When you come to place a bet, your bookmaker of choice will offer you odds on the outcome of the event that you’re looking to bet on. In essence, these odds are a reflection of the likelihood of a particular outcome happening, though it is worth bearing in mind that there are numerous things that can affect the actual odds you’re offered.
In the UK, they are usually expressed as a fraction, such as 2/1, where the 1 is what you stake and the 2 is what you’ll be paid out for every stake unit placed. Here, we’ll explain odds as a concept in more detail.
Why Do Odds Matter?
If you are relatively new to the world of betting, you might well wonder why it is that odds matter. After all, wouldn’t it be fairer to just get everyone to chuck in £10 and the person that bet on the winner gets to take home the pot? In reality, different outcomes have different likelihoods of happening, so odds are designed in order to reflect that as much as possible. Imagine watching a horse race in which one horse has never lost and another has never won. Would it be fair to have the same pot available for either of them winning?
Most people would say that it would not be fair, which is why odds come into play. The outsider, having never won a race before, will be considered a long-odds runner and the bookmaker will offer odds that reflect that. They might price the horse up at, say, 50/1. The horse that has won every race that it has taken part in, meanwhile, will have much lower odds as the bookmakers offer a price that more readily reflect the likelihood of it winning. It wouldn’t be right to simply put all the money into a pot without the ability of the horses taken into account.
That doesn’t mean that the horse with the best odds will definitely win, of course. Nor does it mean that the horse that the bookmaker has given long odds to has no chance of victory. Instead, the odds are reflective of the likelihood of a given outcome, as opposed to being for a nailed on outcome. There are all sorts of things that can stop results panning out the way that you might expect, with horse racing being merely an example sport. Odds matter because they give you a sense of what might happen, but they aren’t the be-all-and-end-all.
Do Odds Represent Probability?
The thing that you need to bear in mind when you’re looking at the odds that are on offer from a bookmaker is that they are not a true representative of the probability of any given outcome. There are all sorts of reasons why a bookie might offer certain odds, with one of the most important being that they have built their own margin into what is being offered. In order to understand this better, let’s look at a relatively simple action, such as the tossing of a coin, which should really be offered with Evens as the odds for either outcome.
If the odds were a true reflection of probability, bookmakers would offer odds of 1/1 and you would win £100 for a £100 stake when your selection is a winning one. If you were to speak to a professional bookmaker about the odds of a coin toss, however, you would discover that they would be more likely to offer odds of 10/11, which is just shy of being Evens. That means that the bookmaker would give themselves a margin of 4.7%, so bettors would lose five pence for every £1 that they placed on the outcome of the coin toss.
That is easy enough to understand, but things obviously become a lot more complicated when there is more than one possible outcome. The good news is that you don’t need to worry about it, as long as you understand the concept that, whatever the odds that are being offered, your bookie of choice will have built in their own margin and those odds in no way reflect the real probability of any specific outcome. Not only are bookies looking to build a margin into their odds, but there are other things at play too.
Using the previous example of the horse that’s won every race and the one that has never won, bookmakers will know that bettors will be reluctant to bet on the ‘loser’ horse. As a result, they might make the odds slightly longer in the hopes of enticing a few punters to bet on it so that the bookie can all but guarantee themselves a profit. Similarly, the more people bet on the ‘winner’ horse, the more exposure a bookmaker has so they need to drop the odds to limit their potential losses and make it a less attractive bet for people to place.
One of the thing that runs the risk of being complicated if you have never placed a bet before is getting your head around the formats on odds that are offered by different companies. In the United Kingdom, it is most common for bookmakers to offer odds in a fractional format. This means that they are written out like a fraction, such as 2/1, with the second number being your stake and the first number being the payout. For every multiple of the second number that you bet, you will be paid out the second number if your wager is a winner.
In other words, if you were to place a bet of £100 on an outcome with odds of 5/1, you would be paid out 5 x 100 if it won, meaning you’d get back £500. Bookmakers also give you back your stake when your bet wins, so your actually payout from them would be £600. Sometimes the odds can appear to be a bit more complicated, such as 4/5, say, but the mathematics is still the same. For every £5 you bet, you’ll get £4 back if your bet is a successful one. Bet £100 at 4/5, therefore, and you’re essentially placing 20 £5 bets, so winning it would result in 20 x 4 or £80 return, plus your £100 stake.
Another format of odds that you can come across in the UK is decimal. These odds represent the amount you’ll win for every £1 staked, with the difference being that the stake is already included in the maths. In other words, odds of 4.00 would mean that a £100 bet will see you get £400 back. It is the equivalent of a 3/1 bet, which would pay £300 plus your £100 stake back for a total of £400. Many people think that this is an easier way to understand the price as you simple multiply the odds by your stake to work out what you’d get back.
Incidentally, in the United States of America, they tend to use something called the Moneyline. This can be confusing to those that haven’t experience it before as the odds include either a minus sign (-) or a plus sign (+). The Moneyline odds are telling you how much you need to stake in order to win £100 when it’s – or how much you’ll win for every £100 you stake when it’s a +. Odds of -580 say that a £100 bet will win you £580, whereas odds of -760 mean that you’ll need to bet £760 to win £100 in profit. That is confusing, which is why it isn’t really used in the UK.
Calculating the Payout of a Bet
Before you place a bet, you’ll probably want to figure out what you’re going to get paid in the event that your wager proves to be a winner. We have already touched on this, but it is worth elaborating further so you get a real sense of what to expect if your bet ends up being a victorious one. If you want a (relatively) simple way of figuring out the mathematics for fractional bets, divide your stake by the second number then times it by the first. For example, 10/1 with a £10 stake becomes 10 divided by one = 10, times 10 = £100. Just don’t forget to add your stake back on too.
Each Way Bets
You can, of course, place Each-Way bets as well as bets on the Place. Each-Way bets require you to double your stake, which is important to remember when thinking about how much you’re betting. If you have a budget of £10, for example, then you’ll want to wager £5 Each-Way in order to ensure that your bet costs you £10 rather than £20. How much you’ll be paid out will depend on what the bookmaker offers, but it is not uncommon for them to pay 1/4 odds on the Each-Way part of your bet, which would work out as follows:
- Odds: 10/1
- Stake: £5 Each-Way
- Each-Way Winning Bet: 10 x £5 + 10/1 divided by 4 = 2.5/1 = £12.50 = £50 + £12.50 = £62.50 + £10 Stake Back for Total of: £72.50
Here is a quick look at some of the payouts that you would expect to get with different odds, showing both the decimal and fractional versions of the bet, presuming Each-Way payouts are at 1/4 odds:
|Fractional Odds||Decimal Odds||£10 Bet Payout||£10 Each-Way Payout||£10 Place Payout|