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Everything you need to know about how betting odds work.

Oct 27 2023, 4:20am | 6 min read

Don't know your American odds from your decimal odds? This article will help shine a spotlight on how betting odds work across all available format, from American odds through to fractional odds. Once you know each format works it will be easier to master your sports betting and pinpoint value prices in the markets.

Carry on reading to discover:

- What plus and negative odds mean in sports betting
- How to calculate payouts based on American, fractional and decimal odds
- How to read betting odds

Unsurprisingly, American odds are the most popular way to display sports betting odds online and with retail sportsbooks. Primarily, the American odds system is based around a plus/minus system for calculating favorites and underdogs, as well as payouts - there'll be more on that later.

American odds work different depending on whether you are betting on a favorite or an underdog. When you are betting on a favorite, the American odds are displaying how much money you would need to wager in order to win $100.

When you are betting on an underdog - be it on a Moneyline or even a handicap market - the American odds are showing how much money you could win from a $100 wager.

How do betting odds work in the reality of a sportsbook market? Let's give you a few examples to try and demonstrate how easy they are to read and understand once you get the hang of it:

**Example 1**
In the NFL odds, the New England Patriots are priced at -125 on the Moneyline against the Washington Football Team who are priced as +825 underdogs. To win $100 betting on the Patriots, you'd need to wager $125. You would win $825 betting on Washington with a wager of $100.

**Example 2**
Kansas City Chiefs are clear -320 favorites to win the next Super Bowl. While the Philadelphia Eagles are priced as +725 underdogs in the Super Bowl futures market. To win $100 betting on the Chiefs, you'd need to wager $320. You could win $725 betting on the Eagles with a wager of $100.

It's also easier than you think to calculate implied probability of expert picks by handicappers using American odds. Implied probability is useful to pinpoint value odds if you believe a team or athlete has a better chance of winning than their odds suggest.

To calculate implied probability using underdog (positive) odds, divide 100 by the positive odds + 100. Let's say Team A was priced at +110. The equation would be 100 divided by (110+100) = 0.476. Multiply this by 100 to get your percentage - 47.6%.

To calculate implied probability using favorite (negative) odds, divide the negative odds by the negative odds + 100. Let's say Team B was priced at -130. The equation would be 130 divided by (-130+100) - basically 130 divided by 230. This comes to 0.565. Multiply this by 100 to get your percentage - 56.5%.

The plus and minus signs used in American odds denote the favorites and underdogs in sports betting markets. Negative odds relate to favorites on the betting line, while positive numbers signify underdogs on the betting line. For example:

Calculating your potential winnings from sports betting using American odds is easier than you think. You already know that betting on favorites in American odds relates to how much you must wager to win $100. Meanwhile betting on underdogs in US odds relates to how much you can win from a $100 wager.

However, what if you wanted to wager just $30 on a favorite? Below is a quick example of how to calculate possible payouts from more modest sports bets, using the example in the section above:

The Boston Celtics are priced at -275 against the Hornets. If you wanted to wager $30 on Boston at -275, you could determine the potential winnings using the following formula:

275 divided by 100 = 40 divided by x Cross-multiply to get 275x = 3000 and then solve for x x = 3000/275 x = 10.91 Wager $30 on the Nets at -120 to potentially win $10.91 (plus your $30 stake returned).

Fractional odds are one of the most popular ways to display sports betting odds in the UK. They are also commonly used in horse racing, including some US racetracks too. Fractional odds are usually displayed like 5/1 or 1/3. In these two examples, they would be pronounced as "five to one" and "one to three" respectively.

The number to the left of a fractional odd denotes how many times a sportsbook believes the outcome won't happen. The number to the right of a fractional odd signifies how many times a sportsbook anticipates the outcome will happen.

It's easy to calculate the implied probability of fractional odds. If Manchester United are priced at 1/2 to defeat Brighton & Hove Albion, this means the sportsbooks believe there is the following implied probability that the Red Devils will win:

Every three games between Man Utd and Brighton, United would defeat Brighton twice. To calculate the implied probability, divide the number of times United would win (two) by the total number of games (three).

Two divided by three = 0.666667 0.666667 x 100 = 66.67%

Decimal odds are the third most popular way to display sports betting odds. They are most used in European sportsbooks and on the leading sports betting exchanges.

Decimal odds are typically displayed like 2.20 or 4.50. As a matter of fact, decimal odds are considered the easiest to calculate potential payouts from real money and free bets, as well as the implied probability of a team or athlete winning.

To determine the potential winnings from a bet in decimal odds, just multiply the size of your wager by the decimal odds you're betting on, before subtracting your original wager to get the final payout.

Let's say the New York Yankees were priced at 2.20 to defeat the Chicago Cubs and you wanted to wager $50 on the Yankees to win:

2.20 x $50 = $110 $110 - $50 (original wager) = $60 winnings

To calculate the implied probability using decimal odds, let's use the same example of the New York Yankees:

1 divided by 2.20 = 0.4545 0.4545 x 100 = 45.45% chance of the Yankees beating the Cubs