When you’re new to internet betting, odds can seem daunting. What are they anyway? How do I calculate them? And how do I make the most of them?
Don’t be intimidated. This doc is for you. Let’s crack open a champagne bottle and dive right in.
What Are Odds?
Put yourself in your opponent’s shoes for a moment. What do you understand about odds?
If you’re like most people, you’ve heard of odds. Maybe you’ve even used them before. For instance, if you’re playing the lottery and you have a 1 in 18 chance of winning, the odds are in your favor. But if you’ve ever played Russian roulette or craps, then you know exactly what odds are. They are the ratio of the amount of a particular outcome (in this case, winning) to the total number of possible outcomes (in this case, 17).
So, when you’re talking about bookmakers’ odds, you are essentially talking about the probability that one event will happen (e.g., the Cubs winning the World Series) divided by the probability that another event will happen (e.g., Hillary Clinton becoming president).
Why Should I Care About Odds?
Odds are all about probabilities and make no assumptions about the underlying distributions of variables. A 5 year-old could explain it to you:
“In sports betting, we say that the odds are in favor of whichever team has more wins. Like when you’re playing the lottery and you have a 1 in 18 chance of winning, the odds of you winning are 1 in 18,”
– Five year-old kid, explaining why you should care about odds in betting.
Probabilities are simply the odds’ ‘s other half. For example, if you have an 18% chance of winning the lottery, then your odds are 1 in 9. That’s because 18% is the same as 1 in 9. This is also known as the ‘law of large numbers’.
“The concept of probability is fundamental to any understanding of statistics and odds. If we look at betting as a form of gaming, then we can apply many of the statistical methods that we use in everyday life,”
– David Coles, Ph.D., Professor of Economics at the University of Warwick, UK.
Why Should I Care About The Underlying Distributions Of Variables?
Odds are always calculated assuming that the variables have a normal (or at least a reasonably normal) distribution. Why is that? It’s important, because if they don’t, then some of the basic rules that we rely on to make odds work don’t apply. Take a look at this classic example. Let’s say that we want to find the odds of the Cubs winning the World Series. To do that, we need to know whether or not they will win. So, we can’t assign them a probability, because we don’t know if they will or won’t win. The same goes for a whole lot of sports, betting, and games in general.
This is why we always assume that the variables we are playing with have a normal (or at least a reasonably normal) distribution. If we don’t know what that is, then it’s difficult to determine whether or not we should be using the odds that a bookmaker has provided.
How Do I Calculate Bookmakers’ Odds?
If you’re curious, you can find the exact formulas used by most bookmakers to calculate odds. They are available on the internet and some bookmaking software. But it’s usually easier to rely on the software to do all the hard work for you.
For example, in the case of the Cubs and the World Series, Phil Ivey had this to say about creating favorable betting lines: “I try to always put myself in my opponent’s shoes and look at things from a different perspective, and that’s how I approached this situation. I used to work for a bookmaker. I would always look at the underdogs and why they were the underdogs. So, I took a look at the World Series and saw that the Cubs were the underdogs. But then I thought, well, actually, they’re pretty good and are more than capable of winning the World Series. So, from a betting standpoint, my opponents probably don’t understand why they’re the underdogs. But from a mathematical standpoint, the underdogs actually are the favorites. So, from a mathematical standpoint, it’s an advantage to bet on the Cubs.” – Ivey, as quoted in Forbes magazine.
If we want to find the odds of the Cubs winning the World Series, we first need to determine whether or not they will win. To do that, we will use the formula:
(Chance of winning x 2) ÷ (Total Number of possibilities)
“2” comes from the fact that there are 2 teams in the World Series. Then, we need to find the total number of possible outcomes of the World Series. To do that, we will use the formula:
(Total Number of possibilities) = 22! ÷ 2
The resulting number is 139,296,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000.
If you want to find the odds of the Yankees winning the World Series, you can use the same formula, but with “1” instead of “2” in the numerator and “24” instead of “22” in the denominator. The resulting number is 12,976,400,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000.
What Are The Most Commonly Used Variables In Sports Betting?
The most commonly used variables in sports betting are the following:
- Odds: These are the odds that a bookmaker gives you for a given event. They are always expressed as a fraction – e.g., 5/1 (5 to 1) mean that your chances of winning are 5 times greater than they are for the opposing team.
- Probabilities: These are the chances that an event will happen. They are generally calculated using the ‘Law of Large Numbers’, which we mentioned above. The chances of the Cubs winning the World Series is approximately 68%.
- Money lines: These are the types of bets that you make when you’re betting online. If you wager on the Cubs and win, then the amount that you win is determined by how many points you bet (e.g., +110 means you’re winning by 110 points). Money lines are popular because they give people the flexibility to engage in risk-free wagering as well as provide a fast, easy method of placing bets. The downside is that if the outcome is unlikely, then you could lose a large amount of money quickly. For example, if the Cubs win the World Series, but you bet on them at odds of 5/1, then you would lose 25 times your initial investment.
- Fields: Another alternative to money lines is betting on ‘fields’ instead of individual players. A field is simply a division of a team – e.g., the NL East is the division of the Atlanta Braves, Washington Nationals, and Florida Marlins.
- Percentages: If you’ve ever played the odds game on a slot machine, then you’re already familiar with this type of variable. The percentage represents how much you won (or lost) compared to what you risked. So, if you bet $10 and win $15, then your percentage is 15%.
- Totals: If you’re interested in investing in a horse, then you can use this type of variable to determine how much money you’ll eventually win. For example, the total for the Chicago Cubs this season is 8 wins. The total for the Detroit Tigers is 5 wins. So, if you’re looking for a low-risk investment, then you could purchase a horse that is winning the overall total. The downside is that if the final outcome is not what you’re looking for, then you could lose your entire investment.
How Do I Interpret The Results Of My Investments?
In addition to helping you calculate the odds of various outcomes, the results of your bet can also be used to help you interpret them. Here’s a cheat sheet: