In this post, we want to explain what “odds” means if we are talking about bets and the types of odds that exist to bet. The first thing we need to explain is that the odds are used to calculate the possible benefits you can get if you win a bet. In the bookmakers are set by their specialists in forecasts.
Odds are inversely proportional to the estimated probability of victory; that is, if we bet in favor of a competitor that has a low odd, it will have a greater probability of victory. On the contrary, if we bet in favor of a competitor that has a high odd, its probability of victory will be lower.
Decimal or European Format
The most frequent type of odds is the decimal format, also called European. The odd is presented in the form of an integer or a decimal number. It is obtained by dividing 1 by the probability of victory.
For example, if a bookmaker assigns Nadal a probability of victory of 50% in a match against Djokovic, the fee that will appear will be 2 (1/50%).
If you want to calculate your own odds, you only have to divide 1 by the probability that you estimate an event. For example, if you think that Nadal’s probability of victory against Djokovic is 60%, according to your estimate, the correct odds should be 1.66 (1/60%).
When the fee offered by the room is better than the one you have calculated, the bet will have value and you can make it if you deem it appropriate.
Imagine that you bet € 5 in favor of Nadal. The fee allows you to know how much money you can earn if the Spanish tennis player wins the Serbian. To calculate the benefit, we apply the following formula:
Benefit = bet amount * (fee – 1) Therefore, if Nadal wins, our net profit will be € 5 (€ 5 * (2-1)). That is, we will receive 10 euros in our account (the 5 we bet, plus the 5 won with the bet).