A crash course on the 3 main ways to express betting odds and how to correctly interpret them.

Summary

  • Odds are coefficients expressing the punter’s profit for a winning bet
  • Bookmakers and punters mostly use decimal odds, moneyline odds, and fractional odds
  • Odds can be converted into probabilities thus providing important information on the betting market situation

Betting Odds

Bookmakers and punters talk about odds using three main standards:

  • Decimal odds e.g. 1.65
  • Moneyline odds e.g. -120 or +140
  • Fractional odds e.g. 5/2

No matter which standard is used, betting odds always convey the same concept: the profit a punter will receive for winning a bet. Also, the odds imply a probability the bookmaker is assigning to a specific outcome.

On fighterodds.ai by default we report decimal odds. However, our platform allows the user to switch between the decimal and the moneyline standards.

Decimal Odds

How to interpret decimal odds

If for the event “Gilbert Burns vs Khamzat Chimaev” the bookmaker offers Gilbert Burns at 1.65, it means that in case of placing and winning a $1 bet on Burns, the punter will get a profit of $0.65 for a total payout of $1.65. The general formula for the potential profit is thus the following:

profit = wager * (odds – 1)

Indeed, for the odds to make any sense the payout must be bigger than the wager. For this very reason, decimal odds must be bigger than 1. In addition, is useful to bear in mind that when the decimal odds are bigger than 2, the potential profit is greater than the wager.

Decimal odds and probability

Odds can be converted into probabilities. When working with decimal odds, the implied probability is calculated as follows:

p = 1 / odds

For example, the implied probability of the decimal odds 1.65 is 1/1.65 = 0.606. This means that the implied probability behind the bookmaker’s odds for the outcome “Gilbert Burns wins” is 0.606 (60.6% in percentage).

Moneyline odds

How to interpret money line odds

Moneyline odds (not to be confused with moneyline bets) are mainly used in the US and express payout coefficients using negative and positive numbers. Let’s consider the event Gilbert Burns -120 vs Khamzat Chimaev +180. Gilbert Burns -120 means that in case of placing and winning a $120 bet on Burns, the punter will get a profit of $100 ($220 total payout). The formula for the potential profit of negative moneyline odds is:

profit = (100 / |-odds|) * wager

In moneyline odds the positive coefficients are used for outcomes that will return a profit higher that the wager. So Khamzat Chimaev +180 means that if the punter bet $100 and Chimaev wins, he gets $180 plus the initial $100 ($280 total payout). For positive moneyline odds the profit can be calculated using the following formula:

profit = (odds / 100) * wager

Moneyline odds and probability

The implied probability of negative odds is:

p = |-odds| / (|-odds| + 100)

For example the implied probability of -120 is calculated as 120 / (120 + 100) = 0.54. According with the bookmaker’s odds, Gilbert Burns has a 54% chance of winning.

Alternatively, the implied probability of positive moneyline odds is:

p = 100 / (odds + 100)

So for example, the implied probability of +180 is 100 / (180 + 100) = 0.357. In our example, this means that the odds are reflecting a 35.7% chance of winning for Chimaev.

Fractional Odds

How to interpret fractional odds

Used primarily in the UK, the fractional odds standard is among the oldest ways to express betting odds but has been progressively replaced by decimal odds. If the bookmakers offer Gilbert Burns winning at 3/1 vs Khamzat Chimaev, it means that a winning bet of $1 on Burns will give the punter a profit of $3 plus the initial investment of $1 for a total payout of $4. Odds with a profit smaller than the wager have the denominator bigger than the numerator such as 2/3. With this latest odds, the punter should win a bet of $3 to get a $2 profit. To calculate the potential profit from fractional odds:

profit = (wager / denominator) * numerator

Fractional odds and probability

The implied probability of fractional odds is calculated as

p = denominator / (numerator + denominator)

For example, the implied probability of fractional odds 3/1 is 1/4 = 0.25. This means that the bookmaker’s odds reflect an underlying winning probability of 25% for Gilbert Burns.

To sum up

  • Odds are coefficients expressing the punter’s profit for a winning bet
  • Bookmakers and punters mostly use decimal odds, moneyline odds, and fractional odds
  • Odds can be converted into probabilities thus providing important information on the betting market situation

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