How Vegas Odds Work

Many people start their betting journey with the same question. How do odds work? The answer to this question is incredibly important if you want to become a successful bettor, but it’s also only the start of a long journey. Read on to find out why all bettors need to know how odds work.

There is a conversation that all seasoned bettors will have had numerous times with friends and relatives who want a casual bet on a major sporting event. What are the odds on x? What do they mean? What will I win if I bet x amount?
The answer you give to these types of questions will vary depending on how much detail you want to go into, but they will centre around the same concept. Probability.

What do odds represent?

Bookmakers present their odds in decimals, fractions or an American format. They all look different but they all mean the same thing. All odds are a representation of the probability of something happening.

The fact that there are many different odds formats - American, Decimal and Fractional - illustrates the point that odds are simply a means to an end, i.e. offering betting. Bookmakers really deal in risk measured by probability.

Betting is about assessing the chance or probability of an event happening and bookmakers like Pinnacle use odds because it translates implied probability into a more usable form in order to offer betting.

Using implied probability in betting can also help you compare odds between bookmakers. However, if you consider betting to be just about odds, you're missing the bigger picture. To really expand your understanding of odds and betting, you must also understand how to calculate probability.

While Vegas odds are common in modern sportsbooks, the origins of Vegas odds go much deeper. Vegas odds originated in 1930s Nevada, when the state agreed to legalise gambling. Oddsmakers flocked to Las Vegas to establish their bases and take advantage of the new sports betting opportunities in. Odds expressed in terms of money, with $100 being the standard. If the odds are minus (–), then that amount of money must be wagered to win $100. –150 means you must bet $150 to win $100.). Consider a probability of.5 (1/2 =.5) which is equivalent to the statistical odds of 1 (.5/ (1.5) =.5/.5 =1). In Las Vegas odds this would be given as 1to1, that is, one chance for to one chance against. When expressed as chance, it would be 1in2, that is, one chance in 2 of winning. If you wanted to bet $50 at odds of 6/4 six to four, this is how you would work it out: First you have to add the numbers of the fraction together, in this case it would be 6 + 4 = 10. Then divide this number by the second number, in this case 4. 10 divide by 4 = 2.5. Then multiply this. How to read NFL Las Vegas Odds The point-spread was developed to provide a balance for both teams involved in a contest to entice bettors to potentially back the weaker team and receive points. The two squads in a game are listed with a title, either a favorite or an underdog.

With a good understanding of how to calculate probability yourself and how it compares to the odds provided by the bookmaker, you can begin to make more informed decisions when it comes to what you should bet on, when you should bet and how much you should stake for the bets you make.

Basics of Betting How does betting work? - Episode 1

The basics of probability

Considering how we are faced with a problem to solve or an assessment of risk every single day of our lives, it is surprising how unfamiliar the average person is with being able to calculate probability.

How often do you think: “What are the chances of me making that train on time?” or “How likely is it to rain?”

We rarely attribute a numerical figure to answer these questions but we are still dealing with a question of probability.

Using implied probability to calculate a bookmaker’s margin is easy and very useful as few, if any, bookmakers publicly share it.

In the simplest of terms, probability is a scale running from 0 (where there is no chance of an event occurring) to 1 (a certain future event). The likelihood of all other potential outcomes fall somewhere in between those two end points of the probability spectrum.

A coin toss is a great way to explain how to calculate probability because we know the true probability for each outcome. The coin will definitely land on either heads or tails, which taken together provide us with the certain event. We now know this certain event has a probability of 1.

Of course as a bettor what you really want to know is the probability (or chance) of your chosen call, which we will say is heads. To do this there is a simple equation:

Favourable outcomes / all possible outcomes

If you are calling heads, then the favourable outcome will be heads. Therefore to get your probability value, you divide the favourable outcome (in this case there is one, heads) by the number of possible outcomes (this is two as it will either be heads or tails). This leaves us with a probability of 0.5.

How Does Gambling Odds Work

In general people are more comfortable with percentages, so by multiplying the probability of your event (0.5 for heads) by 100 you can say that there is a 50% chance of the coin landing on heads, and you winning your bet.

How to calculate betting odds

How Do Las Vegas Odds Work

Getting a handle on how to calculate probability yourself and converting it into odds is the first step in developing your own assessments of betting value.

Once you know how to calculate probability, turning that figure into odds is a straightforward process. Decimal odds are one of the three main formats used by bettors and bookmakers alike.

How Does Vegas Odds Work

You can arrive at the Decimal odds value for your coin toss choice with the simple equation:

So the Decimal odds for a coin being heads is 1 (certainty) divided by the probability of it occurring which we know is 0.5, producing decimal odds of 2.0. At this point you can equally take odds and reverse engineer the implied probability with the inverse of the equation for turning probability into odds:

1/decimal odds = probability

Take your newly found knowledge and work out the implied probability for your coin toss with your friend and you'll see the aggregate implied probability of both outcomes in the coin toss is 100% - (0.5/1+0.5/1)*100 - no surprises as a certain event is 1 (100/100).

However, performing the same calculation for actual odds from your favourite bookmaker will produce a value greater than 100%. So what is happening here?

Calculating a bookmaker’s margin

In simple terms the odds don't reflect the true likelihood of the outcomes concerned with an event. The amount by which the implied probability diverges from 100% is the margin the bookmaker has added to that particular that market.

This is an essential piece of information for a value-seeking bettor as it highlights the true cost of placing a bet with a bookmaker. Using implied probability to calculate a bookmaker’s margin is easy and very useful as few, if any, bookmakers publicly share it.
While it is important you are able to use the above information to convert odds into probability and calculate a bookmaker’s margin, you don’t have to do it yourself for every single bet. If you want a quick way to calculate how much margin a bookmaker has applied to the odds, you can use Pinnacle’s Margin Calculator.

Using odds to calculate your payout

Calculating odds and probability opens up a new world for calculating value but you also want to know what your bet will payout if you win. For our coin toss example this requires a simple multiplication:

So if you bet €10 on heads with odds of 2.0 your return including stake is 2.0 x €10 which equals €20 (this includes your €10 stake + €10 profit).

• Read: Do you know how difficult betting is?

Explain How Las Vegas Odds Work

Being able to calculate probability and understand where odds actually come from is an essential part of evolving as a bettor because it enables you to calculate your own expected frequency for an event - starting to model your own odds - and then compare what you think will happen with what odds are available.

Where the two diverge you can potentially turn that edge in your favour, and generate profit, which is what a bettor should be focused on.

If you want to calculate the return and profit of your bet, Pinnacle's Bet Calculator will do the work for you.

How Vegas Odds Work Ufc

Now that you know how to calculate betting odds, you can take advantage of Pinnacle's low margin odds or read more expert betting articles to help make more informed betting decisions.