It is very unlikely that you have found your way to this page if you have never had any contact with odds, however that doesn’t mean that you completely understand what they are representing.
Odds are normally presented in one of three ways; Fractional (3/1), Decimal (4.0) or American (+300). Now although the format may be different they are all telling you that if you place a 1 unit bet you will get 3 units back as profit, plus your stake for a total of 4 units. The other less obvious piece of information we are being given is that there is an implied 25% chance of you winning that bet. For fractional the return is pretty self explanatory as the fraction represents the multiplier for your stake as profit. So for 3/1, your return would be;
(3*Stake + Stake)
For Decimal, it is even simpler as it is your total,
American Odds are slightly different as they have a positive and negative state. If the odds shown are positive (e.g +300) then that is the amount you would win of a 100 unit bet. However if the odds are negative (e.g -150), then this is the amount that you would need to bet to win 100 units. Now this is normally given to you on any betting site but is worth knowing the calculation if wanted to develop a staking plan.
Now coming back to the ‘implied probability’. This an important piece of information and pretty much what all betting is built on. This is called ‘implied probability’ because the likeliness of an event happening that is offered by a bookmaker will have an added percentage to the selection to make sure that they can make money off it. This is sometimes called overround or vig. We will be coming back to this concept in a later post.
It is important to know how to calculate the ‘implied probability’ as this will give you more information before making your bet, than just the return. For fractional odds the formula is very simple;
if Fractional odds = (x/y) then;
Implied probability = y/(x+y)
So in the example above of 3/1;
Implied probability = 1/(3+1) = 1/4 = 25%
For Decimal it is even easier. If Decimal odds = x then;
Implied probability = 1/x
So in the example above of 4.0;
Implied probability = 1/4.0 = 1/4 = 25%
Again due to American odds having two different states, they require two formula for calculating the probabilities. For positive American x, it is;
Implied probability = [100/(x + 100)] * 100
For our example of +300, this would be;
Implied probability = 100/(300 + 100)*100 = 100/(400)*100 = 25%
To find the probability from negative American odds, x;
Implied probability = [x/(x +100)] * 100
For the negative state we only use the value not the sign. Using -200 as an example;
Implied probability = [200/(200 +100)] * 100 = (200/300) * 100 = 66.67%
Now you understand how to find your return and the implied percentage that you bet at it should be easier to find good betting opportunities. Later we will be covering hwo to convert odds from one format to another.