Sports betting has evolved into an exhilarating recreational activity, and its popularity is continually growing worldwide. However, for those new to the domain, understanding how betting odds work can be a challenging task. If you're venturing into sports betting, grasping the concept of sports betting odds is vital. Let's unravel the mysteries behind odds, highlighting some of the most important concepts: American Odds, Decimal Odds, and Implied Probabilities.
The Basics of American Odds:
American odds are predominantly used in the United States, hence the name. They are typically represented as either a positive or negative number and provide information about the potential payout of a bet.
- Positive American Odds: Positive odds reflect the amount of profit you would make from a $100 stake. For example, in the game between the Los Angeles Clipper and the Detroit Pistons, the odds for the Pistons to win are +490, meaning you would win $490 on a successful $100 bet, plus your original stake, totaling a return of $590.
- Negative American Odds: Negative odds, on the other hand, indicate the amount you need to bet to make a profit of $100. For instance, the Clippers have odds of -675, so you would need to bet $675 to potentially win $100. If your bet is successful, you'll receive your profit of $100 and your initial $675 stake back, totaling a return of $775.
Enjoy educational content like this? Make sure to follow us on our socials @hofbets on Twitter and TikTok and @hof.bets on Instagram, or checkout our website for more insights like these.
Interpreting American Odds:
American odds not only signify potential returns but also provide insights into the probability of an event occurring.
- Positive Odds: The higher the positive odds, the less likely the event is considered to happen (from the sportsbook’s perspective). For instance, a team with odds of +400 is deemed less likely to win than a team with odds of +200.
- Negative Odds: Conversely, the lower the negative odds, the more likely the event is considered to happen. So a team with odds of -400 is viewed as more likely to win than a team with odds of -200.
However, it's essential to remember that these probabilities are from the sportsbooks' perspective and can be influenced by various factors like public sentiment, previous betting patterns, etc.
Breaking Down Decimal Odds:
Decimal odds are widely used outside of the United States, offering a straightforward method to understand the potential payout of a bet. Unlike American odds, decimal odds represent the total return for every dollar bet, including the stake.
These odds show how much you would get back for each dollar wagered, including your original bet. Using our earlier example, if the decimal odds for a team to win are 5.90, and you bet $100, you would receive $590 in total if you win. This total includes your initial $100 stake and $490 in profits. In this sense, it can be useful to think of decimal odds as a multiplier of the amount that you stake.
Calculating Winnings: To calculate the winnings, you simply multiply your stake by the decimal odds. Using the example above, a $100 bet at odds of 2.40 would result in a total return of $240. The calculation is straightforward: $100 (stake) x 2.40 (odds) = $240 (total return).
Interpreting Decimal Odds:
Decimal odds provide an easy way to understand the return on investment for any given bet. The higher the decimal odds, the less likely the event is considered to happen (from the sportsbook’s perspective). Conversely, lower odds suggest a higher probability of the event occurring.
For example, a bet with decimal odds of 4.00 is considered less likely to win than one with odds of 2.00. However, the beauty of decimal odds lies in their simplicity; they directly indicate the total return, making it easier to compare different bets.
It's important to note that while decimal odds offer a clear view of potential returns, they, like any form of odds, are based on the sportsbooks' analysis and can be influenced by many factors, including market conditions, team news, and public betting patterns. Understanding these odds can enhance your betting strategy, providing insight into both the potential returns and the implied probability of an event’s outcome.
Converting American Odds to Decimal Odds:
In the sports betting world, odds may also be presented in the decimal format, especially outside of the United States. Hence, it's essential to understand how to convert American odds to decimal odds.
- Positive American Odds Conversion: To convert positive American odds to decimal odds, divide the American odds by 100 and then add 1. For instance, if you have American odds of +300, the decimal odds would be (300/100) + 1 = 4.00. This means that for every $1 bet, you stand to win $4.00 if your wager is successful.
- Negative American Odds Conversion: For negative American odds, the process is slightly different. First, remove the negative sign to get the absolute value of the odds. Then divide 100 by this value and add 1. For example, if the American odds are -200, the decimal odds would be (100/200) + 1 = 1.50. This implies that for every $1 bet, you could win $1.50 if the wager is successful.
Decoding Implied Probability:
Implied probabilities are a fundamental concept in sports betting, converting betting odds into a percentage that represents the likelihood of an event occurring according to the sportsbook. This conversion provides insight into the bookmaker's perspective on the event's outcome, offering bettors a tool to assess the value of a bet.
How Implied Probabilities Are Useful:
Understanding implied probabilities allows bettors to gauge the value in the odds being offered. If your own analysis leads you to believe the event has a higher probability of occurring than the implied probability, then you've identified what is known as ‘value' in your bet. Essentially, you are betting on outcomes that you believe are more likely to happen than the odds suggest.
One of the many powerful features of Hall of Fame Bets is the ability to easily access and understand implied probabilities of bets, both from their historical odds and the odds that are currently being offered. Keeping with the same example we have looked at so far, we can see the implied probability for the Clippers to win over a variety of different time spans.
Though the Clippers have been in great form, in each one of these time horizons, you can see that the implied probabilities of their performance is below what the implied odds of the sportsbook offering.
This insight becomes even more powerful when exploring bets in the Parlay Optimizer. If we were to take the Clippers to win in this instance and explore the data provided in the Parlay Optimizer this is what we would see.
As we can see here, when factoring in the performance of the Pistons in addition to that of the Clippers, the season-long implied probability of this bet improves quite a bit – all the way to 77%. However, examining the right side of the output, we see that this is still a negative edge bet – meaning that this 77% implied probability is 10% what the odds of the sportsbook imply. Put more simply, the odds of -675 from DraftKings imply that there is a 87% chance that the Clippers win, while the season-long performance of both teams would imply there is a 77% chance of that occurring.
The Importance of Implied Probabilities:
While implied probabilities are a valuable tool, it's crucial to remember they do not guarantee success. They are based on the odds, which are influenced by various factors, including the bookmakers’ need to balance their books and market sentiment. However, by comparing your own probabilities with those implied by the odds, you can make more informed decisions and identify bets that offer the potential for long-term profitability.
Converting American Odds to Implied Probability:
Understanding how to convert American odds to implied probabilities can be very helpful in making informed betting decisions. Here's how to do it:
- Positive Odds Conversion: Use the formula Implied Probability = 100 / (American odds + 100). For example, for American odds of +200, the implied probability is 100 / (200 + 100) = 33.33%.
- Negative Odds Conversion: Use the formula Implied Probability = |American odds| / (|American odds| + 100). For example, for American odds of -150, the implied probability is 150 / (150 + 100) = 60%.
Calculating Decimal Odds into Implied Probability:
The formula to convert decimal odds into implied probabilities is more straightforward:
Decimal Odds Conversion: Implied Probability = (1 / Decimal Odds) × 100. For example, for decimal odds of 2.50, the implied probability of them winning is calculated as (1 / 2.50) × 100 = 40%.
Conclusion:
In the world of sports betting, understanding sports betting odds is a fundamental skill. They offer valuable insights into potential payouts and event probabilities, aiding in making informed wagering decisions. Whether you're betting on the NFL, NBA, MLB, or any other sport, understanding your odds is one of the first steps to success.
Take the question out of betting research with HOF Bets. Optimize your bets using insights like these and many more, available on our platform at hofbets.com or by downloading our new iOS app here.
Get started with us today for the best player prop and sports betting research.
All odds in this article are from DraftKings Sportsbook.
