Q 429. Use of the term "Odds" is common in betting. The three main types of betting odds are fractional (British) odds, decimal (European) odds, and American (moneyline) odds. Explain each of them, preferably using the same example for all three.

 

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The Fractional odds, Decimal odds, and American odds are the three types of betting odds which represents the same thing.

 

1.       Fractional odds are written with a slash (/) for e.g. 5/1 which can be called as five-to-one.

A fractional odd of 5/1 means that you win $5 against every $1 you put at stake which is addition to the stake value.

Formula à Total Amount = [Stake x (Numerator/Denominator)] + Stake

 

2.       Decimal odds are comparatively easier to understand.

The decimal odds number represents the total amount instead of profit.

Formula à Total Amount = Stake x Decimal Odd Number

 

Fraction to Decimal odd can be done by dividing the fraction and then add one as shown in the example below:

5/1+1 = 6.0

 

And for Decimal odd to fractional odd is about minus one from the decimal odd as shown in below example:

2.5 – 1 = 1.5 = 15/10 = 3/2

 

3.       American odds are represented by a minus (-) sign, indicating the amount you need to stake to win $100. Also, some low probability winners are shown by a positive (+) sign, indicating the amount won for every $100 staked.

Example - A website published odds of  Albert A Gore elevating from Vice president level and elected as President and same are published in the form of Fractional Odds 3/1. If one bets, USD 300 , what is equivalent Decimal odds, Money line Odds  a better gets same profit or pay out ?

 

Explanation - In the Fractional odds method (a also called British odds), as probability of candidates goes down or low compared to other candidates, fraction value of odd - goes up. A wager , betting value of  USD - 300 on 3/1 odd means, if Albert Gore wins, better would earn profit of 3/1 x 300 = USD 900 in addition to wager of USD 300.

 

In European Odds, underdogs decimal number will be higher than the favorites. If European odd is A, one bets B amount, in case underdog wins , one would get A x  B , that means one gets profit P = ( A -1)x B.

In the above example B is USD 300,  P = USD 900 , therefore A-1 = 900/3 means A - 4.0

 

In American odd, the terminology is completely different. The odds for favorite person is indicated in Negative sign with certain value, say - B . One need to put amount B to get profit USD 100. Whereas for underdogs with very less chance of winning, odd value is + B , means that one would get profit of B on bet value of 100.

 

In the above example Albert Gore is underdog as per bookies, odd value must be + sign and equivalent odd value to earn same profit would be + 300

 

Final Comparison table with equivalent Odds.

Fractional Odds (British Odds)	Decimal Odds ( European Odds)	Money line odds (American odds)
3/1	4.0	+300

Betting odds are being used by bookmakers as a way of presenting the probability of a specific results in an event.

There are 3 types of Odds are used in betting market:

• 1.      Fractional Odds

   

• 2.      Decimal Odds

   

• 3.      Moneyline Odds

   

 

Fractional odds: It tells us the potential winning regarding our stake. Numbers on the left-hand side tells us the potential profit if we stake the number on the right-hand.

Example: A $1 bet on Team A to win at 2/1 will return $3 if successful. Of those returns, $2 is profit and the remaining $1 is the bettor’s stake.

10/1: $10 is the profit against every $1

5/2: $5 is the profit against every $2

4/11: $4 is the profit against every $11

The number in left-hand side is smaller than the one mentioned in right-hand side, the bet is stated to as odds-on and when the opposite is true, that is referred to odds-against, while odds of 1/1 are stated to as evens.

Decimal odds: It tells us our potential winnings inclusive of our stake. All that’s required to work out the total returns, it to multiply stake with the odds.

For example, a $1 on Team A to win at 3.00 will return $3 if successful. Like the bet with fractional odds above, $2 of those returns are profit and $1 is the bettor’s stake.

10.00: $1 bet would return $10 inclusive of stake.

2.50: $4 bet would return $10 inclusive of stake.

1.50: $2 bet would return $3 inclusive of stake.

The equal value of 1/1 odds in a decimal odd is 2.00.

 

Moneyline Odds: It tells us the potential profit from a bet. The simplest way to understand how it works, is to use an example:

 

Team A +130

Team B -150

The + sign next to Team A’s odds signifies that they are the underdogs in the match.

A successful bet will return $130 in profit for every $100 staked. If Team A win, a $10 bet will return $23 - $13 in profit and the $10 stake.

The minus sign in front of Team B’s odds denotes that they are favorite to win the match.

The bettor will receive $100 for a successful bet with a $150 stake. A $10 stake, meanwhile, would return $16, $6 of which would be profit.

 

Thank You!

 

Odds ratio is the measure of association between an exposure and an outcome. It quantifies the relationship between an exposure and a case control. It corresponds to the odds that an outcome will occur for a particular exposure, compared to that in the absence of that exposure. Odds ratios are mostly used for case-control studies. They can also be used in cross-sectional and cohort study designs with some assumptions.

 

Odds ratio example

 

 

The above table shows two levels of exposure to cold drink: those who drink it, those who didn’t and also shows two outcome levels: (“cases”) people who are ill and (“controls”) people who are not.

The odds ratio is calculated as below:

1.     People who are ill: people who drink cold drink / people who did not = 14/18

2.    People who are not ill: people who drink cold drink / people who did not = 33/23

3.    Dividing the two results, we get (14/18) / (33/23) = 0.54

The resulting odds ratio of 0.54 means that ill people were about half as likely to drink cold drink as well people.

 

The odds ratio is used to determine whether a particular exposure is a risk factor for a particular outcome, and to compare the magnitude of various risk factors for that outcome.

·       Odds Ratio >1: Exposure relates to higher odds of outcome

·       Odds Ratio=1: Exposure doesn’t affect the odds of outcome

·       Odds Ratio<1: Exposure relates to lower odds of outcome

Fractional Odds (British)

Fractional odds are given in fraction form. The first number to the left is the numerator and the second number to the right is the denominator of the fraction. The denominator is the wager and the numerator is the amount the wager will yield.

Example 1:

Wager on Chennai Super Kings at 10 to 15 fractional odds. For every Rs 15 wagered the potential net profit is Rs 10. A winner will get Rs.25 which is the sum of your original stake of 15 and the net profit of 10.

Fractional Odds - Wagering on an Underdog or High Odds Bet

In a high odds bet, the odds are more in your favour. For Example, when wagering for Kolkata Knight Riders the underdog at a 5 to 1 fractional odds, if you bet Rs. 100 and Kolkata Knight Riders win, you would get Rs.600/- (100 original bet + 500 net profit)

Decimal Odds (European)

This is the most popular used odds and its popularity is spreading from Europe across the world. It is the most economical way to bet, as the true odds are calculated making it the fairest and most accurate odds.

In decimal odds, the pay-out is the stake multiplied by the odds. This means that the original stake is included in the pay-out.

Pay-Out = Stake x Odds

Example 1

Decimal odds for Mumbai Indians to win are 1.82. If you wagered Rs. 100 your potential profit would be Rs. 182 (Rs. 100 + 82)

In Fractional Odds a similar wager on Mumbai Indians would be at 82 to 100.

Example 2

Wager of Rs. 100 on Punjab Kings at 2.75 decimal odds

Pay-Out = Stake x Odds

Pay-Out = 100 x 2.75 = Rs.275/-

In Fractional Odds it would be a wager on Punjab Kings at 175 to 100. It means that your risk of Rs.100 is taken against a chance to win Rs.275 at a net profit of Rs.175/-

American Odds (Moneyline)

This system uses a number system based on $100.

Negative odds mean the amount that needs to be wagered to win $100. Therefore -110 would mean that you need to risk $110 in order to win $100. Positive odds mean the amount that will be won when $100 is wagered. Therefore +110 would mean that you need to risk $100 in order to win $110. The formula for Negative Odds are 100/((100/odds) +1), whereas the formula for positive odds are 100/((odds/100) +1). The breakdown of the formula is

•          100/odds or odds/100 breaks the odds into the decimal amount on the amount to be won on the wager. For example, 100/120= 0.83 means that you will win 83% of the amount you risk

•          The +1 adds the wagered amount to the formula. .83 +1 = 1.83. This means if you wager 100, you will win $83 and get your $100 back.

•          100/1.83 = 53.09. This means if you made 100 wagers, you would need 53.09% wins to get a return of 1.83

Conversion of US Odds to Decimal Odds

Positive US Odds : Decimal Odds = (US Odds/100) + 1

Negative US Odds : Decimal Odds = (100/US Odds) + 1

Conversion of Decimal Odds to US Odds

Decimal Odds >= 2 : US Odds = (Decimal -1) x 100

Decimal Odds < 2 : US Odds = (-100)(Decimal -1)

Breakeven Odds

Breakeven odds is the percentage of time to win the wager in order to breakeven. Breakeven Odds for Decimal Odds are 2.0 as it will double your wager. Decimal odds below breakeven odds (less than even money odds) are when the potential returns are less than your stake. Decimal odds above 2 (plus odds) is when your returns is more than your stake. Breakeven Odds for Fractional Odds are 1 to 1 as it will double your wager.

Comparison of Same Wager

If you wagered Rs. 100 with a potential profit or Rs. 90

Fractional Odds for RCB would be at 90 to 100.

Decimal odds for RCB to win are 1.9

US Odds = (-100)(1.9 – 1) = -90

References

https://www.sbo.net/strategy/fractional-odds/

https://www.bettingpros.com/articles/break-even-win-for-sports-betting/

https://www.sbo.net/strategy/decimal-odds/

 

 

 

Below is the explanation of Fractional, Decimal and American Odds with examples

 

1. Fractional Odds helps to calculate profit against the stake. In the fractional odds, the numerator is the profit and denominator is the amount against which the profit can be gained. For e.g. Let's take the stake to be $ 20 and odds is 1/5. This means to get a profit of $1, the person will have to invest $5. The total amount earned will be (0.2*$20)+$20 = $24. The break up is $4 profit + $ 20 stake

 

2. Decimal Odds makes it easier to workout the total return over any wager. Decimal odds helps to bring the actual price to two decimal points helping to accurately assess the returns to each penny.

 

For E.g. If a person is betting $ 20 against an odd of 2.46, the total draw would be $20*2.46 = $49.20. The person can also break it down to the initial stake amount ($20) and winning amount ($29.20).

 

3. American Odds have minus value that indicates the amount to be staked to get a profit of $ 100 and a positive value indicating the amount that will be won if the person stakes $100. For. E.g. if the value is -200, it means that the person should invest $200 to get a total draw of $300 out if which staked amount is $200 and profit is $100. If the person is betting for the positive value, for. e.g. + 240, this means the person will get a total draw of $340 out of which the staked amount is $100 and profit is $240

 

Thank you

Very interesting question and equally interesting answers 

 

The best answer has been provided by Johanan Collins.