How betting odds work
Betting odds are a price. They tell you how much a sportsbook will pay back if your bet is correct, compared with the amount you stake. Every odds format, from decimal to fractional to American, is just a different way of writing that same price.
This guide uses decimal odds for most examples because they are the simplest to calculate with. It explains returns, the link between odds and probability, and what the words favourite and underdog really tell you. It does not offer a way to win, because none exists: odds are set so that the operator earns a margin over time.
Odds are a price, not a prediction
When a sportsbook shows odds of 2.50 on a team, it is saying: stake 1 unit and, if the team wins, we return 2.50 units. The return includes your original stake. The profit is the return minus the stake, so 1.50 units here.
Odds come from a mix of estimated chances, the amount of money coming in on each side, and the operator's own margin. They are not a forecast that something will happen. A price of 2.50 does not mean the outcome is likely or unlikely. It only means that is what the operator will pay.
| Stake | Decimal odds | Total return if it wins | Profit |
|---|---|---|---|
| 10 | 2.50 | 25.00 | 15.00 |
| 20 | 1.50 | 30.00 | 10.00 |
| 5 | 7.00 | 35.00 | 30.00 |
The formula is simple. Total return = stake x decimal odds. Profit = total return - stake. If the bet loses, you lose the stake and nothing is returned.
Implied probability: what a price suggests
Dividing 1 by the decimal odds gives the implied probability, the chance that the price would be break-even if it were fair. At 2.50 the implied probability is 1 / 2.50 = 0.40, or 40%. At 1.50 it is 1 / 1.50 = 0.667, or 66.7%. At 7.00 it is 1 / 7.00 = 0.143, or 14.3%.
Implied probability is a way of reading a price, not a measurement of reality. Real prices include the operator's margin, so the implied chances across all outcomes of an event add up to more than 100%. The bookmaker margin guide shows how to measure that excess.
- Short odds (a low decimal number such as 1.20) mean a high implied probability and a small profit per unit staked.
- Long odds (a high decimal number such as 12.00) mean a low implied probability and a larger profit per unit staked.
- Neither is better value in itself. The question is whether the price is fair for the real chance, and nobody can know that for certain.
Favourites and underdogs
The favourite is the outcome with the shortest odds, which means the market thinks it is the most likely. The underdog has the longest odds. In a two-way market the favourite often sits under 2.00 and the underdog above it, but that depends on the event.
Favourites win more often, but they pay less when they do. Underdogs win less often and pay more. Because the prices already reflect this, backing favourites does not make a bet safer in a financial sense. The margin applies to every outcome.
A heavy favourite at 1.10 returns only 11 on a 10 stake, a profit of 1. One upset wipes out the profit from many such bets, so short prices do not mean low risk.
Reading a typical market
Take a football match winner market with three outcomes: home 2.10, draw 3.40, away 3.60. Their implied probabilities are 47.6%, 29.4% and 27.8%. These add up to 104.8%, so the extra 4.8 percentage points is the margin built into the prices.
If you stake 10 on the home team at 2.10 and it wins, the return is 21.00 and the profit is 11.00. If the match is a draw or an away win, the stake is lost. A single bet has only two results: it wins or it loses.
Prices change. A team's odds can shorten or lengthen as news arrives, as money is placed, or as an event begins. The odds you accepted when you placed the bet are normally the ones used to settle it, unless the terms say otherwise.
Odds can be shown in different formats
The same price can appear as 2.50 (decimal), 3/2 (fractional) or +150 (American). They all mean the same thing. Sportsbooks usually let you switch the display in settings. See the odds formats guide for the conversion formulas, or use the odds converter to check a figure.
If you want to see what a combined bet would return, the odds calculator multiplies the legs and shows the total.
What odds cannot do
Odds cannot tell you what will happen, and understanding them does not create an edge over the operator. The margin means that, across many bets, the expected result for the customer is a loss. Betting is paid entertainment, and the cost should be an amount you can afford to lose.
Never stake money you need for rent, bills or savings. If betting stops feeling like entertainment, see our responsible gambling page for tools and where to find help.
Frequently asked questions
What does odds of 2.00 mean?
Decimal odds of 2.00 return twice your stake if the bet wins, which is a profit equal to the stake. The implied probability is 50%. It is often called evens.
Do higher odds mean a bigger chance of winning?
No, the opposite. Higher odds mean the market sees the outcome as less likely, so it pays more when it happens. Lower odds mean a more likely outcome and a smaller return.
Is the return the same as the profit?
No. The return includes your stake, and the profit is the return minus the stake. A 10 stake at 3.00 returns 30, so the profit is 20.
Can I work out the real probability from the odds?
Only roughly. The implied probability from a price includes the operator's margin, so it is slightly higher than the fair chance. Removing the margin gives a better estimate, but it is still an estimate.