Odds Explained - How Does Fixed Odds Betting Work?
When it comes to betting, you need to have a solid understanding of the basics to make sure you’re making the best and smartest bets you can make – smarter bets always means a better return for your money, and that’s something we all want.
And understanding exactly what fixed odds betting is and how does fixed odds betting work is the foundation of your betting knowledge. Without this, you’re simply not going to be a successful punter.
What Is Fixed Odds Betting?
To put it as simply as possible, fixed odds are the price the bookmaker offers you when you place a bet. So, if you see a horse at 2/1 (3.00) odds, this is an example of fixed odds – fixed by the bookmaker. And fixed odds betting is simply you placing a bet using the odds offered by the bookmaker.
The odds in fixed odds betting tell you how likely something is to happen in a race, an event, or a match. And they also tell you how much you will win and how much money will be returned to you for the stake you put on. But, what does that 2/1 mean? Why is it also written as 3.00? And what’s the difference in a horse priced at 2/1 (3.00) fixed odds and a horse priced at 10/1 (11.00) odds and exactly what does this mean for your fixed odds betting? In this guide to how does fixed odds betting work, we’re going to cover all the basics, give you a great grounding in fixed odds betting, explain all the different odds formats, tell you what the odds mean in terms of how likely a bet is to win and so much more. Read on for the beginners guide to fixed odds betting.
How Do Fixed Odds Represent Probability?
What’s Probability Anyway?
Yes, to understand how odds work you have to have some understanding of probability. We know it’s maths and we know it’s possibly not something you think you’ve thought of since school. But, trust us, if you want to make those smart, money-making bets, you need to understand odds, and to understand how does fixed odds betting work, you need to understand probability.
The probability of something happening is a measure of just how likely it is to happen. So you can use this to predict what is going to happen with any event. When you apply this to betting, you make that prediction and if you are right, you win cash.
For example, let’s look at flipping a coin. There are two possible outcomes – the coin lands heads, or the coin lands tails. The total of all probabilities for any event is always 100%, so with your coin, you have two outcomes with an equal chance of happening, so that means there is a 50% chance of heads and a 50% chance of tails. If you were to bet on the outcome, probability says that you will win 50% of the time if you pick heads. But, of course, there’s also a 50% chance you will lose every time the coin is flipped. And that’s true for every single time the coin is flipped.
But, your bookmaker doesn’t use probabilities – they use odds. And a 50% probability of something winning at a bookmaker will be shown by the bookie as 1/1 (2.00) fixed odds. So, how does this work and how do you read the odds to understand how likely, how probable, a bet is to win for you?
Turning Probability Into Fixed Odds
When you visit an online bookmaker, you’ll more than likely see them present odds in what is known as a fractional format. These odds represent the likelihood of something winning. When something has a very low likelihood or low probability of winning, we say it has long odds, for example 100/1 (101.00). When something has a high likelihood or high probability of winning, we say it has short odds, for example 2/1 (3.00). And, of course, the horse, team, player, whatever in the event you are betting on that has the shortest odds of all is known as the favourite.
So, going back to the toss of the coin, you’d see the odds of heads given as 1/1 (2.00) and the odds of tails as 1/1 (2.00). For the other format we’ve used there, the decimal format, we’ll explain that in a little while!
So, how do you work out the probability of something happening, or for your betting success, something winning, when you have fractional odds?
Calculating Probability From Fixed Odds – Example.
If your fixed odds are shown as X/Y, the probability (as a percentage) is calculated as Y / (X + Y) x 100 or Y / (X + Y) x 100 = P (%)
So, with our coin flipping, with those 1/1 (2.00) odds…
1 / (1 + 1) = 1 / 2 = 0.50 and then multiply by 100 to get the percentage probability to give you 50%
Again, applying the same formula each time:
10/1 odds = 1 / 11 = 0.09 or a 9% chance of winning.
4/1 odds = 1 / 5 = 0.20 or a 20% chance of winning.
2/1 odds = 1 / 3 = 0.33 or a 33% chance of winning.
1/1 odds = 1 / 2 = 0.50 or a 50% chance of winning.
1/4 odds = 4 / 5 = 0.80 or an 80% chance of winning.
Using Fixed Odds To Calculate Your Possible Winnings
So, you know how the odds relate to the probability of your bet winning, but how does fixed odds betting work when it comes to working out your winnings?
Again, we’ll use the flipping a coin example. And you’ll see how easy it is. Remember, the odds of heads are 1/1 (2.00) and the probability is 50%. So, if you put £1 on heads and you win, the odds of 1/1 mean you will win £1 for your £1 bet. But because you also get your £1 stake back, the return on your bet is £2 (£1 win plus £1 stake).
If you’re betting £1 on 2/1 odds, you win £2 for every £1 you put on (£3 return).
If you’re betting £1 on 4/1 odds, you win £4 for every £1 you put on (£5 return).
If you’re betting £1 on 10/1 odds, you win £10 for every £1 you put on (£11 return).
If you’re betting on the favourite at 1/4 odds, and you put on £4, you’ll win £1 (£5 return).
Different Fixed Odds Formats
Fractional Vs Decimal
You’ve seen that when we show odds in this guide we show you in two ways (like this – 2/1 (3.00)). These are fractional and decimal fixed odds formats. From the explanations thus far, we’ve covered just fractional format.
You’ll find decimals on a lot of European and American bookmakers and betting exchanges. But, most UK bookmakers will give you the option of displaying odds in fractional or decimal formats. Which one you use is, of course, up to you. However, for total novices, decimal odds are actually slightly easier. The easiest way to think about it is that fractional odds will tell you your winnings, but decimal odds will show you your return.
Again, the equation for decimal odds can be shown like this:
Winnings = (Odds multiplied by Stake) – Stake).
Return = Odds multiplied by Stake.
So, using the examples we used before:
If you’re betting £1 on 2/1 (3.00) odds, you get (3.00x£1) – £1 = £2 winnings & 3.00x£1 = £3 return.
If you’re betting £1 on 4/1 (5.00) odds, you get £4 winnings and £5 return.
If you’re betting £1 on 10/1 (11.00) odds, you get £10 winnings and £11 return.
If you’re betting on 1/4 (1.25) odds, and you put on £4, you get £1 winnings and £5 return.
Getting More Complicated – Let’s Talk American Moneylines!
Fractional odds format and decimal odds formats are simple and you’ll see them on most bookmakers you will use online. However, they’re not the only odds formats you can find. In the United States, they use something known as American or Moneyline odds. This is something we don’t recommend using until you have a solid understanding of fractional and decimal odds formats.
With moneylines you’ll see that each bet has a three-digit number attached. A favourite will have a negative, an underdog a positive value, such as -105, +120, +150. If you made a bet on the favourite at -105, it means you’d need to bet £10.50 to win £10 or £105 to win £100. Similarly, an underdog at +150 would mean £10 bet wins £15 or £100 bet wins £150.
Converting from moneyline to decimal odds is simple, but converting to fractional is slightly more difficult. To concert moneyline or American odds to decimal simply take the 3 digits, divide by 100 and add 1. Therefore, American odds of +200 would give you decimal odds of 3.00 ((200/100)+1 = 3.00). And, of course, converting the other way is just as simple; take away 1, multiply by 100.
To convert from fractional odds to American odds, it gets rather complex and, frankly, pointless. Yes, you could go through the complex calculation, but we simply convert the fractional to decimal and then the decimal to American. Trust us, it’s far simpler that way!
Hong Kong, Malaysian, and Indonesian – Even More Formats!
Ok, here’s where we’re drawing the line in this simple guide to fixed odds. There are Hong Kong, Malaysian, and Indonesian odds formats. That’s all you really need to know. At this stage in your betting, when you’re just finding your way around basic fixed odds, it’s enough to be able to work in fractional and decimal, with maybe the occasional American odds bet.
Switching Formats – Make Things Even Easier For Yourself – Use An Odds Converter – At First!
When you’re still new to converting odds and working out which odds mean what probability, whether you’re looking at fractional or decimal odds, you can use one of many different odds converters online and available as mobile apps.
But, and we can’t emphasise this enough, you need to know how to calculate odds, how to work out the likelihood of winning by understanding the probabilities – and the more you do the calculations, the better you’ll get at doing the calculations in your head – far better than relying on a converter.
Fixed Odds Can Change – Look For Best Price Offers
Fixed odds betting means that you take the price/odds offered by the bookie and place your stake. And, in theory, these odds are completely fixed. The odds you take at the time of placing your bet are the odds you will receive winnings for. But, in truth, with modern bookmaking, fixed odds aren’t as fixed as they used to be. It’s all thanks to increased competition which means the bookies are looking to offer you the best prices they can to attract your betting. What this means is that a lot of bookies will advertise best price guaranteed betting where the fixed odds for your bet can change – but always only in your favour. So, if you put a bet on at 3/1 (4.00) on Old Nag for the Grand National and his odds change to 5/1 (6.00) at the off, the bookmaker will automatically give you these better odds. Now, that’s a thing to be on the lookout for!
Fixed Odds Betting Understood – Now You’re Ready To Get Betting!
Hopefully, we’ve answered your “how does fixed odds betting work?” questions now in our simple guide. It might seem obvious at times, but being a smart bettor is all about knowledge and being able to make smart bets. And that knowledge has to start from an understanding of the basics. Once you understand fixed odds and how to bet with them, you’re in the best position to learn more, bet smarter, and yes, win more!