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Sports Betting: The Thinker’s Guide to Converting Betting Odds into Implied Probabilities

One of the most important concepts to grasp when considering how to place successful bets is that fact that sports betting is all about analysis and interpretation of statistics. In other words, you cannot guess which team will win. You have to study the history of the past encounters between the two teams or players to determine which player or team is likely to win.

The good news is that the sportsbook has done some of the work for you in the betting odds available for the match you are interested in betting on. You just need to work the betting odds back to the implied probabilities. As an aside, the bookmaker has taken the real probabilities, added the bookmaker’s margin or overround, and converted everything into the betting odds you see next to the team’s or individual players’ names.

Converting betting odds into implied probabilities: A case study

Let’s look at a match between Roger Federer and Rafael Nadal. At the outset of this discussion, it is essential to note that both of these players are two of the greatest tennis players of all time. They have played each other 40 times with Nadal winning 24 encounters to Federer’s 16. The last time they played each other was at Wimbledon 2019 in the semi-finals. Federer won in 4 sets.

While we know who won the match, let’s consider the betting odds offered, via a mobile app like the Betwinner app, to determine what the bookmakers thought. Secondly, we’ll use these betting odds to determine what your total payout will be if you bet on the match.

The odds on the Nadal-Federer match were as follows:

  • Nadal -128 Federer +108

The designation of these odds is known as the American or Moneyline odds. And, it is possible to determine who the favourite is by looking at the plus and minus signs. A minus sign shows who the favourite to win is. Therefore, in this scenario, Nadal is the favourite to win this match. Because Federer’s odds include a plus sign, it shows that the sportsbook thinks he is the underdog.

While we now know who the favourite is, it is also a vital to consider the statistical probability of Nadal winning the match.

The formula for calculating this percentage is:

The implied probability of an outcome = stake / total payout.

The Moneyline odds calc is as follows:

The probability of Nadal winning the match = (128 / 100 + 128) x 100 = 56%.

And, because percentages are normally out of a hundred, and there are only two participants in this match, it’s a simple matter of subtracting 56% (the probability that Nadal will win) from 100 to determine the probability that Federer will win. Therefore, 100 – 56 = 44%. We can see from these probability statistics that Federer only has a 44% of winning this match.

Determining the total payout

The last thing to calculate is the total payout you will receive based on these betting odds.

Because Nadal is the favourite, for every £100 you win, you’ll have to wager £128. Therefore, if Nadal wins, and you only wager £100, your total payout will be £100 + £128 = £228.

On the other hand, because Federer is the underdog, for every £100 you wager, you will win £108. Therefore, your total payout will be £100 + £108 = £208.

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