I am no expert at mathematics of probabilities for that matter but I like betting and I am kinda fascinated of how the odds are calculated. For those who do not know, odds is representing the probability of a event to occur.
The odds at the bookmakers
The odds at a bookmaker can be written in different formats. The most popular today is fraction, decimal and American odds. Fraction is the far most complicated way. The odds are display in the simplest fraction like 14/5 or 21/20. The more easier way is to use decimal and for example a fractal odds of 14/5 would be 3,80 in decimal. The simplest way to describe American odds is that it is displayed based on how much you would need to stake to win $100.
Decimal odds are the most popular
The most popular odds to use are decimal. Since it is the easiest to display and understand. When calculating how much you will win when betting on decimal odds you only need to multiply the stake with the odds. So if you bet $10 on a odds at 3,80 you will have $38 if you win. Simple as that.
Odds contra the probability
When you look at the odds at a bookmaker they can feel abstract if you do not know what they represent. Well you now know they represent the probability. And if you bet $15 on 4,80 you will get $72 back. But what is the real probability for a odds of 4,80 to occur?
For example the probability for you to win a coin flip is 50%, in decimal 0,5. The probability can be described by this simple equation ”Favorable outcomes / all possible outcomes”.
You can easily reverse the equation to calculated this. If you want to know the real probability of a given odds you just divide it by 1. You can to this with a simple calculator.
The probability for a odds of 4,80 to occur is simply 20,83%. The equation for this example will look like this 1 / 4,80. More and often you will come across odds like 1,40 and 2,20, which are probabilities of 71,43% and 45,46% to occur. But you do not need to do the equation every time since you will learn the rough probability of a certain odds the more experience you will get. You can learn more about odds and betting at oddsexpert.co.uk if you’re interested.
Using a script or a program
You can of course create a simple program or script to do the equation. This will be very handy when adding many odds up. Not only how much you will gain if you bet but more over how high or low the probability of the odds to go in.
Are the odds good or bad?
The probability in betting is really important. Since you always try to convert you money in to more money. You will not win every time. Bu to be a successful better you need to always wager the odds you are given against how likely it will happen. Lets say you are given the odds 1,65 of a coin flip to end in heads. Since the probability of a coin flip to end i either way is 50% and the odds you are given are 60,6% likely to happen, you know that it is a good bet.
This logic can be used in many situations. You just need the statistics or hidden information to back it up. Lets say a bookmaker gives you a odds 1,40 of a certain team to win at home but you know that the team has injuries to come and that the opposing team is a good away team. Then it would be wise to be on the opposing team even though the odds is 2,75 and the probability is as low as 36% . But in your book the probability is more like 50%.