What Are Betting Odds and How Are They Calculated?
Betting odds are the foundation of all sports betting and trading.
They tell you two key things:
- The probability of an event happening
- How much you can win from your bet
Understanding odds is essential if you want to make better decisions and find real value in the market.
What Are Betting Odds?
Betting odds represent the likelihood of a specific outcome and the potential payout if your bet wins.
- Lower odds → higher probability
- Higher odds → lower probability
In simple terms: odds reflect how likely something is to happen according to the market or bookmaker.
Types of Betting Odds
There are three main formats used worldwide:
- Decimal Odds (most common in Europe and Portugal)
- Fractional Odds (UK format)
- American Odds (Moneyline format)
All formats represent the same probability — just in different ways. On exchanges like Orbit Exchange, the standard format is decimal.
How Decimal Odds Work
Decimal odds are the easiest to understand. The calculation is straightforward:
Example:
- Odds = 2.00
- Bet = €10
- Total Return = €20 (€10 stake + €10 profit)
Formula: Return = Stake × Odds
This total includes your original stake.
How Odds Are Calculated
Odds are based on mathematical probability. The basic idea is converting a percentage into a decimal number.
Example:
- 50% probability → odds 2.00
- 25% probability → odds 4.00
Formula: Probability (%) = 1 / Odds
This is what we call implied probability.
Implied Probability Explained
You can convert any odds into probability to see if you agree with the market.
- Odds 2.00 → 50% chance
- Odds 1.50 → 66.6% chance
- Odds 5.00 → 20% chance
This helps you understand what the bookmaker or the market believes will happen.
How Bookmakers Set Odds
Bookmakers don't just calculate probability — they also include a profit margin.
This is called the margin (or overround).
Example:
- Real probabilities for a tennis match (50/50) should add up to 100%
- Bookmaker odds might add up to 105% or more
- The extra 5% is their guaranteed profit
On exchanges, since there is no bookmaker margin, odds are generally much higher and fairer.
Why Odds Change
Odds are not fixed — they move constantly based on:
- Money being placed — heavy betting on one selection drives the odds down
- Team news — injuries, suspensions, starting lineups
- Market demand — what bettors believe will happen
- Match events — goals, cards, red cards
The market is dynamic and reacts to every new piece of information.
Odds vs True Probability
There is a crucial difference you must understand:
- True Probability = the actual chance of something happening
- Odds = the market's version (with margins and adjustments)
This is where the concept of Value Betting comes from.
What Is Value in Betting?
A value bet happens when:
Your Probability > Implied Probability of the Odds
Example:
- You think a team has a 60% chance of winning
- The odds imply only a 50% chance (odds 2.00)
- That is a value opportunity.
Odds in Trading (Exchange Perspective)
In betting exchanges:
- Odds are set by the users themselves
- There is no fixed bookmaker margin
- Prices move purely based on supply and demand
This creates more accurate odds and higher returns for the trader. Learn more in our guide on how an exchange works.
Common Mistakes to Avoid
- Not understanding implied probability
- Betting only on high odds (chasing "luck")
- Ignoring the bookmaker's margin
- Not comparing odds across different platforms
Knowledge gives you the edge needed to be profitable in the long run.
Conclusion
Betting odds are more than just numbers.
- They represent mathematical probability
- They determine your potential profit
- They reveal market expectations
Mastering the concept of odds is the essential first step for success in sports trading.
Get Started
Learn to convert odds into probability.
Compare your analysis with market odds.
Focus on finding value, not just guessing winners.
Through BetAdvisor-PRT, you get access to the best odds on the market at Orbit Exchange and BFB247, with professional support for your journey.