The Math Behind Betting Odds & Sports Gambling

Sports Gambling

When you’re looking at placing a bet, you want to know that you’re going to get paid. Not all sports bets are created equally, with odds that determine your payout. Understanding the math behind your wager can help you determine if a stake is worth pursuing. Before knowing the math behind the odds, it’s essential to understand the three different types of odds. American (moneyline), fractional, and decimal represent the three formats to calculate probabilities. They are interchangeable and can convert into another.

What is implied probability?

When you’re considering the chances of a team winning, the term is implied probability. In other words, all odds will factor to a percentage in any match. This percentage is the likelihood that a specific team has of winning the game. Both percentages will total more than 100% to factor in vig. Vig is the sportsbooks percentage of you placing your bet.

Understanding How the House Always Wins

When you’re viewing the odds for any game, it’s never a true reality of the probability of an event occurring. Bookmakers will always add in a profit margin, which will pay the house for every wager. Unfortunately, for the bettor, this means you’ll always receive less than the actual probability. This profit margin is factored in as an “over-round,” which builds in the bookmaker’s profit for every wager. Often, this is calculated as a percentage, no matter which team wins.

Determining Fractional Odds

Typically used in the United Kingdom and Ireland, few bettors use this method when betting (except for horse racing). Conversions can be complicated when trying to determine the return. When trying to understand a fractional odds calculation, the fractional odds will show the win for every $1 wagered in a bet.

How to Calculate Fractional Odds

When calculating winnings on fractional odds, you’ll want to multiply your top number by your wager. Divide this result by the bottom number. For example, a $100 bet at 5/2 odds would be (100×5)/2, totaling $250. Alternatively, you can use a betting odds calculator to help you determine the payout ratio. 

Determining Decimal Odds

Used by most of the world in sports betting, decimal odds are the popular choice for calculating a game’s odds. Simply put, the decimal odds will tell you how much a bettor will win for every $1 wagered. This number includes the total return a bettor will receive, not just the profit. For example, if a team is noted as Packers 2.2 in decimal odds, you’ll be receiving a $1.20 profit in addition to the $1.00 wager.

What are American Odds?

Considered the default odds for American sportsbooks, these are based on winning any $100 wager or given bet. Odds are indicated with a positive or negative sign, depending on the favorite of the two in a match. If you’re betting on a favorite, the team will have a negative sign. This number represents the amount of money you’ll need to wager to win $100. When you’re betting on the underdog, it will be indicated by a plus sign in front. This number will represent how much money you could win for every $100 risked.

While betting the team favorite can seem like a safer option, the odds will quickly highlight how little of a payout you’re given for such high levels of risk. As such, it may pay to play the underdog, depending on your level of confidence.

What is the Bet Amount?

The bet amount is the level of risk you’re going to take for any wager placed on a game. It’s the total amount of money spent for every bet. Part of establishing the bet amount is having a solid understanding of your bankroll. A bankroll is the total amount of money you have available for betting or gambling.

Generally speaking, inexperienced bettors can be overzealous with their bankroll when first starting out. They’ll bet more on a game they love, less on a game they don’t. If they win, they may spend more. If they lose, they may try to recuperate the lost cash in another game. The most dangerous component to new bettors is unpredictability. You want to find a sustainable approach to your bankroll.

What is Flat-Betting?

Flat-betting is establishing one unit in terms of monetary value. Typically, the recommended about would be 1-5% of your total bankroll per play. Use these values regardless of game or confidence level, which provide for an even playing field long-term. This is exceptionally helpful when you’re impulsive or an emotional gambler.