How do Betting Odds work in Football?
If you are new to sports gambling and are looking to place a bet on next week’s football games, some of the terminology involved may be confusing, and can be potentially off-putting for the uninitiated.
One of these terms is the betting odds, an expression that everybody knows, but which is not necessarily clearly understood. In essence betting odds is a numerical expression of the likelihood of an event occurring or not.
How Odds are Expressed
Odds can be expressed in a variety of ways – Moneyline, which is commonly associated with sports betting in North America, and the two systems most familiar to people in other parts of the world – fractional and decimal odds.
Fractional odds, which are used in the United Kingdom and Ireland, are displayed typically in forms such as 3/1, 7/2, or 9/4, and allow a gambler to calculate how much they will win in comparison to their original stake.
For example, at odds of 9/1, for every £1 bet, they will win £9. This can also be calculated as 1/(9 +1) = 0.1 which means that there is a 10% chance that the bet will succeed. Equally, at odds of 7/2, they will win £7 for every £2 bet, which equals to a 2/9 (7+2) or a 22% chance of winning.
Decimal odds, by contrast, which are used throughout the rest of Europe, and in countries like Australia or Canada, show a player how much they will win if their bet succeeds. So odds of 7 indicate that they will get back, for every euro bet, €7, consisting of winnings of €6 plus their original €1 staked.
Both methodologies have their merits, but the fashion is trending towards decimal odds because they are easier to understand. This is because factional odds report winnings, and do not take into account the fact that, if a bet succeeds, the punter not only gets their winnings, but also their original stake back as well.
How Bookmakers Calculate Their Odds
To gain an understanding of how a bookmaker calculates their odds, then it is important to grasp the idea of implied probability, a concept which can be found also in many market-based transactions, including swaps, futures, bonds, and currency markets. Implied profitability, in essence, is merely the conversion of odds into percentage terms.
Normally the sum of 2 probabilities occurring is 100%. So, for example, if a coin is tossed, there are only two outcomes, heads or tails, and the sum of betting on either will always equal 100%. However, where betting on football – or any other sport, for that matter – is different is that, if all the odds for a particular bet are added together, the total of the probabilities exceeds 100%, This incremental element represents the bookmaker’s profit.
This is best represented by examples.
For the forthcoming Premier League fixture between Chelsea and Liverpool, the following odds might be offered by a bookmaker:
- Chelsea – 3.5 (1.91); Liverpool +3.5 (1.91).
Ignoring the possibility of a draw, if we bet Chelsea win, we either have a pay-out of £0 if they lose or £191 if they win.
Equally, if we bet on Liverpool, we either have a pay-out of £0 if they lose or £191 if they win.
To calculate the implied probability for each outcome, we take the amount staked and divide it by the total pay-out:
- Chelsea wins 100/191 = 52.4%
Liverpool wins 100/191 = 52.4%
Both outcomes added together are equal to 104.8% which means that, to cover both bets, a player would have to spend £104.80 to win back £100. The £4.80 is the bookmaker’s profit.
The same principle applies when the odds differ. For example:
Chelsea 1.75, Liverpool 2.2.
Betting £100 on Chelsea, we gain nothing in the event of a loss, but win £175 if our bet succeeds. Equally, if we bet £100 on Liverpool, we either win nothing or £220. Again, ignoring the possibility of a draw, the two implied probabilities are:
Chelsea wins 100/175 = 57.14%
Liverpool win 100/220 =45.45%
Adding the two together gives a total of 102.59%, with the incremental part representing the bookmaker’s margin.
It is worth noting that the odds offered by different bookmakers on the same event may vary. All leading firms employ statisticians and complex algorithmic computer models to calculate probabilities. However, no two algorithms are the same, which is why you will find marginal differences in the odds offered by the leading firms for the same teams, horses, and players etc.
In general, bookmakers make anywhere between 5% and 20% profit, depending on the type of sport on which they are running a book. When choosing your bookmaker, therefore, try and choose the one that is taking the lowest margin in total, as they are likely to be offering the fairest odds.