Betting Basics: How do odds work?

Bookmakers offer odds on a huge range of events in football but how do they work and how can that help punters be more successful at picking winners?

Bookmaker odds relating to different football events are everywhere. Online firms now take bets on a wide variety of events; from the games themselves to next manager markets, potential transfers and seemingly everything in between.

Understanding how odds are calculated and what they mean in practice is an essential part of the toolkit for a successful punter. It underpins everything else that follows so getting comfortable with both the prices and what they represent is an important skill that's well worth learning.

How do odds work?

Odds are a way to represent probability of an event occurring. The price shown translates into a percentage chance of something happening or not. The table below shows a range of fractional odds and how they relate to the implied chances of that selection being correct.

Fractional Odds Decimal Odds Percentage Probability
7/1 8 12.50%
4/1 5 20%
15/8 2.88 34.78%
6/4 2.5 40%
Evens 2 50%
10/11 1.91 52.38%
4/7 1.57 63.64%
1/3 1.33 75%
1/8 1.13 88.89%

This allows bookmakers to set the odds for any given event - including a house edge - but also means bettors can compare their opinion to those of the person setting the prices and see what their return would be if their bet is correct at the odds on offer.

As an example, if you want to back a team to win a game at 3/1 for £1, the total returns for this selection would be £4 should they be come out on top in the match. £3 of that would be the profit that the odds suggest, plus the initial £1 stake.

The bookmakers' edge

Because bookmakers are the ones setting the prices on their own websites or in shops, they have the luxury of building in a house edge when doing so. Much like the 0 on a standard roulette wheel (or the 0 and 00 on an American one) this is their opportunity to make their advantage count.

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The amount of edge built into an event or a specific market can vary wildly across different operators and sports, but let's use football as an example. The implied percentage chances for any given set of outcomes will not add up to 100% exactly with the bookies, they build in their edge by setting prices that total more than that.

This doesn't mean that you can't make money betting on sports (or anything for that matter) but knowing the odds and what you're up against is key.

What do odds mean in terms of probability?

For example, Arsenal are 7/2 to beat Manchester City, who are 4/5 to win the same game. The draw is 3/1 with the same firm offering the former two prices in this real world example. Consider the implied percentages here.

Home win - Arsenal 7/2 (implied percentage chance of 22.22%)
Draw - 3/1 (implied percentage chance of 25%)
Away win - Manchester City 4/5 (implied percentage chance of 55.56%)

Total implied percentage chance - 102.78%.

Betting Basics - How do odds work?

That extra 2.78% is the "edge" built into this market. Match results tend to be at the lower end of this spectrum but understanding what the total percentage of a market's outcomes adds up to will help bettors understand what they're up against.

Making money on the betting markets is not impossible. There are many factors that come into whether someone is profitable or not, several of which we'll discuss more in the Betting Basics series, but it's key to know how odds work and what that means for your betting activity if you choose to get involved.

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