A common misconception among sports betting newcomers is that it is a quick and easy way to make a ton of money. Yet only a small minority of sports bettors manage to show a long-term profit.
A key reason why is the lack of a good understanding of betting odds. As this is an essential weapon in any successful sports handicapper’s arsenal, if you are serious about improving your winning percentage, this article explaining different types of betting odds and how to interpret them is must-reading.
Quick Summary
The article describes the three different ways of expressing betting odds that you are most likely to encounter:
- Moneyline (American) odds
- Fractional (British) odds
- Decimal (European) odds
I will focus on American or moneyline odds since that is the format American sportsbooks regularly use. However, familiarity with the other types of betting odds is also important, so when you do come across them, you know how to read and interpret them.
Here are the key points we will cover.
- How American Odds Work
- Betting Odds and Payments
- The Meaning of + and – in Betting
- Negative Odds
- Alternative Odds Formats
How American (Moneyline) Odds Work
American or moneyline odds can be either positive or negative. The way to tell the difference is that negative odds are always preceded by a minus sign (-) while positive odds are always preceded by a plus sign (+).
Negative odds indicate the amount of money you need to wager to win $100. Also, because the amount of money you need to wager to win a given amount is more than the profit you will make if the bet wins, to win $100, your bet will need to be for more than $100. Low odds, and negative odds particularly, reflect a sports betting outcome that the oddsmaker considers likely. All betting favorites have negative odds.
Positive odds indicate the amount of money you could win for each $100 you wager. If you win, the payout would be more than the same size wager betting into negative odds. However, the bet has less chance of winning. All betting underdogs have positive odds.
Regardless of the odds, the payout on a winning bet includes both the amount of profit from the bet and the bet itself. The only exception would be bonus bets, where the payout would include the winnings only.
Moneyline Odds Example
The odds shown below are for an NBA playoff game between the Los Angeles Clippers and the Dallas Mavericks. Note that while the Clippers were the home team in this matchup, the oddsmakers installed the Mavericks as the favorite on the moneyline.
Keep in mind that moneyline bets simply entail picking the team you think will win outright, unlike a point spread bet where the margin of victory matters.
| Team | Moneyline |
|---|---|
| Dallas Mavericks | -150 |
| LA Clippers | +126 |
Assuming these were the betting odds you are offered, if you wished to make a moneyline bet on the Mavs, for every $100 you hoped to win, you would have needed to risk $150. Thus, a bet to win $50 would cost you $75, a bet to win $300 would cost you $450, and so on.
Conversely, if you thought the Clippers had a good chance of pulling the upset, a winning bet of $50, $100, or $300 would result in a profit of $63, $126, or $378, respectively.
Betting Odds and Payouts
Betting odds reflect the oddsmaker’s opinion about the probable – but by no means guaranteed – outcome of a particular game, event, or proposition. They also show how much money a bettor must risk to win a certain amount. The shorter the odds, the smaller the payout, and the greater the odds, the larger the payout.
The Vig and Implied Probability
All betting propositions have an implied probability, which can be defined as the expected chance of a particular outcome expressed as odds. But rather than do the complicated math to compute the implied probability on your own, I recommend using an odds conversion table you can find online showing at a glance the implied probability for a wide range of odds.
For example, in the Mavericks-Clippers NBA game discussed earlier, the implied probabilities were 60% and 44%, respectively. Armed with this knowledge, it would then be up to the handicapper to agree or disagree and bet accordingly. Even a 60% probability of winning still leaves the door wide open for the result to go the other way, and in this game, that is exactly what happened.
The vig (short for vigorish), or juice, is another variable that can have an important bearing on your success as a sports bettor. Think of the vig as the extra charge or convenience fee sportsbooks add for taking your bet. Point spread bets (as opposed to moneyline bets) typically have a 10% vig. So, for example, a bet to win $100 will cost $110. Then, if you win, the sportsbook will pay you $210 (the $110 you spent on the wager plus an additional $100 in winnings).
Moneyline bets with odds of “pick ‘em” (meaning that both teams are given an equal chance of winning) are also priced at -110 to cover a 10% vig.
The Meaning of + and –
As mentioned, the odds for favorites are preceded by a minus sign, while the odds for underdogs are preceded by a plus sign. Small negative odds such as -115 indicate a slight favorite, whereas a very large negative number such as -800 indicates a heavy favorite. Conversely, the odds for a slight underdog will be a small positive number, and the odds for a huge underdog will be a large positive number.
Negative Odds Meaning
Negative odds – those shown with a minus sign in front – tell you that the amount of profit you will make if your bet wins is less than the amount you have to put up to place your bet. It is the price you have to pay for the bet’s high probability of winning.
Alternative Odds Formats
Two alternative odds formats you should know about since they do pop up in American sportsbooks occasionally are fractional odds and decimal odds.
Fractional Odds
Fractional odds express the ratio of the amount of profit the bettor will make to the amount of money wagered and are written just like a fraction with a slash or hyphen (i.e., 5/2 or 5-2). This odds format is popular with British and Irish bettors.
The formula for computing the payout is as follows:
- Total Payout (bet + winnings) = stake x numerator / denominator + stake
For example, a bet of $20 at 5/2 odds will return $70 ($20 x 5/2 + $20)
Decimal odds
Decimal odds indicate the amount of money the bettor would win for each dollar wagered. This odds format is popular with bettors in Europe, Australia, New Zealand, and Canada.
Use the following formula to compute the payout.
- Total Payout = stake x decimal odds.
For example, a bet of $50 at 1.6 odds will return $80. ($50 x 1.6).
