How Sports Betting Odds Work (Odds Explained for 2021)

In sports betting, odds serve two purposes. The odds give bettors information about the probability of a particular outcome. The odds also indicate the amount of money involved in a given bet.

Sports betting odds work because they appear in a standard format, giving the same kind of information in the same way no matter where a wager is placed. Three different odds standards exist. These different odds styles are each used in a specific part of the world, owing to differences in popular sports and cultural tradition.

Understanding how to bet on sports means understanding and being able to use at least one of the three popular odds formats, though once a person understands how to read one style of gambling odds, the other styles are easier to learn and use.

Sports Betting Odds Explained

Below is a guide to each of the three main gambling odds formats.

American-Style Betting Odds Explained

American-style betting odds are so named because this is the format preferred by US sportsbooks. They’re also called “money line odds.”

US odds indicate a team is a favorite by using a minus sign (-), and the number following that sign indicates the amount a bettor has to stake in order to win $100. Underdogs are indicated in American odds with a plus sign (+), and the number following that sign indicates the amount a bettor would win for every $100 they wager. The likelihood of a favorite’s win is displayed using a widening difference between the odds for the underdog and the favorite.

Here’s an example of American-style betting odds:

Atlanta Braves -175
New York Mets +155

This set of odds tells us that the Braves are favored on the road against the Mets – the home team is always listed on the bottom. We can also see that a successful $100 bet on the underdog Mets would pay off to the tune of $155, while it would take a stake of $175 for a bet on the favored Braves to pay out $100.

There’s a fairly big difference between the odds for the Braves and the Mets, which indicates that the book is confident about their selection of Atlanta as the eventual winner.

British-Style Betting Odds Explained

British-style betting odds are popular with UK-area oddsmakers, including those in Ireland and Scotland. Sometimes called “fractional odds,” they represent odds with fractions. Generally speaking, fractional odds are the most popular globally, thanks to the influence of the British Empire as sports betting expanded around the world.

Fractional listings are just as easy to read as money line odds. For example, a fractional listing of 5/1 is read “five to one,” and it means that a bettor would win $5 for every $1 wagered. The fractional odds represent the ratio of your profit to your initial bet.

A fractional bet of $10 at 6/1 odds would lead to a total payout of $70 if successful – that’s $60 profit from the successful wager plus the bettor’s initial stake returned.

Using the same contest from above, let’s look at a real-world example of British-style odds:

Atlanta Braves 4/7
New York Mets 31/20

Here, you can tell right away that the Mets are the underdog, thanks to the fact that their fraction is “upside-down,” with a larger top number than bottom number. You can also see that a bet on the Braves isn’t as lucrative as a successful underdog bet, since you’re only winning $4 for every $7 you bet.

Working out the actual money amounts involved in a bet is a bit more complicated using fractional odds. A calculator may be necessary, for example, to work out how much a successful $100 bet on the Braves would pay out – $57.12, but who could work that out on the fly in their head?

Euro-Style Betting Odds Explained

Sometimes called “decimal odds,” Euro-style betting odds are the most popular way to represent sports bets in continental Europe, Australia, Canada, and parts of Southeast Asia. Bettors who prefer decimal odds do so because of their ease of us. It’s simple to work out favorites and underdogs and work with decimal odds and gambling money amounts.

Euro-style betting odds represent the amount of money a successful bet wins for every $1 bet. The number shown in decimal odds represents a bettor’s entire payout, rather than just profit, as other betting formats show. Since a bettor’s stake is already included in the decimal odds figure, some bettors say that payout calculation is easier in decimal odds. To work out a potential total payout, a bettor just has to multiply the decimal odd number by their stake.

Let’s use the same baseball game example from earlier and look at an example of decimal odds:

Atlanta Braves 1.571
New York Mets 2.55

Those numbers indicate the amount a person wins for each $1 wagered – obviously, the bigger payout goes to the longer odds proposition. In this case, it’s obviously less likely that the Mets will win, since their payout is significantly higher than the payout for a winning Braves bet.

Do the math and check – if I bet $100 on the Braves and they pull off the win, my take is $100 x 1.571, or $157.10. The same bet on the Mets, if it pays off, would reward a bettor with $100 x 2.55, or $255. Want to figure out how much of that is profit? Subtract your stake from your win – that’s $57.10 in profit for a winning bet on the Braves, and $155 for the successful Mets backer. Clearly, the book predicted and favored a Braves win, rewarding the longshot Mets bettor with a bigger payout.

 

How do Oddsmakers Set Odds?

It’s all about balance.

Bookmakers are the opposite of gamblers. They don’t want to pick sides, betting on one outcome over another. They’d much prefer to set their odds in such a way that they’re ensured a profit no matter how a particular game plays out. It’s important for oddsmakers to represent something close to a real probability for all their bets, otherwise nobody will take them up on a given wager.

Oddsmakers start with a sense of what their profit margin should be. They have to set all their numbers in such a way that this profit margin is protected. This margin is built into every bet using vig or overround. They do this by working out the real probability of each outcome and then subtracting their desired margin. For example, if a given game’s actual probability is 2/1, the bookmaker will subtract their 5% margin and offer odds of 19/10. The difference between the actual probability and the listed odds is the book’s profit.

How do they work out the actual probability? That’s the genius of oddsmakers, the reason they’re paid to watch and analyze sports and we aren’t. Some combination of statistics, experience, recent and long-term history, and good old instinct leads to a number. This gives books an edge in certain markets – we have 100 years of baseball and football statistics and game history, so the books tend to make smarter numbers in that market. Books have to build in larger margins in markets where they have less familiarity – this is a big reason why props and entertainment markets and such are sucker bets.

Books don’t set odds based entirely on real probabilities and profit margins – there’s more to it than that. There’s an art to setting a line in such a way that it reflects reality but still entices bettors to place bets. Creating a balanced book is more important to oddsmakers than perfectly handicapping every contest on the wall.

Bettors concerned about paying huge margins to books should avoid exotic bets or any new markets or markets where oddsmakers don’t feel comfortable. Head-to-head contests in the “big four” sports are the bets which give oddsmakers the least reason to build in a big margin. Books are only calculating in a 2-5% margin for, say, the NFL regular season. Exotic bets on the Super Bowl or the Olympics are more likely to require a 20% profit margin for an oddsmaker to feel comfortable offering it.

Conclusion

It’s impossible to place a confident bet without understanding how to read sports betting odds.

Thanks to the availability of online sportsbooks, it isn’t necessary to learn all three formats perfectly. Online sportsbooks will switch odds formats to whichever one a player prefers at the click of a link. Still, a strong foundation in the basics of gambling means becoming familiar with the three major ways books showcase odds.