Understanding Betting Odds in 5 Minutes

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

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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

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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 useful please click the like button down below and subscribe to the channel thanks

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