How Are Betting Odds Calculated?

Odds are the foundation of the betting industry, and they are designed to calculate your potential winnings from a bet. The math behind the odds can help you determine whether the wager is worth pursuing, as well as, help you by conducting a risk analysis where you can calculate your potential profits, and money invested.

The most important thing to understand with betting odds is the three distinct types you can find in online bookmakers.

  • Fractional Odds  
  • Decimal Odds  
  • American (Moneyline) Odds  

The concept of the odds remains the same since they are here to help you calculate your potential earnings from a bet. However, the various types are displayed in different formats that are used to somehow display the probabilities of certain things happening in a sporting event.

How are betting odds calculated?  

Do Odds Display Probability in an Event?  

Bookmakers conduct an in-depth analysis before every sporting event just to calculate the probability of certain things happening in an event. The odds don't are always an accurate representation of the probability in a sporting event.

Even though bookmakers use complex algorithms to calculate the chances, the odds format doesn't always reflect the probability of an event.

However, the odds still can tell you something about the event.


  • Lower Odds indicate something likely to happen
  • Higher Odds indicate something unlikely to happen

Odds Indicate The Payout of A Winning Bet  

The whole purpose of the odds is to help people calculate their potential winnings from a bet. The math of calculating your payouts is fairly simple, as long as you are familiar with the odd format.


  • Lower Odds mean that there will be a lower potential win
  • Higher Odds mean that there will be a higher potential win

Why Do Odds Change?  

If you are familiar with sports betting, then you probably already know that bookmakers can change their odds before the event. Odds are directly connected with the probability of certain things happening in a sporting event. This means if something changes prior to the match, like missing a player due to injury, the odds will probably change as well.

Bookmakers have well-structured algorithms that are constantly measuring the probability of certain things in a sports match based on the latest data. If something new comes up, sports bookmakers are allowed to change the odds just to minimize their risk of losing money.

Types of Odds  

Once you know the whole purpose of betting odds and how they work, it is time to learn more about the different odd types. The only way to know how to calculate odds is to learn how different odd formats work.

Decimal Odds  

Decimal Odds are very popular in Europe, and the system behind this calculation is very straightforward. Decimal odds are numbers that you use to calculate your potential earnings by multiplying your wager to the odds.

Formula: Bet x Odds = Potential Wins

The process is also very simple for stacking multiple bets on one ticket. You only have to multiply the odds from each bet you add to the ticket. For example, if you put 2.00 odd matches, and 1.5 odd matches on the same ticket, the total odds will be 2 x 1.5 = 3.00

The process gets more difficult as you add more matches since the odds climb higher and you'd probably need a betting calculator to calculate the total odd of the bet. In case you need it, you can use TwinSpires one:


American or Moneyline bets are the most popular odd format in American Football. These odds circle around the number 100, and cannot be less. The most important thing you should understand is that they can be positive or negative.

For example, if you place $200 on a + 300 odd match you'll end up winning $600. Basically, +300 odds means that you'll get $300 for every $100 you wager.

The formula for positive Moneyline:

Initial Bet x (Odds/100) = Potential Wins

The situation is a bit different with negative Moneyline odds:

The formula for negative Moneyline:

(100 / odds) x Initial Bet = Potential Wins

Fractional Odds  

Fractional Odds are commonly found in British and Irish bookmakers, and they are a bit tricky to understand, especially for beginners.

Whenever you see two numbers separated by a slash, this indicates fractional odds.

Fractional odds help you indicate how much money you'll win on your bet in comparison to your stake. The left number indicates how much money you'll earn, and the right number is how much you need to stake.

All you need to do is divide the two numbers, and multiply by your stake.

This is the simplest way to calculate your winnings from fractional bets.

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