Betting odds represent the probability of an event to happen and therefore enable you to work out how much money you will win if your bet wins. As an example, with odds of 4/1, for every £1 you bet, you will win £4. There is a 20% chance of this happening, calculated by 1 / (4 + 1) = 0.20. Boxing odds are written in money lines rather than fighter odds because, in boxing, the odds aren’t always a whole number. Boxing odds are written with plus (+) and minus (-) symbols, and to read boxing odds, you need to know what those symbols mean. ‘Money Line’ and Fighter Odds.

• How Do Sports Gambling Odds Work
• How Do Sports Betting Lines Work
• How Do Sports Odds Work

Sports odds work by offering gamblers the chance to profit if they can correctly guess the outcome of a sports event or predict something that happens in sports. The odds represent the financial contract between the gambler and the bookmaker. The three main ways that sports odds are displayed are known as American odds, fractional odds and decimal odds. These three types of odds look different but represent the same thing: the payout for a winning bet in relation to the amount of money that was bet. Point spreads and over-under bets are other types of sports odds.

Casinos and sportsbooks profit when they have to pay out less than they receive in bets. They also collect a commission — sometimes called the 'juice' — on certain bet to increase their chances of making a profit. Sports odds typically are set so that the bookmaker can expect equal betting on each side of the bet, which would ensure that the bookmaker would not lose money, no matter what happens in the sports event. If the bookmaker collected juice on each bet, the bookmaker would be guaranteed to profit if the betting on each side was equal.

American Odds

One common way for bookmakers in the United States to display sports odds is to show either a plus sign (+) or minus sign (-) followed by a number. Odds with a minus sign represents how much money must be bet on a favorite — the team or competitor that is expected to win — in order to win $100 US Dollars (USD), and odds with a plus sign show how much money would be won if $100 USD was bet on an underdog — a team or competitor that is not expected to win. For example, the odds for betting on a favorite might be displayed as -120, which means that a gambler must bet $120 USD to win $100 USD. The odds for betting on an underdog might be displayed as +115, which means that for a winning bet of $100 USD, the gambler would make $115 USD. In a sports event that has one favorite and one underdog, such as a football game, the number listed in the odds for the favorite is higher than the number in the underdog's odds, which increases the bookmaker's chances of making a profit.

Gamblers should be aware that when American odds are used, the total payout for a winning bet is $100 USD more than the number displayed. For example, if a man bet $120 USD on a favorite with -120 odds and won the bet, he would receive a total of $220 USD back from the bookmaker — his original $120 USD bet plus the $100 USD that he won. Likewise, if he won a $100 USD bet on an underdog with +115 odds, he would receive a total of $215 USD back — his $100 USD bet plus the $115 USD he won.

It is not always necessary to bet exactly the amount shown. A gambler might choose to bet much more than $100 USD or want to win more than $100 USD. For example, a woman could bet $3,000 USD on an underdog with +130 odds, and if she won the bet, she would get back a total of $6,900 USD — her original $3,000 USD bet plus $3,900 USD, which is $130 USD for each $100 USD of her bet.

Fractional Odds

In the United Kingdom and in horse racing everywhere, odds typically are displayed in fractions, such as 8/5, 3/1 or 10/1. When spoken, these odds are read like ratios, such as 'eight to five,' 'three to one' or 'ten to one.' The first number is the amount of money that can be won on a bet in the amount of the second number. For example, if a gambler won a bet at 3/1 odds, he or she would win $3 USD for every $1 USD that was bet. Like American odds, the payout number does not include the amount of the original bet, which also is returned to the gambler. So a man who won a $250 USD bet at 3/1 odds would receive $1,000 USD back from the bookmaker — his original $250 USD bet plus his $750 USD winnings.

Decimal Odds

Unlike American odds and fractional odds, decimal odds show the gambler exactly what the payout will be based on the amount of the bet — the return of the original bet amount is built into the number. As the name implies, decimal odds are expressed in decimals, such as 1.50, 2.50 or 4.25. In these three examples, a winning bet of $200 USD would result in a total payout of $300 USD, $500 USD or $850 USD, which are simply the amount multiplied by the decimal shown in the odds. Decimal odds must be higher than 1.00, or even a winning bet would result in the gambler losing money. This method of displaying sports odds is popular in Canada, continental Europe and Australia.

Point Spreads

For a sports event in which a score is kept, gamblers can bet on who will win as well as the margin of victory. Betting on who will win is referred to as a straight-up bet or betting on the moneyline, and betting on the margin of victory is referred to as a point-spread bet. Point spreads are expressed in numbers preceded by minus signs for favorites and plus signs for underdogs, such as -7.5 for a favorite in an American football game and +7.5 for the underdog in the same game.

A bet on a favorite is won when the favorite wins the game by more than the point spread, and a bet on the underdog is won when the underdog wins the game or loses by less than the point spread. For example, if a gambler bet on a team at a point spread of +8 and the team lost by only six points, the gambler would win the bet. On the other hand, if a gambler bet on a team at a point spread of -6 and the team won by only one point, the gambler would lose the bet. Bookmakers typically set the point spread based on both the expected result of the game and what odds will bring in equal betting on both sides.

Point spreads are sometimes listed with odds for the bet, such as -7(-110), -7(11/10) or -7(2.10). All of these odds represent the same bet — a team favored by seven points, with winnings of $11 USD for every $10 USD that is bet. If no odds are displayed with the point spread, it typically is implied that the odds are -110, 11/10 or 2.10.

Over-Under

Another common way to bet on sports event in which a score is kept is the over-under bet, also called betting on the total. In this type of bet, the gambler is betting on the total points scored in the game, regardless of how many points each team scores or which team wins. For example, if the over-under for a basketball game is 180, a gambler could bet the 'over' and win if more than 180 total points are scored or could bet the 'under' and win if fewer than 180 total points are scored. Just like point spreads, over-under bets typically are implied at -110, 11/10 or 2.10 odds unless otherwise specified.

Other Types of Bets

There are seemingly endless other ways for gamblers to bet on sports. Just a few examples are future bets, in which the bet depends on a result that will take place much later, such as a betting before the season on which team will win the championship; parlays, in which gamblers bet on multiple things and must win all of the bets to receive the payout, usually at very high odds; and proposition bets, in which gamblers bet on very specific results, such as the points scored by a single player or the number of times a certain thing happens in a game. There also are over-under bets that involve things other than the total points scored, such as the combined number of free throws for both teams in a basketball game or the combined number of passing yards for both teams in an American football game.

Understanding how betting works is of crucial importance for any future punter, because there is no point in trying to play against the betting provider if you don’t understand the underlying principles of betting.

In addition, betting without any knowledge of how betting operators conduct their business will only increase the chances that you will lose your money. And while that can happen to all of us, it is important to try to minimize those losses since the point of betting is to beat the bookie and overcome the advantage that the ‘house’ has over you.

So how can you overcome this advantage? Are there any techniques which you can use to beat the bookmaker? In order to answer these questions we first have to understand how betting works. In this article we will look at the basics of betting, how bookmakers compile the odds, balance their books and how the new trends in betting exchanges and eSports betting might influence your choice of wagers.

Betting Basics

In essence, when you are making a bet, you are depositing money with the bookmaker. If the bet is unsuccessful, the bookmaker keeps the deposited money. However, if the bet is successful, then the bookmaker has to pay out the client the deposited sum multiplied by the odds of the winning bet. This is pretty straightforward and easy to grasp.

The next and more complicated step in understanding betting is the adjustment of the odds and the balancing of the books. These enable the bookmaker to always have an advantage over the punter. Let’s see how this is done.

The Bookmakers’ Margin

The bookmakers’ margin, or also known by a couple of other names such as vigorish (vig for short), house’s edge or overround, is the technique with which the betting provider ensures that he always has an advantage over the player, regardless of the outcome of the match.

The simplest way to understand the bookmakers’ margin is to look at a coin toss. In this game there are only two outcomes, each with a chance of happening of 50%. This means that if the bookmaker decided not to include the vigorish in the odds, he would give odds of 2.00 for tails and 2.00 for heads.

If there were 10 players playing the game, and 5 of them bet $1 on heads, and the other 5 bet $1 on tails, the bookmaker would not make any profit at all. If the coin flip results in heads, the bookmaker will have to pay out all of the $10 he received as a deposit, and exactly the same thing will happen if the coin toss results in tails. But let’s say that the coin toss bets were not distributed equally, and say, 7 people bet on heads and 3 on tails. In this situation the bookmaker would basically be riding his luck.

If the coin toss results in tails the bookmaker will win $4 as he will only have to pay out $6 in winnings. However, if the coin toss results in heads, the bookmaker will have to pay out $14 and will therefore record a loss of $4. Based on this, we can easily see why bookmakers have to have a technique which would prevent their business from either constantly working with 0 profit or from being completely dependent on fortune.

The bookmakers’ margin ensures that the bookmaker will make profit regardless of the outcome of the match or event. That’s why when there are only two outcomes in a game (and both of them are equally possible), such as in a coin flip, it is much more likely that you will see odds such as 1.85 or 1.90 instead of odds of 2.00 being given to the two outcomes.

How Do Sports Gambling Odds Work

If we use the same example, we can see that if there were 10 people betting $1 on the coin flip, 5 of which bet on tails, and the other 5 on heads, the bookmaker will always stand to make a profit. This is because the total deposits will again amount to $10, but this time the maximum amount which the bookmaker will have to pay out will be $9.5 (if the odds were 1.90) regardless of the outcome.

However, it must be said that this is an overly simplified example, and that there are many more factors involved when creating the odds. This is because most of the time there are more than only two possible outcomes. In addition, the outcomes don’t have the same likelihood of happening. And finally, people don’t distribute their bets equally on all outcomes.

How Do Sports Betting Lines Work

Compiling the Odds

When compiling the odds, it is incredibly important to understand all of the above mentioned factors. That’s why when bookmakers hire people to create the odds they always look for people who specialize in only one or two sports and have extensive knowledge of how statistics and odds work. Odds compilers must look at factors such as the form of the teams and players, their previous results leading up to the game, match history, injuries to players and even the weather conditions on the day of the match.

However, since these are all top notch professionals, they know how to compile odds containing the right vigorish every time, all the time. Let’s look at an example of how odds compilers would create the odds for one specific esport match up.

When Cloud9 are playing TSM in let us say League of Legends, the relative probability of a Cloud9 win is 60% (1.67) and the probability of a TSM win is 40% (2.50). As we can see, when combined together, the percentages add up to the expected 100%. This is not an optimal scenario for the bookmaker.

This is where an odds compiler comes in. His job is to make sure that the combined chances for both teams to win, always go over the expected 100%. For example, a Cloud9 win will be priced by the odds compiler at 70% (1.43) and a TSM win will be priced at 50% (2.00).

As you can see, the odds are much lower after the odds compiler has been at work.

How Do Sports Odds Work

Balancing the Books

In addition to creating the bookmakers’ margin, it is the odds compiler’s job to create a balanced book of a specific market. The odds shown for the esport match between Cloud9 and TSM represent a nice example of a balanced book of a market. A balanced book means that the odds compiler has taken into account the fact that Cloud9 are favourites for the match against TSM and has lowered the odds as he is expecting an influx of bets on Cloud9 to win.

However, if for some reason the odds compiler has not factored in an injury to a key player, or the injury happened just before the match started, the bookmaker can further balance the odds. For example, if one of Cloud9's key players wakes up with the flu on match day, the bookmaker can increase the odds for an Cloud9 win, thus compensating for the expected influx of bets on a TSM victory.

Betting Exchanges

The bookmakers’ margin is great for the bookmakers business. However, it is not so good if you are a punter who is betting big money and is expecting his winnings to be as big as they possibly can. In his situation, the lower the bookmakers’ margin the better.

This is where betting exchanges come into play. Betting exchanges are transactions made between gamblers, where the bookmaker is only there to make sure that the transaction occurs and only charges a commission ranging from 2% to 5%. In a betting exchange one punter 'backs' a player / a team to win, and the other gambler 'lays' the same player / team to lose. All bets must be matched, meaning that if there is no one to bet against you, the bet will be void.

In short, at betting exchanges players and punters make the rules and set the odds. This means that there is almost no overround and that as long as you find someone to bet against you, you have basically cut out the bookmaker out of the equation.

eSports Betting

Something similar to betting exchanges happens in eSports betting. eSports are probably the youngest type of sport that bookmakers have started to include in their offer, so it is only to be expected that there will be many variations in how the odds are compiled until the most ideal solution is found.

Some bookmakers still use the traditional method of giving odds to eSports matches and events just like they do to all the other sports. They try to make sure that the books are balanced and that they have incorporated all of the useful information such as form, stats and history in their odds.

However, some other bookmakers, especially those working exclusively in eSports betting, have let their customers do all of their work for them. They give their punters the chance to choose the winner of a match and then compare how many people have bet on each outcome.

If both outcomes are equally bet on, then the odds would reflect this, meaning that each team will have odds of around 1.90. However, if one outcome is more heavily backed than the other, then this outcome will have much lower odds.

In fact, because of the interconnected nature of the eSports community, insider betting news often travels quite fast and there are numerous bets being placed on only one outcome as a result. In this situation, it is even possible that, if you win, you will only get your original deposit and wouldn’t make any profit.

Summary

To sum up, betting is big business and is programmed in a way which ensures that the bookmaker will always make a profit regardless of which the final outcome is and how many people have backed it. In addition, odds compilers and bookmakers always try to make sure that they have covered all the aspects of an event before they give you their odds for it. And even when they have compiled their odds, they can still modify them to protect themselves against losses.

It is up to the punter to choose the best betting opportunity for him. This might mean taking advantage of an inside information that he has got; being really meticulous in his pre-match analysis; or focusing his wagers on some strategic eSports betting.