Betting odds and payout
If you can calculate betting odds and convert it to probability, you can bet more efficiently and strategically.
and if you understand what ‘payout’ means, it will help you to choose right betting site.
Calculating sports betting odds
So how do sports bookmakers calculate and set odds?
Let’s assume there is a football match of Liverpool(home) vs. Mancity(away).
First, odds makers analysis each teams’s stats in the season/cup tournament, and grasp their weakness and strength, abilities of attack and defense.
and check each team’s recent form, head to head stats, fixtures, missing players, etc.
and after these close analysis, they calculate each team’s chance of winning and draw.
So let’s assume these chances are created like below :
Liverpool win : 58%
Draw : 20%
Mancity win : 22%
And then they convert it to betting odds like below :
Liverpool win : 1/0.58 = 1.72
Draw : 1/0.2 = 5
Mancity win : 1/0.22 = 4.55
very simple, right?
What is payout in sports betting?
But If bookmakers give all odds to betters like above, how can they earn revenue?
so each betting site allot a part of total odds for their profit.
and those rate of allotting is different on each betting site.
some allots only 1%, and some takes 5%.
and ‘payout’ means the rest of odds for betters except the share for betting sites.
Some betting site’s payout is 99%, and some one is 92%.
Then if a betting site’s payout is 96%, how do they set odds of above football match finally?
Liverpool win : 1.72 x 0.96 = 1.65
Draw : 1/0.2 = 5 x 0.96 = 4.8
Mancity win : 4.55 x 0.96 = 4.37
as you assumed, it is very simple again.
what if its payout is 92% ?
Liverpool win : 1.72 x 0.92 = 1.58
Draw : 1/0.2 = 5 x 0.92 = 4.6
Mancity win : 4.55 x 0.92 = 4.19
Which do you think is it much different or not?
If it is single bet, maybe you can think it is not so different in betting profits
But if you do multi bet or parlay, betting profit will be much different depending on payout
For example, let’s assume a better uses Pinnacle betting site and the other uses Bethard, and will bet on MLB baseball games.
for MLB sports betting, Pinnacle’s payout is around 98%, and bethards’ is around 95%.
We can see it on Oddsportal.com like below
For the match Boston vs. Tampa Bay,
at pinnacle, odds are 2.19(home), 1.78(away)
and payout is 98.2%
at bethard, odds are 2.10, 1.71
payout is 94.3%
For Philadelphia vs. Cincinnati,
Pinnacle : 1.77, 2.20
Bethard : 1.71, 2.15
Toronto vs. Arizona
Pinnacle : 2.33, 1.69
Bethard : 2.25, 1.65
Ok let’s assume both betters do multi bet(parlay) to home team wins in all above 3 games at each betting site.
then total odds must be like below.
total odds in Pinnacle
2.19 x 1.77 x 2.33 = 9.03
bet in Bethard
2.10 x 1.71 x 2.25 = 8.08
So if you bet 100 dollars,
your profit in pinnacle will be 803 dollars
and 708 dollars in Bethard.
the difference is 100$, but if you bet often or everyday, the long-term profit must be very different.
and the general ‘experienced’ better’s winning rate is around only 60%, so choosing betting site which gives high payout is very important for increasing betting profit.
Converting odds to probability
I recommend you convert odds to probability whenever you bet.
Because it makes you identify how much chance of the event more intuitively.
Then you can evaluate the risk of high odds event more clearly.
so how can we convert odds to probability?
the formula is very simple like below.
probability = payout / odds
at the above example, in pinnacle, 3 events multi bet odds are 9.03
and pinnacle payout is around 98%
so its probability = 0.98 / 9.03 = 0.109 =10.9%
let’s think about possibility again here.
10% means that we can get it once in 10 times generally.
but you have to consider you can’t get it even in 20 times, 30 times.
Because it is just probability in average.
Conservative thinking and trying to avoid risk are very important for betting or any investing activities.
Never be confident about your luck 🙂
All professional betters or gamblers advise we have to pursuit steady and careful betting style to achieve successful long term betting.
So I recommend that you always convert odds to probability and remind that what probability is.