The Math Behind Gambling and Betting Odds

Oct 20, 2017 by

The numbers behind gambling look like heavyweight mathematics at first, but once you delve into it things actually become fairly straight-forward. Still, it’s certainly something you should look into if you’re planning on making anything more than the occasional flutter. Let’s break down some of the basics.

Know Your Odds

There are three different formats for most odds, but they all effectively serve the same purpose. Fractional odds (also known as British odds) are used mostly by bookmakers in Ireland and Britain. Their usual format is in with a forward slash or a hyphen, so the 8-1 is pronounced “eight-to-one”. That means for every one currency wagered you would see eight returned. The higher the fraction usually the more popular a result is. Decimal odds are usually to be found in continental Europe and certain parts of the world like Canada and Australia. The decimal odd shows the amount you win for every one unit of currency wagered, which can be quicker to grasp because there’s no maths involved and the favourites and underdogs are instantly apparent. Decimal odds also display the overall return, rather than just the money made on the original stake. American odds (sometimes known as Moneyline odds) are, predictably, popular in the USA at top rated online casinos. The odds are joined by a minus symbol that shows what you need to wager to achieve a return of 100 units of currency. Once you’ve grasped the fundamentals of these odds, you can move out to looking at the finer complexities in and around these gambling mechanics.

How It Really Works

Once you’ve got a handle on fractional, decimal and American odds, you can start breaking down these odds into their ultimate implied probabilities. The different type of odds can all be converted back and forth from each other. The general factor at work behind all of these odds works as the implied probability of an outcome being the sum of the stake divided by the total payout. So, simply divide the wager by the payout offered to get the implied probability. The thing is, the odds alter as more and more bets get placed in real time, which means odds could change dramatically from moment to moment, plus different bookmakers can offer quite different odds for a particular bet depending on their odds accumulation process. They have to be careful to make sure bets remain tempting to punters, even in the case of putting a stake on a clear favourite.

How Do The Bookies Always Prosper?

Usually, the bookmaker won’t display their raw data as the advertised odds, but factor in a profit margin to ensure their success, meaning that the punter’s return will probably also be lower than the maths on implied probabilities would suggest. Then, the bookies also have to offset the odds to ensure that there’s not an even split on the money at stake if either team wins. It follows as well that players receive more hands you play the smaller your payout is likely to look. The gambler is therefore compelled to play more hands in an effort to recoup, even the statistically this is likely to result in further losses. Unfortunately, when it comes down to the raw numbers, the game really is rigged.

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