How do betting odds work? UK betting odds explained

Betting on sports can be great fun if done so responsibly — but one thing betting novices often struggle to grasp is exactly how odds work.

Allow Odds Now to help educate you in the world of sports betting odds with our comprehensive guide, which covers all the areas that often confuse new punters.

What are betting odds? 

Betting odds are a numerical representation of how likely a bookmaker considers a particular outcome is to occur during a specified event.

They are calculated by using probability theory. In simple terms, the lower the odds, the better chance the outcome has of occuring. The higher the odds are, the less chance it has — according to the bookie, at least.

What are the different types of betting odds? 

There are two main types of betting odds used in the UK — fractional odds and decimal odds. Fractional is the more traditional method, while decimal is a relatively modern addition.

Most bookmaker websites allow users to choose the type of odds they want displayed when making their selections. 

Fractional Odds

Fractional odds are displayed in, you guessed it, fractional form.

They display the ratio between the stake placed by the bettor and the bet's potential return. These are the most popular odds in the UK.

For example, if you stake £1 on a 10/1 bet, you will win £11 in total — £10 in winnings, plus the original £1 you used to place the bet. So, essentially, for every £1 staked, you will earn £10 back on top of your original stake.

Here are some more examples of fractional odds: 

• 2/1 - Arsenal to win the Premier League
• 10/11 - Iga Swiatek to win Wimbledon
• 1/1 - Austria to beat Turkey

The first bet is referred to as odds-against because the potential return is higher than the original stake. 

The second is odds-on because the potential return is lower than the original stake. 

The third is an even money bet because the potential return is equal to that of the original stake.

Decimal Odds

Decimal odds are displayed in decimal form. They are particularly popular with younger punters due to their simplicity to calcualate compared with traditional fractions.

The number simply represents how much the bet will return for every £1 staked. So, if you were to stake £10 on a 3.50 bet - 10 x 3.50 = £35 in winnings, plus your original £10 stake. This means you will end up with £45 in total. 

If odds are above 2.0, the bet is deemed to be odds-against. As in the previous example, odds of 3.00 for Arsenal to win the Premier League is an odds-against shot.

However, if the odds are below 2.0, the bet is deemed to be odds-on. Again, Iga Swiatek to win Wimbledon at a price of 1.91 would be an odds-on chance.

Finally, odds priced exactly at 2.0 are considered even money bets. An example of an even money chance would be Austria to beat Turkey at odds of 2.00.

Which types of odds should I use? 

Essentially, the style of odds you use comes down purely to personal preference.

Use whichever type you find easiest to read — though having an understanding of both will certainly be beneficial in the long run.

Being able to quickly calculate a fractional price into decimal terms and vice versa may save you crucial seconds when it comes to finding the best prices, particularly on in-play events.

How do odds add up in an accumulator?

Accumulators are a popular type of bet which involve picking the outcomes of multiple events, all of which must win to generate a return.

As the name suggests, the odds of your selections "accumulate", meaning the original stake effectively rolls on from one bet to the next.

Take this example, where you have selected four teams to win their matches:

• Manchester United to beat Wolves - 4/6
• Arsenal to beat Crystal Palace - 8/11
• Tottenham to beat Newcastle - 6/4
• Liverpool to beat Everton - EVS

If we place a £10 stake on this accumulator to win, and all four sides do the business, this is how our winnings are generated:

• £10 on Manchester United at 4/6 (1.66) returns £16.67
• £16.67 on Arsenal at 8/11 (1.73) returns £28.79
• £28.79 on Tottenham to beat Newcastle at 6/4 (2.50) returns £71.98
• £71.98 on Liverpool to beat Everton at EVS (2.00) returns £143.96

So, your £10 accumulator would return £143.96 if all four teams won.

How do bookmakers work out betting odds? 

Each bookmaker has a team of traders who use a combination of software and expertise to set odds for a wide range of events.

These days, data and analytics play a leading role in forming prices. However, rewind the clock back to as recent as the 1990s and things were a lot more reliant on sharp opinions.

Though traders will still occasionally adjust prices based on their own views (at some companies more than others), things tend to be left to a computer these days.

Once the probabilities of all potential outcomes have been assessed, betting odds are formed with an overround factored in.

What is an overround?

An overround essentially shows how much profit a bookmaker has made on each individual market.  

To illustrate an overround in action, let’s take a hypothetical football (soccer) match, where there are three possible outcomes. A home win, an away win and a draw.

If we say the home team has a 50% chance of winning, the draw has a 30% chance of winning and the away team has 20% chance of winning, this would suggest bookmakers pricing odds for this game should set them as follows:

Home win - Evens (2.00) | Draw - 23/10 (3.33) | Away win - 4/1 (5.00)

These odds add up to 100% when converted into probabilities. This means the punter would be getting the fair price for every outcome.

In reality, a bookmaker would likely offer slightly worse odds on at least some, if not all, outcomes to ensure a higher overround — essentially given themselves the best chance at making profit.

A more realistic pricing of the match would therefore look something like...:

Home win - 4/5 (1.80) | Draw - 5/2 (3.50) | Away win - 7/2 (4.50)

As you can see, the home and away prices are slightly worse in comparison to their actual probability of winning. The draw, meanwhile, has better odds than its implied probability. While these changes may appear minor, they can have a big impact on the new probabilities of the book, as shown below:

Probability of a 4/5 (1.80) shot winning = 55.6%
Probability of a 5/2 (3.50) shot winning = 28.6%
Probability of a 7/2 (4.50) shot winning = 22.2% 

55.6% + 28.6% + 22.2% = 106.4%

So, here, the bookmaker has given themselves a 6.4% overround. This means they can take bets on the contest knowing they have a 6.4% edge on customers placing bets.

While outcomes of individual events are impossible to predict with 100% certainty (a process known as variance), bookies know that if they continue to offer odds with an overround over a longer period, simple mathematics says they will come out on top in the long run.

Why do some bookmakers offer different odds to others?

Betting is a marketplace, just like rival shops selling identical products. They are all competing for the same business so some will offer the best odds on certain events to try and get your custom. 

They use their expertise and judgement, alongside data, to decide which events to offer strong odds and which to be less competitive on.