As we discussed previously, the key to effective and profitable sports gambling is knowing all about the odds. Today’s lesson explores the odds in a more detailed manner.
First off, we need to refresh our memories of a key concept explained last time:
The key differentiator between games of chance and games of skill is that in games of skill the probability of an outcome happening is generally not known exactly. One side sets the odds it will pay at and the other side determines whether those odds are correct (in effect, if the bettor believes his/her calculation/evaluation of the odds is better) and bets accordingly.
Wining strategy is built on the confidence the bettor has in his/her evaluation of the odds versus the posted payout.
Moneyline v Spread Bets
In Sports Gambling, there are two types of bets: Spread bets and Moneyline bets. A Moneyline bet essentially ask you to bet on whether one particular outcome will occur. A Spread bet is similar to a Moneyline bet in that it does the same thing, but it adds the added layer of “by how much”.
Example: A Moneyline bet will ask whether you think the Steelers will beat the Ravens in a football game. A Spread bet will ask whether you think the Steelers will beat the Ravens by 7.
Both bets use the same concept of odds. The main difference is that the variation of odds in Spread bets is usually pretty small. Most of the time, the odds are set at a certain price and the variable factor is the number of points. This happens most often in American sports like football and basketball and the odds are almost always set at -110.
Moneyline bets typically have two outcomes and thus, two sets of odds: Opponent A Wins or Opponent B Wins. Certain sports that baffle Donovan McNabb, most commonly soccer, will have three sets of odds for a particular match: Opponent A Win, Opponent B Win, or Draw.
Odds are provided in three main formats: Fractional, American, and Decimal.
As you can guess, the only idiots that use the American format are us, the Americans. The rest of the world uses either the Decimal format or the Fractional format because the US lags way behind the rest of the world in mathematics scores and we are lazy.
The Fractional format is usually referred to using two types of phrases. For example, Fractional format odds of “1/10” are expressed as “One to Ten” or, less commonly, as “Ten will get you One”. The Fractional format is most commonly used in Horse Racing.
The American format is referred to using either negative or positive numbers in the hundreds. Odds shown in American format as “-110” are said to be “Minus One Ten” while odds of “+240” are said to be “Plus Two Forty”. With American odds, whenever there is a minus (-) you bet that amount to win (profit) a hundred dollars, where there is a plus (+) you win (profit) that amount for every hundred dollars you bet. If you win the bet, the amount you receive (your return or payout) is your original bet plus your profit.
Decimal format odds are described just as the decimals are commonly described in mathematics. Thus, “1.91” are said as “One Point Nine One”. The potential return (original bet plus profit) on a bet quoted in Decimal odds is extremely easy to calculate by simply multiplying the amount you wish to bet by the Decimal odds offered – just remember that the return includes your stake. So, if you bet $100 on 1.5 odds, you will get back $150, which is your original $100 plus your $50 profit.
The table below shows the equivalent value of the odds as described in each format. You can alternatively, go to this page on the Betsmart.co website and use widgets to automatically make the conversion for any numerical value of odds. There are other valuable widgets there that we will address later.
You will note that there is a fourth column. As we discussed in the Introductory Course, the odds simply represent the chance of something happening. The table above has handily provided you the implied percentage chance of an outcome given those specific odds.
Let’s use the earlier example: The odds of the Steelers beating the Ravens are -150 (1.66). This means that the sportsbook says there is a 60% chance that the Steelers win. If you think the chance of the Steelers winning is greater than 60%, then you would want to bet on them to win. Let’s look at the other side. For the same game, the odds of the Ravens beating the Steelers are +120 (2.2). This means that the sportsbook says there is a 45% chance that the Ravens win. If you think the chance of the Ravens winning is greater than 45%, then you would want to bet on them to win.
Now, eagle-eyed readers will have noticed something. The Steelers’ 60% plus the Ravens’ 45% add up to more than 100%. What’s up with that? I mean, either one team or the other will win, so the percentages should add up to 100, shouldn’t they?
This is where the sportsbook’s margin comes in. The difference between 100 and the sum of the posted odds for a particular bet is the margin. In the example above, the sportsbook’s margin is 5%. This means that, as long as equal amounts are bet on each side, the house stands to make 5% no matter the outcome.
The same concept applies to three-outcome bets. Here is a soccer example:
FC Barcelona hosts Chelsea tomorrow in the Champions League. The odds are: Barcelona to Win: -240 (1.42, 70%), Chelsea to Win: +700 (8, 13%), Draw: +380 (4.8, 21%).
If you add up all the percentages, they add up to 104. This means the house has a 4% margin on this match. Again, the widget on this page can do the math for you.
A parlay bet allows you to combine two or more bets into one in order to get a better payday. Again, let’s use an example:
Let’s say you think the Steelers will win. Let’s say you also think that Barcelona will win. You could put one $50 bet on the Steelers and another $50 bet on Barcelona. Your potential payout will be:
$50*1.66 + $50*1.42 = $83 + $71 = $154 ($54 profit on $100 bet)
Now, if you combine the bets in a parlay, you only win if BOTH bets win. However, the potential payout is now:
Bet Amount*(Price of Bet 1 X Price of Bet 2) = $100*(1.66*1.42) = $235.72 ($135.72 profit on a $100 bet)
The payout is bigger because the risk is bigger. If one bet fails, the entire thing fails. We can analyze whether this is a bet you should make by looking at the percentages.
% for Steelers Win X % for Barcelona Win = % for both teams to win = 60%*70% = 42%
So, the chance of both the Steelers winning and Barcelona winning is implied by the odds as 42%. If you think the chance is actually higher than that, then you would want to make the parlay bet.
Teaser bets apply the concept of the parlay bet to Spread bets. The name “teaser” comes about because the bettor can change or “tease” the spread number in any direction. Again, a combination of two bets or more are linked and the bettor only wins if all individual bets win. The catch on all this is that the odds are greatly reduced by the sportsbooks, so the payout is less. Typically teasers are only offered in Basketball and American football, which are the two main sports that use Spread bets.
Teaser odds are usually set by the sportsbook based on the number of outcomes, not by the odds of each individual outcome, so the percentages of something happening are fixed and relatively high. Hence, teasers ultimately “tease” the bettor into thinking they are getting a better deal than they really are.
A complicating factor for both teaser bets and parlay bets is that the higher the number of different outcomes, it becomes more difficult for people to innately calculate probabilities. Thus, the reliability of a bettor’s internal probability evaluation worsens with more bets added to the parlay/teaser.
Today’s lesson has provided the basics for all kinds of sports bets. Given the start of the NCAA Tournament, you may want to place a bet or two. By using the information above, you should be able to make more informed and profitable betting decisions.