Home > Guide > Betting odds explained

What are betting odds?

Betting odds are the cornerstone of the gambling industry.

Betting odds are displayed in different formats, but they all show the same thing:

  • the likely outcome of the bet
  • how much money you will win if you place a bet

Betting agencies set odds according to their assessment of the chances of each outcome eventuating. The odds are the price they will pay anyone successfully placing a bet.

Pick a card, any card…

When picking a card from a standard deck, you have a one in fifty two chance of picking each card. The odds for each card are the same. But in horse racing betting, for example, the odds vary, depending on factors such as the horse, jockey, conditions, trainer and many other variables. That’s why bookmakers set different odds for different outcomes, based on the probability of that outcome eventuating.

Betting odds and probability

Betting odds indicate the predicted chance or probability of an outcome happening. Knowing the odds helps you calculate the probability. Remember, the bookmaker has considered the probability of the outcome before setting the odds, so you as a punter should also consider the probability if you’re looking for continued, long term success in betting. The key to this is converting odds into implied probability.

Converting decimal odds to probability

The formula for converting decimal odds to implied probability is:

  • Implied probability = 1 ÷ ‘decimal odds’

(If you want to see the number as a percentage of 100, times the final result by 100.) Using three horse racing examples:

  • Horse A: 2.80 = 1 ÷ 2.8 = 0.357 or 35.7 %
  • Horse B: 6.50 = 1 ÷ 6.5 = 0.153 or 15.3%
  • Horse C: 13.00 = 1 ÷ 13.00 = 0.076 or 7.6%

Converting the odds to probability makes it easier to see the likelihood of your chosen horse winning. Novice punters may be dazzled by the lure of a big win on a horse with odds of 13.00, but an experienced veteran will calculate the odds at being less than ten percent and make a decision accordingly.

Pro Tip

Identifying value in bookmaker odds. Assess the probability of an outcome eventuating according to your own research as opposed to the betting odds supplied by the bookmaker.

If you assess an outcome as having a $2.50 chance of winning, and the bookmaker has odds of $3.50, then you have identified value in the betting market. The Kelly Criterion staking plan identifies that this discrepancy in betting odds would suggest it is a good time to place a bet.

What are the different types of odds?

The most common types of odds are:

Odds converter

We have an odds converter tool that will convert your odds into your preferred format, and help you make informed betting choices.

How to read decimal odds

Decimal odds show your payout in decimals, including the your original stake (or bet). Multiply your bet by the decimal and you can calculate your return, including your original stake.

Decimal odds formula: Your ‘bet stake’ x ‘the odds’ = your return

For example, if you have odds of 5.00 and you bet $1.00 you will get $5.00 in winnings. $1.00 ‘the bet stake’ x 5.00 ‘the odds’ = $1.00 x 5 = $5.00.

You might see bookmakers offering a variety of different decimal odds for different events, such as in horse racing:

  • Horse A: 2.80
  • Horse B: 6.50
  • Horse C: 13.00

Using the same formula, you can see the potential winnings for each bet. Let’s presume a $10.00 bet on each of these horses at the different odds:

  • Horse A: 2.80 = $10.00 x 2.80 = $28.00
  • Horse B: 6.50 = $10.00 x 6.50 = $65.00
  • Horse C: 13.00 = $10.00 x 13.00 = $130.00

You can see that the lower the decimal odds number, the more likely the outcome and the lower payment you’ll receive if you win. Higher stakes bets give you more winnings, but they are much less likely to happen.