Understanding betting odds. Fractional odds
For anyone who is going to engage in sports, casino or any other type of betting, it is essential to understand the odds and the way they work. One cannot become good at betting without having a profound understanding of the main types of betting odds, their formats and ways of interpreting them.
There are three main types of betting odds. These are fractional odds, primarily used in the UK; decimal odds, mainly used in Europe; and moneyline odds, which is the preferred betting format in the US.
Al these types of odds are essentially the same in terms of payouts, although they present a percentage probability of the event in different formats. This percentage probability can be converted and presented in any of the three betting odds formats.
Fractional odds or traditional odds are commonly used in the UK by British and Irish bookmakers. They are normally written with a “slash (/)” or a “dash (-)”, for example 5/1 or 5-1, and called as “five-to-one.”
Some of the world’s most prominent bookmakers prefer using fractional odds, making this format universally popular.
A fractional odd of 5/1 designates that a bettor wins $5 on every $1 wagered in addition to the initial stake amount. For instance, if someone bets $5 at 5/1, the total return will be $30 – ($25 profit + $5stake).
Thus, the formula for calculating the total potential return on a stake is:
Total Return = [wagered amount x (numerator/denominator)] + wagered amount
Whereas numerator/denominator designates the fractional odd, e.g. 5/7.
For example, imagine that some sports betting website provides the following fractional listings of odds for futures betting to win NBA Tournament. The odds for three prominent teams are announced as follows:
Boston Celtics: 8/9
Washington Bullets: 7/2
Chicago Bulls: 5/1
We can see that Boston Celtics are the favourites, while the odds on Washington Bullets and Chicago Bulls are higher. This means that bettors would win only $8 on every $9 wagered on Boston if they win the tournament. At the same time, one would win $7 against each $2 wagered on Washington, – the outcome, which is less likely to happen. For Chicago, one gets $5 on each $1 wagered.
If a player bets $100 on Boston Celtics to win, he could make $88.89 profit [$100 x (8/9)] plus the initial $100 wagered. The total return, in this case, would be $188.89. If $100 is wagered on Washington Bullets to win, the expected profit would be $350 [$100 x (7/2)], and the total return, in this case, would be $450. Betting on the underdog Chicago Bulls would yield even higher profit of $500 [$100 x (5/1)]. Adding the initial bet amount of $100 would bring the total return to $600.