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Odds in their most simple terms are a way of expressing the probability of an event. They provide us with a quantifiable means to look at how likely it is that an event will or will not happen. Once we know this then we can look at ways to assign price to these events based upon our position as a bookmaker, handicapper or regular sports gambler.
To calculate odds, we must have an idea of all possible outcomes in order to determine frequency at which they occur. Using this frequency we are then able to predict a probability for the specific outcome of say, a game of football. This is essential in the world of sports betting and this assigning of probability to the event is known as handicapping. Once the event is 'handicapped' then a price and a betting odd can be assigned.
Calculating odds is essential to sports betting; for a book to make money they must set what is known as the "over-round". This, in a perfect world, increases the bookmakers chances of making a profit no matter what odd "cashes" in for the bettors. While most of the world thinks in relation to 100%, bookies need to offer odds often adding up to 120% and higher, so if the betting public bets in direct correlation with the odds provided, the books still profit. A smart bettor will know that the odds listed are not the true odds for the game. If the bookies released the true odds, the chances of breaking even are increased and they cannot profit. With this knowledge, a bettor can choose to look for the aid of an odds handicapper to see which side of the odds listed at the books is most profitable.
Fractional odds are most common in Europe, largely the UK and Ireland. Fractional odds are used to express how much the bettor would win in comparison to how much they wagered.
A simple example would be taking a bet with the odds set at 2/1. In this situation it is shown that for every "1" risked, they have the chance to win "2", offering a 200% profit on a win, plus the return of your initial stake (the 1). A $100 bet would win $200 along with the return of the initial $100, for a total of $300. With a loss, the bettor receives nothing.
A more common example would be a 1/5 option where the bettor is siding with a more probable option that has a greater chance of cashing, and therefore offers a smaller return. Here, a $100 wager would return 1/5 of the bet plus the origional amount as well, so $100+$20. Decimal odds are the most common form of odds, and in contrast to fractional odds, show the amount that would be paid out to a winning bettor. The number represented in the decimal relates to how much you would win in relation to 1 single unit. An odd listed as 1.70 will win you $1.70 for every $1 played, where as betting on something listed at .40 will only win you $0.40 for every $1 risked. Of course you would get your wager back as well. In America the odds are expressed in terms of + or – with the positive integer showing the amount you will win for every $100 bet and the negative integer showing how much you will need to lay to win $100.