Interpreting Odds

I have tried not to use too much gambling jargon in my writing (you’ll find definitions of, and discursions on, the jargon I do use in the glossary) however a certain amount is unavoidable. In particular any gambling discussion almost of necessity involves the use of ‘odds’ and if you don’t know what ‘7/2’ actually means you’re liable to miss half the point. What follows is an attempt to clarify what the odds mean and give a sense of how a mastery of them lies at the heart of successful gambling.

There are many different ways of expressing probabilities. Four are particularly relevant to gambling: fractional odds; decimal odds; percentages; and ratios. These are just different ways of expressing the same thing – 6/4 in fractional odds, for example, would be 2.5 in decimal odds, 40% as a percentage and 2 in 5 as a ratio. The first two, as the name implies, are the odds offered by bookmakers and the like; the latter two are more tools for assessing prices.

Let’s look at these in turn.

Fractional odds.  When using fractional odds you multiply your stake by the odds to find out what you will win (your profit rather than your return as the stake is not included). So £10 at 6/4 will win you £15 (with a total return of £25 as you get your stake back too). Most of the time I will express odds as fractions – not because this is the most intuitive way but because it is the convention in British bookmaking and thus the one I grew up using – so if it’s now clear to you what fractional odds mean and you’re not interested in the technical minutae of gambling feel free to skip the rest of this piece.

Decimal odds. Long common in Europe and Asia and in parimutuel betting (such as the Tote in the UK) these are becoming increasingly prevalent in the UK too with the rise of betting exchanges. The main difference between decimal and fractional odds, apart from their form, is that with decimals the stake is included; again you simply multiple your stake with the odds given but here you get your total return not just your profit. So £10 at 2.5 will return you £25 (£15 profit plus £10 stake).

Percentages.  You won’t generally get offered odds in terms of percentages but it is useful to think in terms of percentages when assessing chances. To an extent this is a matter of taste – does it make more sense to you to say something has a 40% chance of winning or that it is 6/4 – but if you’re going to assess an event you’re not going to come up with accurate prices if all the selections’ percentages added together doesn’t total 100. To convert a set of odds to the equivalent percentage chance, turn the decimal odds upside down then multiply by 100 (i.e. (1/decimal odds) * 100=%). If the odds available imply the selection in question has a lower percentage chance of winning than your assessment there may be a bet to be had.

Ratios.  Like percentages this is more a way of assessing chances than expressing odds. It’s more intuitive and less mathematical than percentages – for most people that something has a 2 in 5 chance of winning (that you would expect it to win, in other words, two times out of every five) seems easier to grasp than that it has a 40% chance –  and as such is probably the best way to start thinking about probabilities when new to gambling.  To convert decimal odds into ratios just make the decimal a fraction (or add 1 to the fractional odds); the resultant fraction, say 5/2, is reversed and phrased as 2 in 5.

Examples:

Fractional; 1/1 (evens); decimal 2.0; percentage 50%; ratio 1 in 2.

Fractional; 1/4; decimal 1.25; percentage 80%; ratio 4 in 5.

Fractional; 1/2; decimal 1.5; percentage 66.7%; ratio 2 in 3.

Fractional; 7/2; decimal 4.5; percentage 22.2%; ratio 2 in 9.

Fractional; 4/1; decimal 5.0; percentage 20%; ratio 1 in 5.

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