How Do Odds Impact Payout?
[vc_row][vc_column][vc_column_text css=""]If you're new to sports betting, understanding how odds work is crucial. Whether you're betting in a casino, on sports, or on any other event, knowing how to read and interpret different types of odds is key to placing smart bets.
The types of sports betting odds include:
- Moneyline Odds (American): widely used in the United States
- Fractional Odds (British): common in the United Kingdom and Ireland
- Decimal Odds (European): popular in Europe, Canada, and Australia
Key Takeaways
- The three main types of betting odds are fractional (British) odds, decimal (European) odds, and moneyline (American) odds.
- These formats are alternate ways of presenting the same thing and have no difference in terms of payouts.
- British fractional odds are the ratio of the amount won (profit) to the bettor's stake.
- European decimal odds represent the amount the bettor could win for every $1 they wager.
- Depending on the negative or positive sign, American moneyline odds either indicate the amount one needs to wager to win $100 or the amount one would win for every $100 staked.
How U.S./Moneyline Odds Work
Moneyline odds (aka "American odds" or "U.S. odds") are popular in the U.S.
- Favorites: Denoted with a minus (-) sign. The number shows how much you need to bet to win $100.
- Underdogs: Denoted with a plus (+) sign. The number shows how much you'll win if you bet $100.
For example, if a team has odds of -150, you'd need to bet $150 to win $100. If the odds are +200, a $100 bet would win you $200. In both cases, your original bet is returned along with your winnings. The larger the gap between the favorite and underdog odds, the higher the favorite's chances of winning.
Betting on the Moneyline
Let's say a betting website (also known as an online sportsbook) priced an NFL game between the Pittsburgh Steelers and the Kansas City Chiefs with the following moneyline odds.
- Steelers: +585
- Chiefs: -760
The bookmaker has offered odds of +585 for the Steelers, which indicates that the bookmaker has placed a much lower probability (about 15%) that the Steelers will win the game. Therefore, if you risk $100 on the Steelers, you could win $585.
If the Steelers pull off the upset, you get back your initial stake of $100 in addition to the $585 you won, for a total payout of $685.
If you decide to bet on the Chiefs—the team that, according to the bookmaker, has a higher probability of winning the game—you would need to bet $760 to win $100. If the Chiefs are victorious, you will win $100, for a total payout of $860 (initial stake of $760 + profit of $100).
In this matchup, there is a big difference between the two odds, indicating a much higher probability of the Chiefs winning the game. Often, the odds are much closer.
Fast Fact
How British/Fractional Odds Work
Fractional odds (aka "British odds," "U.K. odds," or "traditional odds") are popular among British and Irish bookies. They are typically written with a slash (/) or hyphen (-).
A fractional listing of 6/1 (six-to-one) odds would mean that you could win $6 for every $1 you wager as well as get the amount you wagered back. In other words, 6/1 is the ratio of the potential profit to the initial bet. Therefore, if you stake $10 at 6/1 and win, you'll get a total payout of $70 ($60 profit + $10 stake). The total (potential) return on a stake can be calculated as: Tp=(S(ND)) where: The total payoutS=StakeN/D=The numerator/denominator of the fractional odd (e.g., 286) Let's posit that the following are the odds on the three teams most likely to win the NBA Championship:- Brooklyn Nets: 13/5
- Golden State Warriors: 9/2
- Milwaukee Bucks: 7/1
How European/Decimal Odds Work
Decimal odds (aka "European odds," "digital odds," or "continental odds") are popular in continental Europe, Australia, New Zealand, and Canada. These are a bit easier to work with and understand. The favorites and underdogs can be spotted instantaneously by looking at the numbers.
The decimal odds number represents the amount the bettor could take home for every $1 wagered—the total payout rather than just the profit. In other words, your stake is already included in the decimal number (no need to add back your stake), which makes the calculation easier.3 The total (potential) return on a stake can be calculated as: Tp=S×Dwhere:Tp=The total (potential) returnS=StakeD=The decimal odd Let's look at an example involving who might have won the 2020 U.S. presidential election. Suppose the decimal odds were:- Donald Trump: 4.00
- Joe Biden: 1.3
Types of Bets
Sports bettors have numerous options for the types of bets they can make. Here are a few of the most popular ones available
- Over-under bets: Also known as a total bet, an over-under bet is a wager on whether a specific statistic for a game will be higher or lower than a quoted value from a sportsbook. The most common over-under bet is on the combined score of the two teams in a match. These are among the most popular sports-betting wager options.
- Parlay bets: When a bettor makes two or more bets and combines them into one wager, it's called a parlay bet (or an "accumulator" or "multi"). This type of bet is riskier than others because you have to win all of the small bets to win the parlay bet, and losing one means losing the whole bet. Parlay bets have a bigger payout if all the wagers are won.
- Teaser bets: A type of parlay bet, a teaser bet allows the bettor to change the point spread for a game, which makes the bet easier to win, but also lowers the payout in the event of a win. The most common teaser bet is a two-team, six-point football teaser for which the bettor can adjust the point spread for two games.
- Prop bets: A prop bet is a wager on a game that isn't tied to its outcome. Prop bets might be made on the accomplishments of individual players in a game, for example, or on which player might hit a home run in a Major League Baseball game.
How Will I Use This in Real Life?
Whether you open an app on your smartphone, walk into a casino, or visit a brick-and-mortar sports betting location to place a bet, you'll see odds listed, and now you'll know how to read them. While there are certainly no guarantees in sports betting, you can increase your odds by knowing which team is favored, the implied probability of winning, how the market is moving, and how much you can win.
When you're new to reading the odds, start small and don't bet more than you can afford to lose. Beginning with simple bets like moneylines or over/unders is one way to get your feet wet without drowning. Always stick with sports you know, and don't forget to bet with your head and not with your heart.
How Do Odds Impact Payout?
What Do the + and - Mean in Sports Betting?
What Does It Mean When Odds Are Negative?
What Are Vegas Odds?
The Bottom Line
American, British, and European odds are three different ways of expressing the same thing and can be converted from one to another. By understanding all three and how they work, you'll increase your own odds of placing well-informed (if not always successful) bets.
If you or someone you know has a gambling disorder, please call the National Problem Gambling Helpline at 1-800-GAMBLER (1-800-426-2537) or visit ncpgambling.org/chat to chat with a helpline specialist.