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How Are Sports Betting Odds Determined?

Dating back to at least Ancient Greece, where sports as we know them, really took hold, sports betting is almost definitely the oldest form of gambling known to mankind. It’s also a form of gambling that is being legalized in more and more states across the country, with numerous major states joining a quickly growing selection over just the past couple of years.  

Despite, or perhaps precisely because of this, more and more people are keen to pick up this popular pastime, be it on a more “professional” level with the intent of making serious cash, or just in terms of getting in on the action by betting on your favorite team or player. The catch is, though, that when many people see sports odds laid out in front of them, most betting novices probably will have more than their fair share of confusion. It’s certainly nowhere near as simple as just betting on one of the teams or players playing and then receiving your share of the money against those who bet against them – what would normally happen in a betting pool.

It’s much more complicated than that. 

It has to do with bookies working out the odds of just how likely one team or player is to win over the other (they do so through a fairly complicated algorithm) and based on those odds, payout ratios are calculated. Bettors sometimes bet just whether X team will beat Y team, which is called a moneyline bet, or they bet according to how much one team needs to beat the other team by, which is called a spread bet.

Confused? Let’s take a look at a practical, but hypothetical example:

An Imaginary Game

Let’s say the Green Bay Packers are playing against the Dallas Cowboys and they are expected to win by seven points based on both teams’ previous record throughout the season, the players they’re made up of and their general history.

So far so simple.

There are, basically, three kinds of bets that you can take that make different uses of these odds. Before getting into each, though, let’s take a quick look at what these odds look like written out. 

 

Odds Notations

Though we will use the American notation for our purposes as the vast majority of American bookies use this notation, there are also two other ways of writing them. 

British notation, which is also used in Canada, Australia and New Zealand, is based on the decimal system, which is the easiest notation to understand by far – much like the decimal system itself. So, in a football match of Liverpool vs Manchester United, the odds would simply be something like:

 

Liverpool: 1.50

Manchester United 3.10

Liverpool flag

Liverpool will have a 1.5x payout if they win, Man United would have a 3.1x payout if they win. Clearly, this is because Liverpool were the favorite (the most likely to win) so their win would result in a lower payout than if Man U won. 

The European system uses fractions to portray the odds and this is only slightly more complicated. It’s also, oddly enough, the notation used for most other gambling games, even in the United States. 

In the same example of Liverpool and MU, European notation would be:

 

Liverpool: 3/2 

Manchester United: 31/10

 

That may look scarier, but actually, they’re also worked out exactly the same way. You just multiply your bet by these fractions and, voila, there’s your payout! 3/2 is exactly the same thing as writing 1.50 and 31/10 is the exact same as 3.10. And if math isn’t your strong suit, you can easily convert between these two notations just by Googling “1.50 as fraction” or “3/2 as a decimal”.

American notation is more complicated, still, as it uses pluses and minuses to convey the odds and the payout ratios. It is, by far, the least intuitive of the three formats, but it’s actually pretty easy to understand once it is explained to you.

Let’s go back to our original example…

 

Back to the Game

In American notation, the odds of the Packers vs the Cowboys would be written as such:

 

Green Bay Packers: -7

Dallas Cowboys: +7

American football player running

What this means is that because the Packers are more likely to win by 7 points, you deduct 7 points off of their score to decide whether they’ve won or not. In other words, if they beat the Cowboys 38-32, those who bet on them winning will not win the bet because, as the favorite, we take 7 points off their total and suddenly, they’ve lost 31-2. 

On the flip side, the Cowboys having +7 odds, means that those who bet on them winning, will win their bets if the score is, again, 32-38. Why? Because the Cowboys are the underdogs and that +7 is added to their total points so suddenly 32-38 becomes 39-38!

How does this work with payouts? Well, it depends on the kind of bet made:

 

  • Moneyline: This is a simple bet of who will win and who will lose and ignores the above spread. It would actually be Packers: -170; Cowboys: +150 and this means that if the Packers win, you will need to bet $170 to make back $100, whereas if the Cowboys won, you would get back $150 on a $100 bet. 
  • Spread bet: This is the most common bet and it uses the system above. It would be written as Packers: -7 (-110); Cowboys +7 (-110). That 110 simply refers to the usual payout rate – so to win $100, you would need to bet $110. It can be more or less, depending on the bookie and the state. That $10 difference is basically a fee. And again, the Packers would need to win by more than 7 for those who bet on them to win, whereas the Cowboys can lose by 7 and those who bet on them still win. All wins payout 1:1 (minus the $10). 
  • Over/ Under Bet: In this bet you’re betting on the actual score, not on the players. This would be written out, in our example, as u70 (-110) or o70 (-110). That -110 is the same as the above (you have to pay $110 to get $100 back) and the “u” means under; the “o”over and the “70” means that the combined score of both teams has to be either over 70 or under 70. And, again, the payout is 1:1 (minus the $10). 

  

  So What Should You Bet On?

Whichever bet you decide to take, it’s always crucial that you do your homework as thoroughly as possible. The best bet you can make, as is clear from the above, is a bet on the underdog, but they’re called underdogs for a reason: they’re not very likely to win. So, what you need to do is to see cases where your research is most obviously at odds with that of the bookies, and to bet on an underdog that you have reason to believe may well beat the odds in spite of it all. Anything other than that, really, is just blind gambling. And that’s never a first prize.

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