The Best Advice for Beginners on how to Understand Betting Odds

Almost every beginner gambler is in a puzzle when he starts betting because he does not completely understand what betting odds are. According to a glossary, odds are a numerical probability of a certain event to happen. In other words, the betting odds are a direct reflection of probabilities and possible winnings, if any.

As soon as you understand this phenomenon, it will be high-time for you to compare odds offered by different bookmakers in order to find the most profitable variant. Though odds are important, it is actually necessary to look behind them because the most significant thing for bettors is the probability.

Nowadays, there are three main odds formats used by different bookmakers from the whole world. They are decimal, fractional and American odds, with each having their own peculiarities and form. In fact, odds of all these types can be applied to almost every event in our life. With their help, we can estimate a probability of train to arrive in time or chances that it will rain tomorrow.

Calculating Probability Example

In order to better understand how to calculate the probability for a single event, let us consider the best example of it – a coin toss. Here, there are only two possible outcomes with equal probability to happen. If you want to obtain a numerical representation of this probability, you should use a simple formula:

Expected outcome / All possible outcomes

For the given case, both Heads and Tails have a possibility of 0.5 to land. As for percentage, this probability amounts to 50%.

Converting Probability into Odds

Once you found a probability, you would be able to turn it into decimal odds. Fortunately, it can be achieved with as simple equation as previous one. For this, you should divide one by obtained probability. For a coin toss, both possible outcomes will have the odds of 2.0. It should be mentioned separately that the given equation works equally well in the reverse. Being familiar with odds only, it is easy to find a probability. For this, divide one by the odds.

As for the coin toss, if you add probabilities of two possible outcomes, you will obtain 100%. It means that all the calculations were conducted properly. On the other hand, if you add all the probabilities offered by your bookmaker on possible outcomes of a single event, you will obtain a number that will be slightly higher than 100%.

This result does not mean that bookmakers do not have appropriate mathematical skills. The extra percentage is known as margins that are a bookmakers` edge over their clients. Were this margin absent, the bookmakers would not exist. In other words, it is margin that guarantees any profits to oddsmakers. In fact, the lower the margin is, the more reliable the given bookmaker is said to be. That is why you should not deal with bookmakers that conceal a size of their margin.

Odds & Returns

As it has already been mentioned, odds also show returns you can obtain in case of a win. In order to calculate their amount, you should multiply your stake by decimal odds on the given outcome. As for our example with a coin toss, if we stake $5 on Tails, we will obtain $10 of returns, with $5 being net profits. There is nothing complex here. However, the laziest people can use special calculators offered by online bookmakers in order to calculate possible profits automatically.

Conclusion

The given knowledge is extremely important for beginner bettors who just make their first steps into this industry. Understanding general principles will provide them with confidence and necessary experience to turn obtained knowledge into professional skills.