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How do odds work?

January 7, 2019, Betting Strategy

Betting odds can look a little complicated when you first look at them. So without further ado let’s get to it and answer the question: how do odds work?

Firstly I’ll start out by running through the two main ways betting odds are shown.

Decimals and fractions.

#### Fractional Odds

When you see odds like 5/1 this is a fractional betting odd. Fractional odds are used as they make it really simple to figure out how much you will win depending on your stake.

Take the example of 5/1. This is simply telling you that if you placed a £1 bet on these odds and your selection won, you’d win £5

#### Decimal Odds

When you see odds like 3.00 this is a decimal betting odds. 3.00 is just the same as 2/1. 4.00 would be 3/1. 5.00 would be 4/1. Get it?

Decimal odds basically allow you to quickly figure out how much will be returned. So if you placed a £1 bet at odds of 5.00 and it won you’d get £5.. £4 profit plus your £1 stake.

#### Betting odds simply represent the probability of any given event happening.

Take for example a football match.

The odds might be something like this.. 21/20 in decimal odds is 2.05 and represents an implied probability of 48.80%

11/4 in decimal odds is 3.75 and represents an implied probability of 26.70%

11/4 in decimal odds is 3.75 and represents an implied probability of 26.70%

The implied probability tells us what % chance the bookies think the teams have of winning..

#### However bookmakers take a margin..

The phrase “the house always wins” doesn’t exist for nothing ya’know.

If you add up those implied probabilities you’ll find they equal 102.2%

Basically the bookie has a margin of 2% and will make 2% profit regardless of the result of the game.

#### How To Find Value Bets..

The fact that the bookmakers take a margin means that finding fair prices that represent value is not easy. Most of the time the odds are stacked against us.

To explain the concept of value betting I’ll use the example of a coin toss..

We all know it’s 50/50 chance which would be reflected in odds of 1/1 (2.00 decimal).

Now imagine a bookmaker is offering odds of 2.10 for either heads of tails.. you’d be jumping on at that price right?!

Sure you wouldn’t win every time but if you flip the coin 100 times and bet at those odds, you’re very likely to turn a profit.

Anyway, if you fancy learning more about how value betting works you’re in exactly the right place – it’s what we focus on here at Odds Tribe.

If you fancy getting involved click “request to join”.