help demonstrate the likelihood that an outcome will happen. This can be defined as ‘Probability (%) = B / (A+B) (with A / B reflecting the odds ratio in play).

Using the previous example of Brazil’s World Cup winning odds of 5/1, the probability can be calculated here as ‘1 / (5+1) = 0.167’, meaning that Seleção have an estimated 16.7% chance of lifting the Jules Rimet trophy.

Calculating Winnings – Is Your Bet Worth the Risk?

Not only can odds help us to understand the probability of a particular event or outcome, but they also provide an insight into your potential winnings. This can further inform your betting decisions and help you to create bet slips that simultaneously minimise the risk of loss while boosting potential returns.

For example, if we use the same example from above and replace the A / B values with the live odds of 5/1, you can immediately see that you’ll recoup ‘A’ for the value of every ‘B’ that you wager. So, let’s say that you place a £10 bet on Brazil to win the Qatar World Cup at odds of 5/1. In this instance, you’ll earn £50 in relation to a successful wager, while the return of your stake will create a total win worth £60.

This is where the incentive comes into play, as this represents a healthy return on a relatively small and nominal stake. However, the potential return will dwindle when backing shorter-price favourites, as the level of risk involved also depreciates and the probability of your bet coming in increases.

If you wanted to back tennis star Novak Djokovic to win the upcoming Wimbledon Championships, for example, an average price of 5/6 means that you’ll only recoup £5 for every £6 staked. To provide further context, even a hefty £30 wager will mean that you’ll only win £25 if successful, while a total payout of £55 offers less of an incentive to punters.

Of course, hiking your stake amount can increase returns when backing a short price favourite of this type, but this also maximises your potential loss in the event of the bet turning against you. Regardless, odds can be used to identify probability and inform your exact stake amount, ensuring that you make informed selections at all times and create a more comprehensive betting strategy that’s fit for purpose.

The Last Word – Can Odds be Used to Your Advantage>

The question that remains, of course, is can you actually leverage published odds to your advantage as a punter? The short answer is yes, with a few options available depending on your precise betting activity and preferred level of risk. These include:

#1. Consider Handicap Betting

: One option is handicap betting, which can be used to put a short price favourite at a theoretical disadvantage and increase the odds accordingly. You can subsequently tailor your selection and the extent of the handicap to boost your potential returns without overly compromising your chances of winning, creating additional and much-needed value in the process.

#2. Use Accumulator Betting Wisely

: On a similar note, accumulator betting enables you to include multiple selections in a single wager, the odds of which are multiplied to create a single, extended price. All of the selections must win for the wager to be successful, so we’d recommend limiting your number to six and prioritising short price favourites. This way, you’ll strike the ideal balance between managing risk and optimising rewards.

#3. Consider Matched Betting

: Then you have matched betting, which requires the use of free bets to place a ‘back’ wager while simultaneously laying the opposite bet at an exchange. When betting on the result of a tennis match, this guarantees some form of return as you’re covering both potential outcomes, while you’ll only have to commit a single stake. However, it’s crucial that you target events with two outcomes and where the draw is eliminated (where possible), while ensuring that any potential payout delivers a return on your stake.