Understanding Betting Odds in 5 Minutes - YouTube

when you first come across betting odds bookmakers the media would have you

believe it's a level playing field where you can profit by picking a winner but

think about that logically for a second it doesn't make much sense does it if it

were true it would mean the bookies possess a divine power where they can

predict the future it also means that nobody else could do it otherwise they'd

soon be out of business which might leave you wondering what they spent so

much money promoting tipsters bookies don't predict the winner to make their

money and understanding how betting odds work will show you why so wherever you

are in the world betting odds work the same way the format may change but the

underlying structure remains the same it's just an expression of pricing

simply put betting odds work by reflecting the implied chance of an

outcome in monetary terms inclusive of the operators margin it doesn't matter

which sport you're betting on or where you do it from in fact it has nothing to

do with the football teams greyhounds tennis players or horses but the

previous betting odds explanation isn't all that clear so as the saying goes

tell me not forget teach me in a may remember involve me and I learn so here's

an example to involve you with how betting odds work assuming we're

looking at the betting odds on a football match the chance of the match

happening is a hundred percent otherwise the bets will not take place individual

odds are linked to each outcomes probability just like the value of ingredients

and linked to the price of a cake sounds fair enough right bookmakers make money

by putting these odds together and adding on a hefty margin for themselves

again like a baker would win selling a cake so if we look a football match

example you have three possible outcomes team A wins team B wins and the draw

let's say team a have favorites with a 50% chance of winning team B are the

underdogs with a 30% chance and the drawer is most unlikely with 20%

together they all total 100% in betting terms this hundred percent figure is

called the over and if one out comes odds increase anothers must decrease

simple if we convert these probabilities into the three different odds formats

decimal fraction and money line you get something like this

however these prices are the true value of something happening

if bets are struck at true odds over the long term neither bookmaker

nor punter would make a profit but there's more about that in the

betting strategy video that will follow this one in the end screen bookies

ensure they win by subtracting a chunk of value from each outcomes price it

changes the overall overround figure like this this is why you'll typically see

overround figures 108 percent to 125 percent with a bookmaker occasionally

they're as high as 140 percent on events like the grand national this is because

bookmakers know the entire nation is going to have a bet anyway so they just

jack up their margin but there's a better option on offer on a betting

exchange like Betfair or Betdaq betting odds work differently an

exchange platform is a place where users like you and I are free to match bets

against each other at a price we agree on the winner is then charged a small

Commission when the event is settled at the time and published both the exchange

is mentioned in this video offer a flat rate of 2% so if we're going back to our

example you can see a quick comparison between the different platforms it's

quite shocking really isn't it but wait because the most important bit is yet to

come if you cash out an existing bet you only

pay Commission on the winning figure that's cashed out supposed to get a bad

value on the opening bet and again on the cash out bet as a brief example if

you place the back bet on Chelsea that had a true price of 4.5 you'd more than

likely get a price a 4.0 with a bookmaker three to one in fractional odds

a hundred-pound of four point zero means a 400 pound total return by placing the

same back bet with a betting exchange you'd likely get the four point five

price and then pay 2% on your winnings 100 pound of four point five is 450

pound return minus the 2% which is seven pounds total return being 443 pounds now

the important bit if you cashed out with a bookmaker you'd see their margin

applied again assuming the true price is moved to three point five the cash out

would be worth 14 pound 29 profit but a bookie would apply their margin again

offering you the 3.75 price to cash out against this makes their cash out offer

just six pound 67 ouch double shafted however if we were on an

exchange they'd allow you to cash out your full bet from four point five price

of three point five only then would they apply the 2% commission

cashing out between 4.5 of 3.5 is worth 28 pound 57 so you pay 2% Commission on

that a total of 58 pence the end result for these identical bets on alternate

platforms like this 6.67 with a bookmaker or 27.99 with the exchange this is

exactly why you should always use a betting exchange instead of a bookmaker so

now you understand how betting odds work it's time to take a little look at

betting strategy taking it one step further so click the video on screen

here to watch that one next also while you're here if you found the content

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