Betting Odds & Probabilities
To be able to understand what betting odds are, you have first to grasp the concept of chance. The chance is the probability of an event to occurring, and it usually is expressed in percentages. To get this concept, let’s do a practical example.
If we roll a dice, there is one probability out of 6 for every outcome. The chance that the dice will land on any of the 6 numbers is the same. In terms of percentages, this means that you have a 16.66% chance of any number to come up. How did we get to this number? Easy. Just divide 100% by 6, which are the possible outcomes.
Betting Odds Explained – Understanding Odds
Learning how to convert betting odds can be very helpful. It is one of the fundamentals of betting. It is crucial to understand what value you are being offered. If the probability is less than your own assessed likelihood of any event to occur, that is a value betting opportunity. In this article, we will take a look at how to convert the three most popular odds format (decimal, fractional and American) into their implied probability.
How To Convert Odds
The first thing you need to do is to check what odds format you are dealing with. Do you want to convert Decimal, Fractional or American odds? Let’s say for instance, that you have decimal odds of 3.00. In this case, the implied probability would be 33.3%. This can also be converted into a fractional odds of 2/1. But let’s go step by step.
How To Convert Odds To Implied Probability
There are normally three types of odds format you can encounter:
1 – Decimal odds: those are in the format of 1.50, 2.35, etc.
2 – Fractional odds: those are in the format of 5/2, 3/1, etc.
3 – Moneyline odds: those are in the format of -120, +110, etc.
They all serve the same function. They indicate what the return you will get from a winning bet depending on the stake.
How To Convert Decimal Odds Into Probabilities
Decimal odds reflect the return you will get for every single unit placed. Let’s say that you are betting on Arsenal to win at 1.65. This means that for every unit you bet, you will get a profit of 0.65 if your bet is correct. Converting those odds into the implied probabilities is easy and can be done via a simple calculation.
Implied probability = 1 / “Decimal Odds”
So in our example, it will be 1 / 1.65 = 0.606 = 60.6%
So a decimal odds of 1.65 implies a 60.6% probability of an event occurring.
Converting Fractional Odds
Fractional odds are used mainly in the UK to express betting odds. Similarly to decimal odds they are the reflection of the return you will get by placing a bet.
Let’s say you are betting at odds of 5/2 for a horse to win a race. The 5/2 odds means that for every 2 unit that you bet you will get 5 as profit. So if you bet £200 on that horse and your bet wins, you will get £500 in profit in addition to the original stake of £200.
How to convert fractional odds into implied probability?
Implied probability = denominator / (denominator + numerator)
In our example, this will be:
5 / 2 = 2 / (2 + 5) = 2 / 7 = 0.2857 = 28.57%
So odds of 5/2 represent an implied probability of 28.57%.
Converting Moneyline Odds
Moneyline odds are also called ‘American odds’ and are the most used format of odds in North America. At first glance might look confusing, but they are not complicated. There are two types of Moneyline odds: ‘minus’ money lines and ‘plus’ money lines. Let’s take a look at minus money lines first. If we have -120 this means that if you want to make a profit of £100 you have to bet £120 on that outcome. Now let’s look at plus money lines. If we have +180, if you bet £100, you will get £180 back as profit.
But how can we convert the ‘minus’ and the ‘plus’ moneyline odds into the probabilities?
How to convert ‘minus’ moneyline odds into implied probability formula:
Implied probability = ( – ( ‘minus’ moneyline odds ) ) / ( – ( ‘minus’ moneyline odds ) ) + 100
For instance, if you are betting at odds of -120 this is how you find out the implied probability:
(- (-120) / ( (- (-120) ) + 100) = 120 / 220 = 0.545 = 54.5%
so -120 has an implied probability of 54.5%.
To convert a ‘plus’ moneyline you use a different formula:
Implied probability = 100 / ( ‘plus’ moneyline odds + 100 )
so if we are betting at odds of +180 the formula will be:
( 100 / 180 + 100 ) = 100 / 280 = 0.357 = 35.7%
How to convert one form of odds to another
To convert one form of odds to another, you need to convert any odds format to their implied probability. Once you have done that, the process is rather simple.
How to convert implied probability into ‘Decimal Odds’
This is the formula to use:
“Decimal Odds” = 100 / implied probability
So for instance, if we think there are 75% probability of Man City beating Bournemouth we can calculate our ‘decimal odds’ with the following formula:
100 / 75 = 1.33
So the decimal odds will be 1.33
How to convert implied probability into ‘Fractional Odds’
Fractional odds = ( 100 / implied probability ) -1
So let’s say that we think Watford has 25% probability of winning a game. In this case, the fractional odds will be calculated as follow:
(100 / 25) – 1 = 4 – 1 = 3
So the fractional odds will be 3/1 in this scenario.
How to convert implied probability into Moneyline Odds
To convert implied probability into Moneyline is a little more complicated compared with decimal or fractional odds. There are two calculations to make. One when the probability is above 50% and one when it is below.
The formula when the implied probability is above 50% is as follow:
Moneyline Odds = – ( implied probability / (100 – implied probability)) x 100
So if for example, we have 75% chance that Arsenal will win a match against West Ham. In this case the moneyline odds will be calculated as follow:
– (75 / (100 – 75)) x100 = – (75 / 25) x 100 = – 3 x 100 = – 300
Moneyline odds = – 300.
When the implied probability is below 50%, to convert this into moneyline odds the formula is:
Moneyline odds = (100 – implied probability / implied probability ) x 100
So let’s say Watford have 25% chance of winning against Man City. The moneyline odds will be as follow:
((100 – probability)/(probability) x 100) = ((75) / (25) x 100) = 3 x 100 = 300
Moneyline odds = + 300.
Bookmaker Odds Summary
So to conclude, we can say that there are many tools online that will help you converting odds into their implied probabilities and the other way around. Most bookmakers also have functionality on their betting sites where you can easily convert odds from one form to another with the click of a button. As you have seen, there are a rather simple mathematical formula to do so.
What is important that you take away from this article is that odds represent probabilities and values. To have an edge against bookmakers, you need to try to find valuable odds. To do so, you should exercise your betting brain to think in terms of implied probabilities when outcomes and odds are presented to you.