Are you an online gambling pundit? Or are you new to the art and science of winning at casino games? Have you considered learning how betting odds are calculated or are you determined to rely on guesswork, luck, and chance?
While it is essential to note that all casino games are largely games of chance, there is still a mathematical element to the betting odds. Consequently, the question that begs is whether, and for how long, you can survive without gaining insight into how betting odds are calculated?
The straightforward answer to this question is: Yes, you can survive without understanding the math behind betting odds calculations. However, you will only be able to make decisions based on luck or chance. If you understand how betting odds are calculated, you will reduce your dependence on guesswork or luck, and increase your odds of winning because your decisions have a scientific basis. Finally, even though this argument is relevant for all forms of gambling games, it becomes particularly relevant when betting on sporting events.
Consequently, let’s consider several ways mathematics is used to calculate gambling odds as implemented by online casinos and sports bookmakers featured on BestCasino.
1. Betting odds described as probabilities
A probability is defined as the calculation that determines how likely an event is to occur. By expanding on this definition, let’s consider the following scenario:
Let’s assume that there is a football (soccer) match between Manchester United and Liverpool. And, you want to calculate the probability of both teams winning and losing. It’s important to note that this number is usually expressed in a percentage.
Consequently, the simplest form of a probability calculation is as follows:
There are two teams: Manchester United and Liverpool.
Because there are only two teams, and the options are win or lose, the probability calculation is 100 / 2 (one hundred divided by two) = 50.
Thus, your hit rate of each time winning or losing is 50%. Therefore, each team has a 50% chance of winning and a 50% chance of losing.
If we were to determine the statistical chance that the favorite team will win the match, we need to consider the history of all the matches played between the two teams, as well as the number of wins and losses between the two teams.
Therefore, let’s assume that both teams have played each other 20 times in the past, and Manchester United has won 15 and lost 5 of their encounters. If we turn it around, the figures show that of the 20 times Manchester United and Liverpool have played each other, Liverpool has won 5 matches and lost 15 matches.
By using these figures, we can calculate the statistical probability of who the favorite will be to win the latest encounter between the two teams. It’s important to be cognizant of the fact that these are examples, are not based on any evidence, and they are designed to demonstrate the principle by using simple calculations.
Manchester United has won 2/3rd of the matches, and Liverpool has only won 1/3rd of the matches. Therefore, the hit rate of Manchester United winning is 66.34%, and Liverpool has 33.33% of winning. Again, if we turn the algorithm around, Liverpool has a 66.34% chance of losing, and Manchester United has a 33.33% chance of losing.
2. Calculating financial returns based on betting odds
It is essential to be able to calculate how much your winnings will be if you place a bet with the odds of winning specified ahead of the time. This calculation helps you determine whether the bet is worth placing or not.
If we use our case study of Manchester United versus Liverpool again, and the odds of Manchester United winning is 1:1 (decimal odds). Therefore, if you bet £100, your payout will be £100. Clearly, this bet is not worth taking. If anything, you will lose money by drawing the £100 out of your bank account. Service fees are levied on most banking transactions.
3. Fractional odds
Fractional odds are preferred by the British. And, the standard fractional odds calculation determines the profit or loss made when placing the bet. It does not include the original amount wagered. But, it’s not difficult to add the original amount to the final total.
For example, if you are betting £150 at the odds of 7/5. The profit calculation is the stake multiplied by the odds.
Profit = £150*(7/5) = £150*1.4 = £210. Therefore, your total payout will be £150 + £210 = £360.
4. American odds
American or Moneyline odds are the most popular way to describe a sports match’s betting odds. Let’s consider the following example:
The odds of Manchester United beating Liverpool are:
Manchester United -200 Liverpool +250
The minus sign indicates which team is the favorite. The plus sign indicates which team is the underdog. And, the larger the numerical value, the larger the favorite or underdog. Therefore, in our example, Liverpool is a greater underdog to win the match as Manchester United is the favorite team to win the match. And, the profit calculation is slightly different between the two. To calculate the total payout, just add the stake to the profit.
Let’s assume you place £50 in Liverpool to win. If they win, your profit will be calculated as follows:
Profit = stake * (odds/100)
Profit = £50*(250/100) = £50 * 2.5 = £125.
Payout = £125 + £50 = £175.
And, if you place £50 on Manchester United to win, your payout calculation is as follows:
Profit = stake * (odds/100)
Profit = £50*(200/100) = £50 * 2 = £100.
Payout = £100 + £50 = £150.
5. Decimal odds
As highlighted above, the decimal form of the betting odds is displayed at 1:1. Let’s look at a payout calculation based on the decimal format. It’s important to note that the total payout is calculated with this method.
Again, Manchester United is the favorite to win at 2:4, and you wagered £150 to secure your bet, the payout calculation is as follows:
Payout = Stake * odds = £150 * 2.4 = £360.
If you want to calculate your profit and not the total payout, the calculation is as follows:
Payout = Stake*(odds -1)
Payout = £150 * (2.4-1)
Payout = £150 * 1.4 = £210
As described at the outset of this article, it is essential to understand the different betting odds formats. Secondly, it is equally important to correctly interpret these odds calculations as this is the only way you can determine whether it is worth placing a bet or not.