What a price is
Every sports bet is a price. The bookmaker offers to pay a certain amount if an outcome happens, in exchange for the stake if it does not. The odds are that price written down, and the first skill in this industry is reading them fluently in every format and knowing what they say about probability.
There are three formats in common use and you will meet all of them.
Decimal odds show the total return per unit staked, including the stake. Odds of 2.50 mean a 10 unit bet returns 25 units if it wins: 15 profit plus the 10 stake back. Decimal is standard in continental Europe, Australia, New Zealand and Canada and is the usual format on betting exchanges, and it is the format this course uses internally because it is the easiest to calculate with.
Fractional odds show profit relative to stake. 6/4 (said "six to four") means 6 profit for every 4 staked, so a 10 unit bet returns 25: 15 profit plus the stake. Fractional is traditional in Britain and Ireland, and common in horse racing. To convert to decimal, divide the first number by the second and add 1: 6/4 is 1.5 + 1 = 2.50.
American (moneyline) odds use a plus or minus. +150 means a 100 stake wins 150 profit. -200 means you must stake 200 to win 100 profit. A positive number usually marks an underdog and a negative number a favourite, but in an evenly matched contest both sides can be negative: the common American price of -110 on each side means staking 110 to win 100 profit. To convert +150 to decimal: 150/100 + 1 = 2.50. To convert -200: 100/200 + 1 = 1.50.
Being able to say instantly that 6/4, 2.50 and +150 are the same price is table stakes for any job in sports betting.
Odds are probabilities in disguise
The reason odds matter is that each one implies a probability. Take the decimal price and divide 1 by it: 2.50 implies 1/2.50 = 0.40, or 40%. A price of 1.50 implies 67%; a price of 5.00 implies 20%.
This is the number a bookmaker is really working with. When a trader sets a price of 2.50 on a team, they are saying they think that team wins about 40% of the time, and then adding something on top. That something is the subject of the next section, and it is why the implied probabilities in a market never add up to exactly 100%.
Try it on a football match priced at 2.10 for the home win, 3.40 for the draw and 3.60 for the away win. The implied probabilities are 47.6%, 29.4% and 27.8%. Add them and you get 104.8%. The extra 4.8% is not a mistake.
The overround, or margin
A bookmaker is not a neutral forecaster; it is a business. It builds a margin into every market by pricing each outcome slightly shorter (lower odds) than its true probability would justify. Summed across the market, the implied probabilities exceed 100%, and the excess is called the overround, the vig, the juice or simply the margin.
In the example, if the bookmaker took bets in exactly the proportions the prices imply, it would keep about 4.6% of all stakes whatever the result. That is 1 minus 1/1.048: an overround of 4.8% is not quite the same as a 4.8% margin on stakes, although at typical online margins the two figures are close. That is the theory of how a bookmaker makes money: not by predicting results, but by pricing every outcome so that the book is balanced and the margin is collected. In practice books are rarely balanced: an analysis of about 20,000 wagers on NFL games, placed by 285 bettors in a handicapping contest at an online sportsbook in the 2001/02 season, published by the economist Steven Levitt in 2004, found that in the median game almost two-thirds of the bets fell on one side, and concluded that bookmakers set prices to exploit bettors' biases rather than to balance the money.
Margins vary. A major football match at a competitive online book usually carries a margin of a few per cent: a study of Premier League odds in 2016/17 and 2017/18 found an average overround of about 4% on the match result across more than 50 bookmakers. Multi-outcome markets run much higher: the same study found about 12% on correct-score betting. The total overround tends to grow with the number of outcomes, because a little margin is added to each one, and racing shows this clearly. The Horseracing Bettors Forum, which divides the overround by the number of runners for that reason, measured the UK starting-price overround at roughly 1.7% to 2.1% per runner between 2016 and 2024; at those rates a ten-runner race carries roughly 17% to 21%. Nor is the margin spread evenly across outcomes: across more than 80,000 European football matches, the tenth of match-result bets least likely to win lost 17% on average, while the tenth most likely to win lost 2%, a pattern called the favourite-longshot bias. Knowing how to compute the overround on a market tells you immediately how competitive it is.
Working out a payout
Payouts follow directly from decimal odds: stake multiplied by decimal odds gives the return; return minus stake gives the profit.
- 20 at 3.20: return 64, profit 44.
- 50 at 1.80: return 90, profit 40.
- 5 at 11.00: return 55, profit 50.
For an accumulator (a bet where several selections must all win), multiply the decimal odds together and then multiply by the stake. Three selections at 1.80, 2.10 and 1.50: combined odds 5.67, so a 10 stake returns 56.70. Accumulators are popular because the returns look large, and profitable for bookmakers because the margins multiply too: three markets each with a 5% overround combine to about 16% (1.05 × 1.05 × 1.05 = 1.158).
Why prices move
A price is not fixed. It moves before the event for two reasons: new information (team news, injuries, weather) changes the bookmaker's view of the probability, and money changes the bookmaker's position. If far more bets arrive on one side than the other, the bookmaker shortens that side's price to discourage more bets on it and lengthens the other side to attract them. Some of that money is informed; a bookmaker that sees a sharp customer bet heavily will move the price because the customer probably knows something.
The price at which the market closes just before the event is called the closing line, and across the industry it is treated as the best available estimate of the true probability, because it has absorbed the most information and money: in an efficient market the closing odds should incorporate all relevant information. It is not a perfect estimate. In the football match-result market, outsiders still win less often than their closing prices imply.
Vocabulary you will hear
Favourite is the outcome with the shortest odds; outsider or longshot the one with the longest. Odds-on means the profit is less than the stake (decimal below 2.00); odds-against the reverse. Evens is 2.00, or 1/1, or +100. Shortening means the odds are getting smaller (the outcome is seen as more likely); drifting or lengthening means the reverse. A steamer is a selection whose price has shortened sharply because of heavy backing.
What to take from this lesson
Convert between formats without thinking. Turn any price into a probability by dividing 1 by the decimal. Sum the probabilities in a market to see the margin. Understand that the margin, not the prediction, is the bookmaker's built-in source of profit. The rest of the course builds on these four skills: the bets that can be placed, how a book is run, how bets are settled, how to read the market, and how the business makes money.