Why Understanding Betting Odds Matters
Every bet has odds associated with it, so understanding this concept is an important place to start for a beginner.
Sports betting odds tell you two key things:
✔️ How much can you win on a bet?
✔️ How likely a sportsbook believes an outcome is (implied probability).
Whether you’re betting on a game’s winner (moneyline), point spread, or over/under total, knowing how to read and interpret betting odds is essential.
The Three Main Types of Betting Odds
All betting odds tell the same story—potential payout and probability—but they are displayed differently depending on the sportsbook and region. Most sportsbooks allow you to view the odds in whichever format you prefer, but learning how to make these conversions in your head is worthwhile.
All betting odds can be converted into an implied probability, which we will review next. First, let’s look at the most common odds formats.
American Odds (Used in the U.S.)
📌 Format: +200 (underdog) or -150 (favorite)
Positive odds (+200): Show how much profit you’d make on a $100 bet.
Negative odds (-150): Show how much you need to bet to win $100.
Decimal Odds (Used in Europe, Canada, Australia)
📌 Format: 1.50, 2.00, 3.75
Decimal odds show total payout per $1 wagered (including your original bet).
Fractional Odds (Common in Horse Racing & UK Betting)
📌 Format: 5/2, 3/1, 7/4
The first number = profit, the second number = amount wagered.
Example: American: +200 Odds → Bet $100, Profit $200 (Total payout = $300) Decimal: 1.75 Odds → Bet $100, Total Payout = $175 Fractional: 10/1 Odds → Bet $100, Profit = $1,000
How to Convert Betting Odds into Implied Probability
Implied probability shows how likely a sportsbook believes an outcome is. You can calculate the implied probability of a bet by using the odds associated with the bet.
This is a crucial concept to grasp. Betting odds are the sportsbooks' best estimation of an event occurring. Winning a sports bet is essentially doing a better job of predicting the likelihood of an outcome.
Formula for Converting Betting Odds to Implied Probability:
✔️ For Positive American Odds (+200):
📌 Formula: 100 ÷ (Odds + 100) = Implied Probability (%)
✔️ For Negative American Odds (-150):
📌 Formula: (Odds ÷ (Odds + 100)) x 100 = Implied Probability (%)
Example: +200 odds = 33.3% implied probability & -150 odds = 60% implied probability
How to Calculate Payouts from Betting Odds
Not only do the odds forecast the sportsbooks' assessment of the bet, but they also give you insight into how much you can win. Knowing how much you can win is key to making smart bets.
Formula for Calculating Payouts:
✔️ For Positive Odds (+200): Profit = (Bet Amount x Odds) ÷ 100
✔️ For Negative Odds (-150): Profit = (Bet Amount ÷ Absolute Value of Odds) x 100
Remember, a +200 bet means the sportsbook thinks the outcome is unlikely to happen (33% chance), hence the larger payout.
Example: $100 on +200 → Profit = $200 (Total payout = $300) $150 on -150 → Profit = $100 (Total payout = $250)
How Sportsbooks Adjust Odds
Sportsbooks don’t just set odds and leave them—they adjust them based on the sports betting market. Like the stock market, sports betting is shaped by its users, who, in some cases, are betting serious cash on the right person, which has market implications.
Factors That Move Betting Odds:
✔️ Sharp Money – Professional bettors influencing the market.
✔️ Breaking News – Player injuries, weather, or suspensions.
It is a common misconception that sportsbooks adjust odds based on either trying to balance their book of action or from public money. Sportsbooks move their odds when they take significant wagers from customers who have market influence.
Certain players or extreme weather can also impact the odds of a bet. If Luka Doncic is ruled out for the Lakers, the other team will be more likely to win. Also, if it’s snowing and windy in Buffalo, it should be expected that the total in the Bills’ game will drop since it is more likely that each team scores fewer points.
Example: If Patrick Mahomes is expected to miss a game for the Kansas City Chiefs, the moneyline and spread for the Chiefs will certainly change based on this news.
The Impact of Juice (Vig) on Odds & Payouts
The vig (short for vigorish), also called juice, is the built-in fee sportsbooks charge on bets. This fee ensures that the sportsbook makes a profit regardless of a game's outcome.
Understanding Vig:
✔️ A standard -110 spread bet includes a $10 vig per $100 wagered.
✔️ Lower vig means better long-term profitability for the bettor.
✔️ Vig is different from implied probability—implied probability tells you how likely a sportsbook believes an event is to happen, while vig represents the sportsbook’s cut of the action.
Example: If both teams in a game had true 50/50 odds, a fair line would be +100 on both sides. Instead, sportsbooks set the line at -110 on both teams, meaning you must bet $110 to win $100. That extra $10 is the vig, ensuring the sportsbook profits no matter which side wins.
