Betting Odds and Probabilities Explained: why do you need to fully grasp these terms in sports betting?

Sports betting is all about wagering to beat the house. But beat the house on what grounds and on what basis? Enter Betting Odds. 

Every event in sports, every game or match comes with odds in the websites of online bookmakers or in the bet tickets of brick-and-mortar sportsbooks. So, whether you are wagering on betting sites in the Philippines or you are betting in a traditional, physical bookie in the US, what you bet will always come with odds. These odds are accompanying the propositions made for the event, the teams, the athletes or any other statement which involves the game for which the bet is being processed. 

These odds are nothing else than the likelihood of an event occuring, based on what the bookmakers’ believe or expect the outcome to be. The betting odds are, thereby, compiled and set by the oddsmakers and they represent the sportsbooks’ estimations that the event is going to happen. 

Probability is also the likelihood of an event occurring. It shows how likely the event is to happen. Wait… Are they the same? Are odds and probabilities the same thing? 

Well, no. They are different. 

Odds represent the likelihood that something will occur as opposed to the likelihood that it will not occur. Probability represents the likelihood that something will occur, taking all the possible outcomes in account, not just the outcome of ‘not occurring’. 

Odds are calculated based on a ratio, while probabilities are calculated as percentages.

But there’s more to it, particularly when we are talking about betting odds and probabilities. 

In betting, setting odds is done by the bookmakers in order to express their estimated chances of something happening. But these odds are not plain chances – they have something built-in to them, a margin, which is the guaranteed profit for the bookmaker. Remember that sportsbooks are not running charities. They want to make profits and so, they set the odds in such a way that the chances and the margin are integrated into one figure, expressed as the odds. 

Note that both odds and probabilities remain the same, regardless of whether you are using cash or other currencies, like cryptos, in your betting game. So, it is important for every one of you who likes to bet, to understand what each one stands for. 

Now, since the odds are not the true chances or plain chances, how can we calculate the implied chances of something happening? Simply enough, we find the implied probability of the event based on the odds. 

It is important to be able to tell the implied probability of an event, based on the odds given by the bookies, because in the end, the best probability is more likely to come true. 

When bookmakers have something as very probable (high probability), then it is indeed very probable and when they have something as very unlikely to happen, then it is indeed unlikely to happen. Of course nothing can be guaranteed, but keep this in mind. 

How to turn odds into implied probabilities

There are formulas which help you transform betting odds into implied probabilities. For each different type of odds -decimal, fractional or American odds – there is a different formula. 

For the decimal odds, you only need to do the following: 

1/decimal odds * 100 or simply 100/decimal odds

So, when we see a bookmaker giving, for example, 5.10 odds for a team to win a football league, then we know that the bookmaker believes the team to have 32.3% chances of winning. 

For the fractional odds, you need to calculate:

(denominator/(denominator + numerator))*100

So, if you have Carlos Alcaraz with a 5/6 odds to win the next major tennis tournament, then you know that bookies give the Spanish tennis player almost 55% of eventually winning it. 

For the American odds, there are two things to take into account. 

If you want to convert odds of the favorites to implied probability (with a minus sign), then you will do the following formula:

Odds/(Odds +100)*100

So, for the Milwaukee Bucks to win a game with odds of -145, we have an implied probability of 59% for the team to score its victory.

If you want to calculate the implied probability for the underdog (the positive sign), then 

100/ (Odds + 100)

So, for an underdog the odds of 600 mean that the bookies give this team 14.29% chances of winning.