Calculating and Converting Betting Odds
Before you start converting odds into meaningful data you first need to understand how odds are converted into the ‘likelihood’.
The Internet is awash with odds calculators and betting odds converters but, remarkably, there’s very little information available about betting odds calculators or, to put it simply, converting odds into a percentage chance of something happening.
What are the odds?
Let’s simplify things from the outset by looking at odds:
Flipping a coin gives an equal chance of a heads or a tail; that’s ‘even money’ (50/50 chance) either scenario. Therein, in a perfect world, the bookmakers would indeed go even money (1/1 or 2.00 in decimal odds) on either outcome. But they don’t, they go 10/11 (1.91) about either outcome to give themselves a profit margin.
But what is 10/11 and how does it give them a margin?
Well, the best way to explain how bookmakers build in profit is to look at a perfectly graded greyhound race where every dog appears to have an equal chance of winning. With six possible outcomes each dog should be priced at 5/1 but, to make a profit each dog is likely to be priced at 4/1.
In an ideal world, given betting shop bets and online bets with major bookmaking firms are likely to see each dog have roughly the same sum gambled on it, that’s £10,000 on trap 1, trap 2, trap 3 etc. Therefore, in total, the bookies will have £60,000 in bet stakes in their tills. Should every dog in that race be priced at 5/1 they will have to pay out £60,000 to winning bets, representing no profit.
Therefore they will price all runners at 4/1 meaning £50,000 will be returned to successful bettors in ‘winnings’ and £10,000 will be retained in profits.
Returning to our coin-flipping scenario, £10 on heads (where bookies offer 10/11 on each outcome), when successful, repays winning punters with £19.09 meaning a £9.09 profit on winning bets.
I’m sure the bookmakers would love to take £20,000 on a coin flipping contest with £10,000 placed on either scenario. This would mean £20,000 in incoming bets and £19,090 paid back out in ‘winnings’. That’s a £910 profit.
Things are never so black and white but this is the basic mathematics of how bookmakers profit from having thousands of punters on their books.
How To Convert Odds
Now, old fashioned betting odds do complicate things. You need to convert fractional betting odds to decimal odds to simplify things. This way all the maths are a lot more transparent.
A betting odds converter will show you things such as a 7/4 shot equating to 36.36% ‘likely’ which is displayed as 2.75 in decimal odds.
Convert fractional odds to percentage chance
To convert fractional odds into a ‘percentage chance’ you just take the 2nd number and divide it by the sum of both numbers added together and then multiply by 100.
So for example, fractional odds of 7/4 is – 4 divided by 11 which = 0.36363 and then multiply by 100 gives 36.36% chance of winning.
£2.75 is what you will have returned should your selection be successful to a £1.00 stake. So, that’s your stakes returned plus your profit.
Convert fractional odds to decimal odds
Examples of how to convert fractional odds to decimal odds:
If the fractional odds are say, 7/4, this then will be displayed as 2.75 when converting to decimal and 5/1 is shown as 6.00 in decimal odds.
You convert it by simply dividing the 1st number by the 2nd number and then adding 1. So 7 divided by 4 plus 1 = 2.75
Now how the odds are displayed has no bearing on the outcome and should have no bearing on your decision to place a bet. For some, converting odds from fractional to decimal simply makes things easier to understand.
Sometimes even basic fractional odds are not broken down to their simplest form, for example 6/4 and 3/2 is the same thing but it is unlikely you have seen a horse, greyhound or football match outcome priced-up at 3/2.
Calculating odds of 6/4 is actually a lot easier than 3/2 because when assessing a bookmakers ‘over-round’ (or profit margin) you should calculate how much you need to place on a selection to return 100 percent.
With a 6/4 shot that simply means 40 units (or £40). As unlikely as it is (because bookmakers are not that mean) a football match could see the home win, draw and away win scenarios all priced at 6/4 (2.50 in decimal odds). A bet on all such outcomes to return a guaranteed £100 ‘payment’ would incur a £120 stake (three x £40 individual bets) and so the bookmakers will return £100 on the ultimate winning scenario despite taking £120 in wagers.
Suddenly beating the bookie seems a lot harder right? But, to combat this, the punters do have two key things going for them, namely:
- A) No one is forcing people to bet while bookmakers are duty bound to accept bets on all events.
- B) Punters can shop around for the best possible prices from numerous betting firms often negating perceived profit margins completely.
Ultimately the best punters calculate outcomes and scenarios and give each a percentage chance of happening and then they use a betting odds converter to see if the odds available are greater than what they asses the percentage odds to be.
When betting odds calculators show what you consider to be a 40% likelihood scenario and it is available fractional odds greater that 7/4 you should back your selection. But when 5/4 is the best price available you should shirk it. What could be easier?