What are sports betting odds and what are they used for
How to calculate winnings in American odds (with formulas)
How to calculate Implied Probability with American odds (with formulas)
Understanding odds is vital to your success as a sports bettor. This article will teach you how to read American Odds, how to calculate your winnings with them, and how to calculate your implied probability.
So whether you're new to betting, or need a refresher on the formulas - read on!
What are sports betting odds used for?
Sportsbooks use odds for two reasons:
Odds communicate how much you could win betting on the given event
Odds represent the implied probability of the outcome of the given event
Keep in mind for #2, sportsbooks shift odds for odds boosts or when they are looking to bring more action on one side or the other.
What are the different types of odds?
When betting on sports, there are three types of odds that you will see: decimal, fractional, and American.
Decimal Odds
Decimal odds are the most common around the world except for in the US, and they represent the amount of money that you will win for every dollar that you bet. For example, if the decimal odds are 2.5, then you will win $2.50 for every $1 that you bet.
Fractional Odds
Fractional odds are most common in the UK, and they represent the amount of money that you will win for every pound that you bet. For example, if the fractional odds are 3/1, then you will win £3 for every £1 that you bet.
American Odds
American odds are used almost exclusively in the US - you will rarely see decimal or fractional odds used here. (We Americans always like to be different, just like how we measure in the imperial system when the rest of the earth uses the metric system!)
Because the majority of our readers bet using American Odds, this is the topic we'll cover today, but we'll go into others in later posts!
What do the + and – mean in sports betting?
Positive American odds (i.e. +350) indicate:
The team is an underdog (not favored to win)
The amount of money that you will win
If the odds for the Brooklyn Nets are +350, it means they are not favored to win, and for every $100 that you bet, you will win $350.
Negative American odds (i.e. -200) indicate:
The team is favored to win
The amount of money that you will win
If the odds for the Milwaukee Bucks are -200, it means they are highly favored to win, and for every $200 that you bet, you will win $100.
How to calculate winnings with American Odds?
Calculating a payout for American Odds requires two simple formulas. One for positive odds and one for negative odds.
If you use a bet tracking app or bet tracking spreadsheet, these formulas are already calculated for you, but it's still fun to know what goes on behind the scenes!
Variables Used
W = Amount you wagered
X = Absolute value of the odds (absolute value just means to remove the negative sign if there is one)
Positive Odds Formula
Payout = W * (X / 100)
Example: How much is the payout if I bet $25 on an underdog team at +210 odds?
(25) * (210/100) = $52.50 payout if you won the bet!
Negative Odds Formula
Payout = W * (100 / X)
Example: How much is the payout if I bet $55 on a team favored to win at -117 odds?
(25) * (100/117) = $21.36 payout if you won the bet!
How to calculate Implied Probability with American odds
Implied probability in sports betting refers to the probability of an outcome occurring.
If you find that your estimate of the probability of an event will occur is different than what the sportsbook odds indicate, this is a sign you should adjust your bet accordingly.
If you find that your estimate of the probability of an event will occur is different than what the sportsbook odds indicate, this is a clear indicator you should adjust your bet accordingly.
For example, if you believe the Celtics have a 65% chance of beating the Heat, but the odd's implied probability is only at 55%, then there is value in this bet and you should consider taking it.
Implied probability is shown in a percentage and is calculated slightly differently for positive and negative American odds, as seen in the formulas below.
Note that if you track your bets on a bet tracking app or spreadsheet, these formulas are already calculated for you.
Variables Used
X = Positive American odds
Y = Absolute value of the negative American odds (absolute value just means to remove the negative sign if there is one)
Positive Odds Implied Probability Formula
Implied Probablity = 100 / (X + 100)
Example: What is the implied probability if the outcome I bet on has +210 odds?
100 / (210 + 100) = 0.3225 or 32.25%
According to the sportsbook, this bet has a 32.25% chance of winning. If you think the chance of this outcome occurring is higher than that, this bet is worth serious consideration.
Negative Odds Implied Probability Formula
Implied Probablity = Y / (Y + 100)
Example: What is the implied probability if the outcome I bet on has -117 odds?
117 / (117 + 100) = 0.5391 or 53.91%
According to the sportsbook, this bet has a 53.91% chance of winning.
Why are sports betting odds often -110?
Often you will see -110 odds for both teams for Spread and Total bets. But wouldn't that mean the implied probability doesn't add up to 100%?
Correct! The reason you often see -110 odds is because the sportsbook takes a cut. This is often called "the cut", "the juice", or "the vig".
Takeaways
Understanding odds is a fundamental skill of sports betting and are used to communicate the payout and represent the implied probability of the outcome.
Knowing how to read odds and calculate payouts will ensure that you are always prepared to make a bet and know how much money you stand to win!
Did this article clear up any confusion you had about sports betting odds? What other topics about sports betting you would like us to cover? Let us know in the comments below!