What do betting odds signify for each option?

💡What are betting odds?
❓Do different format odds mean different things?
⚽What do the changes in the odds show when punters make their bets?
📈How accurate are betting odds in predicting an event's outcome?

Betting odds are fundamental to all forms of betting. Without them, betting would cease to function.

Yet despite this considerable importance within the betting industry, many punters fail to understand or do not fully appreciate the information that betting odds provide.

In this article, we will explore precisely what betting odds tell us. We will look at what the different format of odds mean, the information odds give us both on a newly created market at a bookmaker, and also on a market that has attracted money and seen the odds fluctuate.

We’ll then conclude by asking an important question: How accurate are odds in predicting the outcome of an event? In other words - Do the bookmakers always have their markets priced up accurately?

Let’s begin by asking the most straightforward and important question : What are betting odds?

What are exactly betting odds?

So, what exactly are these betting odds that hold so much significance in the world of sports betting? Let's uncover their true nature.

The primary function of betting odds is simple to understand. They are the foundation for bookmakers' acceptance of bets.

Think about it. Without odds, punters would simply be betting on statements or outcomes. They would have no idea of the likelihood of their bet winning. Nor would they know how much they stand to win.

Bookmakers would not be able to calculate their potential incomings in bets received and outgoings in terms of winnings paid out on any event. In short, any form of betting would not function without odds.

Now that we understand their vital importance let’s now discuss the key information odds provide.

Betting Odds - The Key Information

There are two pieces of information odds provide for punters. The first is well understood. The second is less so.

1. Odds tell you how much you can expect to receive back from your bet.

Every punter should know that the odds on a chosen selection tell you exactly what to expect back as winnings, should your bet succeed.

For example, if you place a bet of £10 on Manchester City to beat Arsenal at odds of 2/1, then those odds state that you will receive two times (2) your stake (1) back as winnings. Hence - 2/1.

In this example, your £10 bet would win you £20, plus you would get your £10 stake back, for a total return of £30.

This is the case for all the different odds formats used, although the calculation used to discover your potential return is slightly different for each (see the section below).

2. Odds also tell you the implied probability of a selection winning that bet.

Less appreciated by punters is the fact that the odds stated on a selection, especially when a market is first made available, can be used to tell you how probable it is that this selection will win.

All punters understand that the ‘longer’ the odds, the less chance their is of that selection winning. Similarly, the ‘shorter’ the odds on a selection, the more chance it has of success.

However odds go beyond merely indicating the likelihood and allow you to calculate the implied probability of a bet being successful.

What is implied probability? It is simply the probability (usually expressed as a percentage) of a betting selection being successful, based on the odds offered for that selection.

For example, if Manchester City were priced at 2/1 to beat Arsenal, then the implied probability of that bet is a 33.3% chance of success. If a horse is priced at 4/1 to win a race, then it would have an implied probability of a 20% chance of success.

Converting odds (of any format) into implied probability is an essential skill for punters. It allows them to fully appreciate the chances of success their selection has, in the eyes of the bookmakers of course!

Do different format odds mean different things?

There are a number of different odds formats punters can use at bookmakers. The three most common are fractional odds (3/1, 100/30, 19/2 etc), decimal odds (5.50, 17.00, 2.63) and American odds (+200, -100, +650)

The different odds formats available all share an equivalence. This means that the odds stated in one format, have equivalent odds in each of the others. The same odds in all formats also have a shared equivalence with the implied probability of a selection winning.

This may sound complicated, but it is surprisingly simple to understand. Here’s an example of how different formats of odds all mean the same thing and how each relates to the same implied probability of that selection.

Odds Equivalence - Examples

Fractional - 1/3 equates to Decimal - 1.3 and American -300. An Implied Probability of 70%
Fractional - Evens (1/1) equated to Decimal - 2.0 and American +100. An Implied Probability of 50%
Fractional - 3/1 equates to Decimal - 4.00 and American +300. An Implied Probability of 25%
Fractional - 13/2 equates to Decimal - 7.50 and American +650. An Implied Probability of 13.3%
Fractional - 20/1 equates to Decimal - 21.00 and American +2000. An Implied Probability of 4.8%

You can clearly see how the odds relate to each other regardless of format. Also visible is how different format odds of the same relative value all share the same implied probability. Lastly, it is also much easier to understand why longer odds mean less chance of your selection achieving success due to a much lower Implied Probability.

What do the changes in the odds show when punters make their bets?

However, the one thing that is most notable about odds, is that they can fluctuate in value either shortening (decreasing in value) or lengthening (increasing in value). These changes in the value of odds on selections can also give punters additional information.

Shortening prices usually indicate a significant amount of money has been bet on that selection. This forces the bookmaker to reduce their risk on paying out too much on that selection and so they reduce the odds to make it less attractive to punters.

Lengthening prices indicate less money is being wagered on this selection and the bookmaker increases the odds on this choice to make it more attractive to punters to bet on.

While bookmakers use fluctuating odds to ensure they cover their losses on any betting market, for punters they are a great indicator of which selections are attracting the most betting money from other punters.

How accurate are betting odds in predicting an event's outcome?

This is an important question, but it is also one that is tricky to answer! Truthfully, the answer is that they are accurate enough for bookmakers to operate at a profit. But equally, the odds are not accurate enough to make betting on the favourite every time the sensible choice for punters.

That is a good thing, as it means that those longer-odds wins, which offer some of the best returns for punters, are still a relatively regular occurrence. That is what makes betting so popular and why odds are only an indication of what the bookmaker feels will happen in that particular event.

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