How Do iGaming Sites Calculate Their Odds?
Image source
We have three discrete types of odds in the betting world; fractional, decimal, and American. The New York Times indicates that the odds for all the games provide an advantage for the bookmakers. Before wagering, you should understand how the odds are calculated. Each odd represents a different arrangement of presenting possibilities.
Bookies can use any of the odds to present probabilities. However, bookies can change from one type of odd to the other. The odds are a gambler's chance of winning and the amount they stand to win if a wager is successful. The bookmaker always has a profit margin added to the odds.
Below are ways in which online betting sites calculate odds.
1. Betting Odds and Probability
Betting odds represent the possibility of an event happening from the bookmaker's perspective. In Europe, fractions (4/3) and decimal odds (2.5) are common. The other type of odds is American or Moneyline, in which a plus or minus is in front of the number. Bookmakers can accept bets on such events as football and politics. A probability represents the chances of an event happening.
2. Conversion of Odds to Implied Probabilities
First, you should understand the three types of odds available. Then, master how you can translate the numbers into implied outcome probabilities. You can use a realtime sports betting odds API to increase your chances. It provides comprehensive data such as realtime scores, team statistics, and predictions.
Here is how to convert odds into implied possibilities:
Decimal odds signify the amount you can win for every $1 you stake. That is, if the odds are 4.00 that a given team wins, then the payout for a bet is $400 for each $100 staked.
Fractional odds are also commonly known as British or traditional odds. They are often written as a fraction like 4/1 or stated as a ratio like fourtoone.
Moneyline odds, also commonly referred to as American odds, have a plus (+) or minus () sign. The plus sign is given to a lower probability event but with a higher payout.
Several tools are available if you want to convert between the three types of odds. Also, most iGaming sites provide a choice of displaying the odds in the format of preference.
A formula is used to convert odds to implied probability. For instance, a bookie gives the odds of the Los Angeles Galaxy defeating inter Miami at 4/7. If you insert the numbers into a formula, you will get the implied probability of 57.14%. In this case, you divide 4 by 7 and change it to an implied probability of 57.17%. The probability increases when the number is higher.
For decimal odds, Chicago fire has 2.20 odds of winning a match. Then, the implied probability is 45.45%. You multiply the odds with the stake and change it to a percentage. On the other hand, the odds that the Lakers will win this year's NBA title is 250. Consequently, the implied possibility is 71.43%. According to the Washington Post, you can find a stale line of 21/2 or +31/2 at 110 odds (wager $110 to $100), giving you an edge over the house.
3. How Odds Work
According to Forbes, sometimes the payout shown includes the money you wagered. If you use decimal odds, potential winnings are included in the stake. Therefore, you read decimal odds as follows:
12.00 odds for a $100 stake would return $1200, including a stake
2.5 odds for $100 stake returns $250, including stake
The Moneyline or American odds are expressed as +100 or 100, with 100 as the important number. For instance, in an American basketball match, the odds are:
Los Angeles Lakers @ 125
Golden State Warriors @ +110
A win for golden state warriors with a +110 implies that for every $100 you bet on the team, you will win $210. That is your stake of $100 plus $110 profit calculated as $100/$100 x 110. Similarly, a bet of $10 wins $21, your $10 stake, and $11 profit ($10/$100 x 110).
The calculation for odds with a minus in front is different. So, for the Los Angeles Lakers, the 125 means they are favorites. Thus, you will win $100 for every $125 you bet. So, for example, a bet of $10 would yield $18.0, which is the sum of your $10 stake and $8 profit (calculated as $10/$125 x 100).
Concluding Remarks
Before starting betting, it is good to understand how odds work and be able to read, process, and use them in your favor. A thorough understanding of odds can help you develop advanced betting strategies for basketball, football, baseball, and any other sports you enjoy.
