Sports betting is an exciting and potentially lucrative pastime, but it can also be confusing, especially for beginners. One of the most important aspects of sports betting is understanding betting odds. In simpler terms, they represent the probability of your team winning and they show you how much money you’ll make if they do.

However, before you go online to look up the epl odds to get the best information available on your favourite teams, it’s a good idea to learn more about how to calculate odds and how to interpret them correctly.

## Types of betting odds

The first thing to understand is that there are three primary types of odds used in sports betting: American, decimal and fractional. Each one is commonly used in different regions and for all kinds of sports betting. Understanding the differences between them is crucial for calculating payouts accurately and making informed betting decisions.

### American odds

American odds are the most common type of odds used in the United States. They are expressed as either a positive or a negative number and indicate how much money you’d need to wager to win $100 or how much you would win on a $100 bet.

### Decimal odds

Decimal odds are the primary odds format used in Europe and other parts of the world. They are expressed as a decimal, and here the number represents the total payout you would receive for every $1 wagered, including the original stake.

### Fractional odds

They are most commonly used in the United Kingdom. Fractional odds are expressed as a fraction, for example, 2/1 or 7/2. The first number represents the potential winnings, and the second number is the amount bet.

## Probability and odds

After getting familiar with the three types of odds, you need to know the difference between probability and odds.

Odds represent the likelihood of an event happening and the potential payout. Probability represents the likelihood of the event happening expressed as a percentage. Understanding the relationship between the two is essential for making informed betting decisions.

It's worth an exercise in understanding the relationship between odds and probability and how to calculate probability from odds and vice versa. For example, if the odds of a team winning are 2/1, the probability of them winning can be calculated by dividing 1 by 2 + 1, which equals 0.33 or 33%.

Alternatively, if the probability of a team winning is 60%, you can convert this to odds by dividing 100 by 60 and subtracting 1, which gives you odds of 1.67. By estimating the probability of an event occurring, you can determine whether the odds offered by a sportsbook represent good value.

## Implied probability

Implied probability is the probability of an event occurring as implied by the betting odds. Understanding it is crucial for assessing the value of a bet. So, how do you calculate implied probability from betting odds?

For example, if the odds of a team winning are 3/1, you can calculate the implied probability by dividing 1 by 3 + 1, which gives you 0.25 or 25%. But, if the odds of a team winning are -150, you can calculate the implied probability by dividing 100 by 150 + 100, which gives you 0.4 or 40%.

If the estimated probability of an event is higher than the implied probability, you can conclude that the odds have a good value. However, if the estimated probability is lower than the implied one, the odds do not represent a good value.

## Understanding the vigorish ("the vig")

The vigorish, or the vig, is the fee charged by a sportsbook for accepting a bet. Understanding it is essential for calculating accurate payouts and making informed betting decisions. But how does the vig work?

For example, if a sportsbook offers odds of -110 for a particular event, this means that you’d need to wager $110 to win $100. The sportsbook collects the additional $10 as the vig, representing a 10% commission on the bet.

Read Also: How Do Bookmakers Calculate Sports Betting Odds

## Calculating payouts

Understanding how to calculate payouts is possibly the most important factor for making good betting decisions and ensuring that you receive accurate payouts. So, keep reading to learn how to calculate payouts for different kinds of bets:

### Simple bets

The first type of bet to understand is the simple bet, like a moneyline bet. To calculate the payout for a moneyline bet with odds of -110, for example, you would need to divide the amount wagered by 1.1 and round down to the nearest cent. So, a $100 bet would result in a payout of $90.91 ($100 / 1.1).

### Point spread bets

In these types of bets, the payout is typically even money (1:1) or close to it, meaning that a $100 bet would result in a payout of $100 plus the original stake. However, this can vary depending on the odds offered by the sportsbook.

### Parlay bets

Parlay bets involve combining multiple bets into a single wager. To calculate the payout, you’ll need to multiply the odds of each bet together and then multiply that by the amount wagered. For example, if you place a two-team parlay bet with odds of +250 and +300, and you wager $100, the payout would be $1,250 ($100 x 2.5 x 3). The more bets you add to the parlay, the higher the potential payout, but the more difficult it is to win the bet.

In conclusion, understanding the different types of bets and methods used to calculate odds are invaluable skills to have when it comes to sports betting. Once you become proficient in the fundamentals, you are ready to put your skills to the test and place your first bet.