Odds and Prices
Keywords described on this page:
Chance of winning = The probability, expressed in percent or fraction, that a competitor can win an encounter.
evens = Odds of an encounter with equal chance of going either way.
Favorite = The one that is expected to win.
Odds ( prices ) = A number indicating payouts or winnings of a bet.
Odds-on = Odds of the favorite.
Odds-against = Odds of the underdog.
Underdog = The one that is expected to lose.
Before defining odds and prices let's first discuss chances (or probability) of winning . If two competitors have
equal chances to win, like two equally competitive tennis players player-A and player-B, then we say that the odds
are 50-50 or half-half.
On the other hand, if one of the players or teams is considered to be 'stronger' than the other, then the chance of this player
(or team) winning will be higher than the other.
To illustrate, consider another tennis match between player-C and player-D. If player-D is
be 'stronger' than player-C, then his/her chance of winning the match will be greater than 50%.
Conversely, player-C's chance of winning will be less than 50%; thus,
player-D is termed as the favorite while player-C is the underdog. For the sake of an example
let's say that these chances are 25% for player-C to win, then,
chance to win will be 75%. These chances can be expressed in fraction form as 1/4 and 3/4, respectively.
Odds and price are synonyms as far as betting is concerned. The
odds or the price of a bet is a number representing the amount of money you will
receive if the selection you chose in a bet turns out to be correct.
In the case of fair bets, the odds of a bet are exactly the
inverse (or reciprocal) of the fraction representation of the chances to win discussed above.
For player-A and player-B the chances were 1/2-1/2, so, the odds
for each player are 2/1 (or simply 2.0). This means that for each unit of money you wager you'll
receive 2 units when you win the bet (it includes your wager). In a similar
manner, the odds for player-C are 4/1 (or 4.0) and for player-D
they are 4/3 (or 1.33). A $1 bet on player-C will win $3.00 (i.e., you'll receive $4.00), while a $1 bet on
player-D wins only 33 cents. For a bet between two friends, this last case means that, because of the difference in
strength of the two players, if the bettor favoring player-C wagers $1,
then the bettor favoring player-D must wager $3; then the total of $4 will be paid to the winner. Remember that these
explanations of odds apply only for the case of fair bets (no bookie, therefore
no commission involved).
When the chances of winning of two competitors are equal, we refer to the odds as evens.
Similarly, the odds of a favorite are referred to as odds-on, and those of the underdog
Now, what about when betting is placed through a sportsbook? Also in this case the
odds are the inverse of the chances to win but they are adjusted to incorporate
the commissions. We cannot cite the precise odds here since they vary from
sportsbook to sportsbook, nevertheless, we will give you a very close estimate
of what they would be. If the chances to win are evens, the odds will also be
evens and unlike the case of fair bets where the odds were 2.0, here the
odds will be about 1.90, that is, you will win 90 cents for each dollar
you wager making the total payout $1.90. The odds corresponding to fair odds of
4.0 would be approximately 3.80, and those corresponding to 1.33 would be about
1.26. In fact, whenever you are betting at a sportsbook, the first thing you have
to take note of must be the odds offered for each player or team of that event.
Also, remember that the higher the odds the more you win, but the
probability of winning will be lower.
Note that,although there are three ways of representing odds, namely,
the decimal method, the fraction method, and the American method,
as will be seen in the odds specification section, we shall stick here with the decimal
representation since it is the simplest and the most straight-forward. The conversion from one to the others, and also how to compute your
winnings and payouts, will be the subject of the section conversion of odds
The following table summarizes the foregoing concepts with the help of the two games : Player-A VS Player-B in
the first game, and Player-C VS Player-D in the second game.
|Games||Chances to win||True odds|
|Payout on |
a $100 fair bet
|Payout on a $100 |
Some internet authors contend that the chance to win is the reciprocal of the odds posted by sportsbooks.
Strictly speaking, this is absolutely not true, unless the sportsbook does not collect its vig. According to these authors, if
two teams both have odds of 1.90, then the chances of winning for both are are 52.6%. They further go on to explain
that the sum of the two chances, which is 105.2% indicate a 5.2% vig. This is not correct. There is certainly a way
of calculating the chance to win from posted odds, which we will not present here lest boring the reader with mundane details.
We will try to write a separate article on the subject, God willing.
One final, otherwise important, note on odds. In the foregoing discussions we
might have mislead you into thinking that odds are representative of the
strength of the competitors. This is what they should be, but unfortunately they
are not. In realty, odds are a bookie's tool to equalize the number of bettors
on each side of the bet. For example, even if all statistics and history suggest
that player-A and player-B have exactly equal chances to win, the
sportsbook may not place the odds as 1.90 for both players. Rather, he will look
at how many bettors are expected to bet on one and how many on the other. If
more bets are expected to be placed on player-A (maybe he is playing at
home or could be more liked by fans), then the bookie lowers the odds of
player-A and raises that of player-B in order to lure more bettors
into betting on player-B so that the bettors are evenly distributed. This
eliminates the risk that the bookie may fall into if the player with many
Thus, in reality, odds are the sportsbook's way of balancing the bets placed on both sides of a game, and not
the strength of the competitor or the team. For instance, a 2.0 odds for Nadal and a 1.8 odds for Federer does not necessarily mean that
Federer is stronger; rather, it means that more players are betting on Federer than on Nadal.