# Betting Odds Explained

If you want to bet on sports, you better get used to the word ‘odds’.

You need to be able to read odds, compare them, and understand how much you can win for the amount of money you’re risking.

They’re that important.

But if you don’t understand odds yet, that’s okay, because we’re going to cover them in detail below. We’ll answer these specific questions:

- How do bookmakers set their odds?
- Why do odds change?
- Why are punters at a disadvantage?
- How do you read American, fraction and decimal odds?

Let’s get started.

## How do bookmakers set their odds?

Bookmakers set odds based on two things:

- Probability of each outcome (using experience, trends, current stats, etc).
- His own margin.

Let’s start with the probability of each outcome. We’ll use a football game as an example.

England – 60%

Drawn – 20%

France – 20%

Total Probability – 100%

Pretty straightforward, eh? There are 3 outcomes, and these are the odds the bookmaker gives each one.

Next he adds his margin (aka profit).

Each bookmaker will have a default margin they use. It might be overall, or based on a specific sport, match or event. The margins could even be swayed by the public.

Typical margins hover around 105-107%. It just depends on where you place your bets.

Here’s what the finished odds for that football might look like with the bookmaker’s margin tacked on:

England (to win at odds of 1.54) – 65%

Drawn (to win at odds of 4.12) – 24%

France (to win at odds of 5.55) – 18%

Total Probability – 107%

Make sense?

It’s for this reason that you’re automatically at a disadvantage every time you bet. Since the bookie adds a commission the bet is no longer even money on a coin flip. You’re not 50% to win/lose anymore, but more like 53-60% to lose – which is a hurdle you’ll need to overcome to be a profitable bettor.

One other thing worth noting – if you find that the margin is around 107% online, know that with a bit of research you can find smaller margins elsewhere (at reputable books).

## Why do odds change?

The simplest reason is because the bookmaker needs to action on both sides to be even in order to make a profit.

For example, say Team A has odds of -1.40. You’ll wager 140 to win 100.

Team B’s odds are +120. You’ll wager 100 to win 120.

Say 2 people place a bet, one for 140 on Team A, the other 100 on Team B.

Now, let’s assume Team B loses (they were the underdog after all). So the bookie collects 100 from him.

But he still has to pay out the guy who bet on Team A. He owes him 100 bucks. Ultimately, he breaks even on this game.

If the action was too heavy on Team B, the bookmaker could face a devastating loss. And it does happen.

But to discourage that from happening, if the bookmaker noticed too much action on Team B, he’ll adjust the odds to encourage more action on Team A.

That way he doesn’t find himself too deep in the hole (preferably not at all).

Of course, had the game gone the other way, the bookmaker would’ve collected 140 from Team A. Then he’d have to pay 100 to the guy who bet on Team B, which would’ve resulted in a +40 profit (to the bookie).

The bookies goal is to have more days where he collects a profit than breaks-even, or loses …just like you.

## How do you read American, fraction and decimal odds?

Sportsbooks list odds in 3 different ways. Most books will let you pick how the odds are listed – which you’ll choose based on what’s easiest to read/understand.

Most people will say that the easiest to read/understand are decimal odds.

But you can look at all 3 (with examples) and determine that for yourself.

### American Odds

These are written in whole numbers with a plus (+) or negative (-) sign in front of them.

For example:

Team A: +120

Team B: -140

The plus sign means the team is an underdog, and that you’ll need to bet $100 to win the amount shown. In this example you’d bet $100 to win $120.

Negative signs mean the opposite. The team is an underdog, and you’ll need to bet the amount shown to win $100. In this case you’d bet $140 to win $100.

### Fractional Odds

These are used most in the UK. They’re written as fractions.

For example: 1.5/1

This would read like this: You bet $1 to win $1.50.

### Decimal Odds

These are simple to read. These are just probabilities turned into percentages. All you do is take 100% and divide that by the probability of an outcome.

For example, say the outcome is 50%. You’d do this: 100% (total) / 50% (this outcome) = 2.0

Let’s look at one more example…

Say the probability to win is 65%. The math would look like this: 100/65 = 1.54

Every unit you bet will earn you 1.54 units (using the example above). If your unit is $1, then if your bet wins, you’ll win $1.54.

Simple, eh?

## Conclusion

Like I said, odds are everything in betting.

Just re-read this page if you still don’t see it yet.

For example, now that you know why sportsbooks’ odds shift (all the time), you should now understand the importance of trends, stats, research, etc., as well as the importance behind line shopping.

And since you know how to read odds, you should be able to line shop and choose odds that will lead to the most profit should your bet(s) win.

Right?

And it’s all because you understand how sports odds work.