Betting Odds Explained
Betting odds are not difficult to understand. The first concept to wrap your head around is how they’re presented. You’ll often see them displayed like this ’10/1′. But what does that mean? Well, the first number (10) is the amount you’ll win from the bookmaker for staking the second number (1).
On the racecourse, you’ll see various types of odds on display. 5/2, 20/1 and 100/30. Remember, the concept is still the same; you’ll win the first number for staking the second number. However, with odds like 5/2, you’re not required to risk £2 to win £5. You could bet £1, and if your selection wins, you’ll get £2.50 back from the bookmaker, plus your £1 stake (£3.50 in total). 5/2 is essentially 2.5/1 for all intents and purposes.
EVEN MONEY AND SHORT ODDS
Betting odds represent a risk and reward formula. The riskier your bet, the higher the odds and payout. On the flip side, if a bet has a high likelihood of happening, the odds could be ‘EVS’ evens or shorter.
Even money bets (EVS) give a 1:1 return; you risk £1 to win £1. Shorter odds (prices) can be found in races or football games where one participant is expected to win comfortably. If odds go lower than Evens, the price is said to be ‘odds on’. That means you’re risking more than you could win. Examples of ‘Odds on’ prices include 1/4 or 1/2. If you back a horse at 1/4, you’ll win £1 for every £4 you risk.
How Betting Odds Are Determined
A question often asked by novice punters is ‘who sets the odds?’ The simple answer is The Bookmakers. They’ll look at a sporting event and form a ‘book’ on the possible outcomes. The bookies endeavour to frame the odds so that they walk away with a profit regardless of the outcome.
It’s not always possible for the bookmaker to achieve an ‘overround’ (profit) on their book. The biggest problem faced by Bookies is too many punters lumping on the same outcome. If that happens, the bookie could lose a fortune. To entice punters away from a particular horse, the bookmaker can offer bigger odds on other runners. That’s why you see odds changing all the time, until the race starts.
In summary, the bookies’ set-up the initial odds, then the volume and weight of bets on a horse will shift and move those odds up and down in reaction to money staked.
Are Odds and Probability The Same?
The quick answer is NO. However, as people use the terms ‘Odds’ and ‘Probability’ interchangeably, the answer is also YES. Confused? I’ll try to explain the difference between the two.
A mathematician would explain that ‘probability’ has a range from zero to one. Odds has an infinite range.
Odds are defined as the number of occurrences of a particular event expressed as a proportion of the number of non-occurrences. For example, if a horse runs in the Grand National and is priced at 5/1. We should expect him to win once in five attempts at the race.
In the real world, odds are another representation of probability and vice versa. Remember, the odds quoted by the bookmaker represent the Bookies liabilities on an event, not the true odds of an outcome.
What Happens When Betting Odds Change?
If you’ve attended a popular race like the Cheltenham Gold Cup, you can’t help but notice the ever-changing odds boards displayed by the on-course bookmakers.
The odds can change minute by minute; horses can drift in the odds or shorten. This happens as the bookmakers alter the odds in response to bets placed. A single chunky wager can dramatically reduce the odds. You can mitigate odds fluctuation by taking the quoted price when you place your bet. If you think that the odds will shorten before the off, take the price when you bet. If you think the odds will lengthen after placed your wager, you can take the SP (starting price).