Odds and Chances

Alisa Barladyan
11 Jan 2021
22:20
Article

Before we get to know odds, let's understand the concept of probability.

Probability

Probability is usually expressed as a percentage.

Let's look at the example of dice. When you roll the dice, there is a one in six chance of getting one side or the other. The probabilities that you will get any of the six numbers on the sides of the die are the same. As a percentage, the probability of each face falling out is 16.66%. You may have already figured out that to calculate this probability, you should divide 100% by the number of expected events, i.e. six (faces of the dice) in our case.

Odds

The decimal odds are an alternative, more convenient and affordable way to indicate the probability of an outcome. It is popular because it is easy to calculate. Instead of saying that the probability of a particular event is a certain percentage, we indicate a decimal fraction - odds corresponding to this chance. Let's look at how to transform the chances from a percentage ratio to odds.

For example, if you think that the probability of Boston Celtics winning an NBA game is 80%, as decimal odds the chances will look like this:

                       100%80%=1.25

Such odds are called decimal, or European. It’s especially popular in the CIS. For every one dollar you bet, in case of a victory, you will get 1.25 dollars back. The net profit will be 25 cents from each dollar. To calculate the net profit, take the bet amount or stake amount ($1) from the revenue at the bet ($1.25).

To convert decimal odds to a probability percentage, you need to divide one by these odds, multiplying it by 100. 

Example: 12.45100%=40.81%

Fractional (UK) odds

Fractional odds are another variation on the probability of an outcome. It is popular in Britain and some other countries, and some major online bookmakers display this type of odds by default.

Using the previous example, the decimal factor 1.25 in fractional notation will be 4/16 (or 1/4, or 0.25 / 1). The value obtained by dividing the numerator by the denominator is the odds by which the bet is multiplied to find out the net profit. In our case – 0.25. In other words, if you bet $10 at odds of 4/16 and win, you will get $2.5 of net profit ($10 x 0.25) and the bet amount of $10 back.

Many people are mistaken when they think that the decimal odds 1.25 should be equal to the fractional 1.25 / 1. That is not true. The fractional odds are used to calculate your net income, not the total refund. How to read fractional odds? The denominator is the number of units that you need to bet to win the number of units indicated in the numerator. For example, 4/16 is read as four to sixteen and means you have to bet $16 on these odds to win $4.

Such odds are losing popularity even in Britain - the decimal odds are much more convenient. Especially if we are talking about the probability of outcomes.

To convert fractional odds to decimal odds, it is enough to divide the numerator by the denominator (for a 4/16 odds, divide 4 by 16) and add one. That is:

416+1=1.25

You can also add a numerator to the denominator and divide the sum by the denominator value to get decimal odds from a fractional one:

(4 + 16) / 16 = 1,25

American (moneyline) Odds

American odds will seem a lot more confusing to Europeans than fractional odds.

To begin with, they can be positive or negative. For example, +250 and -250. Their value is always at least 100. It shows how much you have to bet to get a net profit of $100 or how much you win if you bet $100.

Negative US odds indicate how much you must bet to get a net profit of $100. In other words, if the team has odds -250, this means that you have to bet 250 to get a net profit of $100.

Let's look at an example of how to convert the American odds to decimal.

Let's say we have odds -250. Divide 100 by 250 and add 1:

100250+1=1.40

Positive US odds show how much you win if you bet $100. For example, if the odds are +250 for a team to win, this means that your winnings will be $250 if you bet $100 on this outcome.

To convert it to decimal odds, divide 250 by 100 and add 1:

250100+1=3.50

Estimated Probability

As you have already understood, odds reflect the bookmaker's assumed probability of an event. You must be able to calculate it to understand the value of a particular bet.

So how do we calculate the probability of an event given the odds available? To do this, you need to divide 100% by the odds. For example, if we divide 100% by 1.25, we get 80%.

Other types of odds

There are three extra types of odds, which are used in Asian countries: Hong Kong, Indonesian and Malaysian.

Hong Kong odds look very similar to European one's, but without counting a $1 in a stake. Thus, they instantly show the net profit. For example, Hong Kong odds 0.9 highlight that with winning $10 stake, a player would receive $9 net profit. In decimal odds, it is equal to 1.9.

Indonesian odds are equal to US odds, but with $1 instead of $100 as a basis stake. Hong Kong odds multiplied by 100 are equal to American one's.

Malaysian type of odds can also be positive or negative. A negative value means that net profit is higher than the amount of stake. A positive value means net profit is lower than the amount of stake. For example, Malaysian odds (-0.7) mean that a $0.7 stake might bring $1.4 net profits. And vice versa.