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How do you calculate odds of winning?

How do you calculate odds of winning?

To understand the concept of placing a winning bet, punters need a thorough knowledge of how odds are calculated. Bookmakers decide the odds of an event. To place a bet on its outcome and win, punters must know how the odds are calculated and decided.

The assumption that it is not possible to beat the bookmakers can be negated to some extent by calculating the betting odds and covering all probabilities. To know more about the calculations involved and perform them accurately, punters should first understand the concept of odds.

How are “odds” defined?

Even before understanding the concept of odds, punters should know that odds are related to yet different from probability. Probability is the chance of the occurrence of the given outcome. It is calculated simply by dividing the count of favourable outcomes by that of the total outcome.

In any given situation, the odds express the relationship between the counts of favourable outcomes versus the count of unfavourable outcomes. Thus, odds are generally represented in the form of a ratio. This ratio can be of two types:

  • Odds of winning wherein the first number of the ratio represents the chances of success and the second number the chances of losing
  • Odds of losing wherein the first number represents the chances of losing and the second the chances of winning

Bookmakers use three different types of betting odds to present probabilities. Each of these can be converted into the other. The different types of odds are:

  • Fractional or the U.K format wherein fraction is used to express the odds
  • Decimal or the European format wherein odds are expressed as a decimal and are very easy to understand
  • Moneyline or American format wherein numbers preceded by the plus or minus sign are used to represent the odds making the system a bit complicated and difficult to understand

How are odds calculated?

Irrespective of whether the punter is a newcomer or a high-roller, he needs to know the science behind the calculation of odds. This makes the bets more profitable and enjoyable. The steps involved in the calculation of the odds are:

  • To calculate the basic odds, punters need to:
    • Determine the count of the favourable
    • Get the count of unfavourable outcomes by subtracting the favourable outcomes from the total count of the outcomes
    • Numerically express the odds by obtaining the ratio of the favourable to unfavourable outcomes
    • To calculate the odds against winning or odds of losing, the ratio of an unfavourable to a favourable outcome is calculated
  • To calculate complex odds, the following sub-steps have to be followed:
    • Differentiating between independent and dependent events: Certain scenarios might see the odds change and they give rise to:
      • Independent events wherein the odds remain unaffected by previous events
      • Dependent events wherein past event outcomes change the odds
    • Determining the likelihood of all outcomes: Two important points that need to be taken into consideration are:
      • Likelihood of the occurrence of some outcomes is more than the others and the odds should reflect this fact
      • The occurrence of the number of simultaneous events changes the odds exponentially
    • Mutual exclusivity has to be taken into account since certain events tend to overlap
  • Odds can be calculated from probability by using the simple formula of O = P/(1-P) and to calculate probability from odds the formula gets reversed to become P = O/(O+1)

Despite knowing how to calculate the odds why does a house always win?

The betting odds that are displayed are never a true representative of the actual probability of the occurrence of the event. Bookmakers generally add a profit margin to these odds. This results in successful punters receiving less money than they would have received had the odds reflected the true probabilities.

The bookmaker, however, has to make a correct estimation of the true probability of an outcome. Only then can he set the odds in a way that the bookmaker always profits irrespective of whether the punter wins or loses.

Since the bookmaker has an edge that it builds into the odds, the house is always seen to be winning.

Just calculating the odds is not enough. This has to be backed by tips and predictions from reliable tipsters like www.footballtipster.net. A punter only wins when he obtains the perfect combination of tips, predictions, calculation of odds and luck.

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