Betting Odds – Definitive Guide (2024)

  • 12 mins read

Understand the 2 common betting odds systems, and when and why it is useful to switch between them. Plus, we cover Starting Price, Overround, and Wisdom of the Crowd.

  • Fractional odds (e.g. 5/1) make it easy to see how much profit could be made relative to the stake. However, different possible denominators may make comparing odds at a glance difficult.
  • Decimal odds (e.g. 6.0) make it easy to calculate accumulator returns quickly, as well as comparing odds at a glance.
  • Switching odds formats is easy to do with most online bookmakers, and may be helpful depending on what you are doing at the time.
  • Learn about Starting Price betting, where you do not know in advance what odds you are getting. Nevertheless, sometimes this might be a good option (or even the only option).
  • Find out what overround is, how it affects any bet you place. Understand it is in your interest to find relatively low overrounds.
  • We also cover how Wisdom of the Crowd affect odds.
  • Get stuck in to our definitive guide to learn all this essential information, before you place your next bet.

What are Fractional Odds?

Bookmakers in the United Kingdom and Ireland usually quote betting odds or prices using fractional odds (i.e. 5/1, 1/2, etc). Both the numerator and denominator are expressed as whole numbers.

fractional odds

Fractional odds show the payoff:stake ratio. The left hand number of the fractional odds is the amount of profit you will make IF your bet wins (PAYOFF). The right hand number is the amount you will have to gamble (STAKE). IF your bet loses, you forfeit the stake. If your bet wins, you get your stake back AND the payoff.

Fractional Odds Examples

  • 5/1 odds mean that if you bet £1, you will make £5 profit if your bet wins.
  • You will get back your original stake of £1 AND £5 profit.
  • Remember, the odds just show a ratio – you don’t have to bet exactly £1.
    • If you bet £2, you make £10 profit if your bet wins.
    • If you bet £60, you make £300 profit if your bet wins.
  • 1/2 odds mean if you bet £2 you will make £1 profit if your bet wins.
  • You will get back your original stake of £2 AND £1 profit.
  • This is an example of an odds-on price (the possible profit is less than the stake).
    • However, you would not lose any money if your bet wins, as you would get your stake back.
  • If you bet £10, you make £5 profit if your bet wins.
  • If you bet £200, you make £100 profit if your bet wins.

An intuitive way of thinking about fractional odds

  • Another way of looking at this is the fractional odds show the ratio of the amounts gambled by two parties.
  • Suppose a bookmaker offers 5/1 on a horse winning a race.
  • You decide to place a £1 bet on that horse.
  • Imagine your bookmaker puts in £5 into an envelope & you put in £1 into the same envelope.
  • So, there is £6 in the envelope.
  • If you win the bet (i.e. the horse wins), you get to keep all the contents of the envelope.
  • If you lose (i.e. the horse doesn’t win), your bookmaker gets to keep all the contents of the envelope.

What are Decimal Odds?

decimal odds

Decimal Odds show how many times your original stake (INCLUDING your original stake) you will get back if your bet wins. Obviously, this number should always be more than 1.0. This is because you should always get back your original stake if you win, plus some profit.

Compare that to Fractional Odds which only show the potential profit you will get back if you win. Of course, regardless of the odds system you will always get your original stake back if you win.

Let’s look at some decimal odds examples:

  • 6.0 – for every £1 bet you will get £6 back, if your bet wins. You make £5 profit, per £1 staked. 5/1 (Fractional Odds), and 6.0 are equivalent.
  • 1.2 – for every £1 bet you will get £1.20 back, if your bet wins. You make £0.20 profit, per £1 staked). 1/5 (Fractional Odds), and 1.2 are equivalent.

Comparing Decimal Odds to Fractional Odds

Fractional Odds are popular in the UK & Ireland. Decimal Odds are popular in Continental Europe, Australia, New Zealand, and Canada. However, even for UK bettors using Fractional Odds, we think it is useful to understand the Decimal Odds system. Why?

  1. As these betting odds systems are interchangeable, you may find it more intuitive to switch in certain circumstances. A good example is for accumulators (although, we do recommend you stay away from these).
    • Imagine the Fractional Odds on three bets you wanted to place as an accumulator were 2/1, 7/2, and 9/4.
    • If a £100 3 selection accumulator won at those odds, how much will you get back from the bookmaker?
      • Using Fractional Odds, you will have to use the formula: £100 x (2/1 +1) x (7/2 +1) x (9/4 + 1). This will show your return including your £100 original stake.
      • However, imagine these odds are already given to you in Decimal Odds form: 3.0, 4.5, and 3.25. Then there’s little left for you to do. Just multiply the stake by all the odds. There’s nothing more to do…£100 x 3.0 x 4.5 x 3.25 = £4,387.50 back (including your £100 original stake)!
  2. It is useful to understand the popular Decimal Odds system of expressing odds, as you can then compare odds across other bookmakers across the world. To convert Fractional Odds to Decimal Odds, divide the numerator by the denominator AND then add 1. For example 2/1 becomes 3.0 (2 divided by 1, then add 1).
  3. You may also be able to understand (and participate) in conversations on forums with bettors from around the world, who are using Decimal Odds to express odds rather than the Fractional Odds system.

What is the Starting Price?

starting price

Starting Price betting, will mean you do not know in advance what betting odds you are getting! Compare that to the situation, when you place a bet a fixed odds price. Let’s explore why you might want to bet at the starting price.

In the UK, a panel decides the starting price, based on how they view the fluctuations of prices. It should be the same regardless of which bookmaker you us.

Fluctuating Odds

  • Odds on horse racing can fluctuate, in the build up to the race.
  • When the race start time comes closer, it is clearer what the conditions will be like.
    • For example, is the ground heavy or soft, will it be raining or really hot at the time of the race, if any other horses have withdrawn, and if the horse has any issues etc.
  • Odds can thus fluctuate for many reasons, including the amount being bet on a horse.
    • So, with lots of money coming in, the price is likely to go down and vice-versa.

Non-starter protection

If you place a bet by taking the SP, and your horse doesn’t start, your stake will be returned. This will not usually be the case if you took a fixed price. An exception would be if the bookmaker was specifically running a non-runner no-bet promotion (NRNB).

Starting Price, the only option?

This may be the case for future races, where betting odds haven’t yet been set by your selected bookmaker.

Best Odds Guaranteed?

  • Some bookmakers run a Best Odds Guaranteed (BOG) promotion on certain horse races.
  • It is important that you read and understand all the T&Cs that apply, if such a promotion is offered.
  • Usually, if you take a fixed odds price after a certain time, but the starting price is higher, you will get paid according to the Starting Price.

What is Overround

overround

The betting odds offered are unlikely to correspond exactly to the actual probabilities of the outcomes in any market. This is because no bookmaker is likely to operate without trying to offset its costs and/or make a profit!

Bookmakers are likely to be taking money from lots of customers over the possible outcomes. They may try to guarantee themselves a profit regardless of the result.

  • Bookmakers may start a market by working out the actual probabilities of the outcomes in a market occurring. They then incorporate a profit margin into the odds they offer.
  • As money comes in on the market they will often adjust prices. This is to attract less or more money to particular outcomes.
  • For example they may want to limit their liability on an outcome they already face a big payout on if it comes through. Or, they may want to attract more money to different outcome(s) to one(s) they already have taken a lot of money on. This is to guarantee a profit or minimise potential losses.

Example of Overound

How do bookmakers use overround to try and make profits? As an example, here are the odds on a Rugby Union match. There are only three possible outcomes in this market:
The home team wins: 15/8
The match is drawn: 16/1
The away team wins: 2/5

You will need to apply the following equation to the fractional odds: denominator/(denominator+numerator)
Home Team Win: 8/(8+15) = 8/23 = 34.8% [h]
Draw: 1/(1+16) = 1/17 = 5.9% [d]
Away Team Win: 5/(5+2) 5/7 = 71.4% [a]
[h] + [d] + [a] = 112.1%

  • As these are the only 3 possible outcomes in this market, if [h] + [d] + [a] don’t equal 100% the odds cannot correspond to the actual probabilities of each outcome (as the sum of the actual probabilities will always equal 100%, if the market consists of the full set of possible outcomes).
  • If the sum of the percentages is above 100%, the market is in the bookmaker’s favour. The bookmaker could guaranteed itself a profit, if it takes the right ratio of bets on all outcomes. The amount over and above 100% is the overround.
  • It is unlikely any bookmaker will offer a market at less than 100% (unless they have made a temporary mistake). Otherwise, all the bettor would have to do is place a bet for the appropriate amount on each of the outcomes and guarantee a profit.

Look for the lowest % after using the method above, e.g. 115% is better than 120%. A bookmaker may offer different amounts of overround on different markets. You should also avoid accumulators due to compounding of overrounds, in the bookmaker’s favour.

How does Wisdom of the Crowd affect odds?

wisdom of the crowd

Wisdom of the Crowd refers to the phenomenon that a large number of individuals in a group, will usually be able to make better decisions than any individual in that group. For example, at a funfair say their was a big jar with an unknown amount of marbles. People were asked to guess the number of marbles (with the closest getting a prize).

  • If you took all the guesses and averaged them (provided there was a sufficient number of people in the group) it would usually come close to the actual number of marbles in the jar.
  • Obviously, the more people who participated the closer to the actual number you would get.
  • This happens, because individual noise is filtered out.

Wisdom of the Crowd affects betting odds as bookmakers will want to lower prices getting a lot of action. Or, increase prices not getting a lot. So, highly backed outcomes get their prices lowered, and less well back outcomes get their prices increased.

When does Wisdom of the Crowd affect betting odds?

However, for Wisdom of the Crowd to work people have to be making rational and independent decisions. In the case, of marbles in the jar at the funfair this may be the case. In the case, of betting markets this may not be the case.

Lots of fun bettors

  • In a competition, where a large number of people bet for fun as an ‘one-off’ rather than a competition that attracts regular bettors, distortion will likely be seen in certain prices.
  • Perhaps the best example of this is the Grand National. Many people place a bet for the only time in the year, on this event, as a tradition.
    • Many will be picking horses based on just the name of the horse. For example, the name means something to them, for example a colour mentioned in the name of the horse relates to a team they support in some sport.
    • They will not have considered whether the odds offer value. Instead, they will back the horse regardless of whether it’s at 35-1 or 25-1!
    • Prices of horses which contain colours or names that may be related to popular football teams may be much shorter than their true probabilities.
    • People often support a horse due to irrationality (due to a colour mentioned in the name of a horse), and/or not independently (just betting on a horse because their mates are doing so too).

International competitions, with home team

  • Consider international competitions, where there is a home team playing. The home team’s price of winning a particular match may be lower than their true probability would suggest. This applies to bookmakers who only or mainly accept bets from the home team’s country.
  • People may be betting irrationally. This is due to patriotic support for the home team, regardless of the prices). They will not be betting independently (believing their teams chance are higher than they are due to hype in the press, or among their social group).
  • This may also apply to any markets the home team is involved in, such as Tournament Winner or Top Goalscorer. England to win the football World Cup, often is offered at a shorter price than that true probability would suggest (at UK bookmakers).
    • To see for yourself, look at the prices offered by bookmakers only accepting bets outside the UK. You may find odds on England higher.

It’s not all bad news…

On the other hand, if some prices become too short, others will often become better!