How do odds work in betting

Understanding Odds in Betting
Term Definition
Odds The ratio of the amount you can win to the amount you must stake.
Decimal Odds The total amount you will receive if you win, including your stake.
Fractional Odds The amount you will win for every unit you stake.
American Odds The amount you must stake to win $100 or the amount you will win for every $100 you stake.
Favorite The team or outcome with the lowest odds, indicating a higher probability of winning.
Underdog The team or outcome with the highest odds, indicating a lower probability of winning.
Even Money Odds where the payout is equal to the stake.
Long Shot An outcome with very high odds, indicating a very low probability of winning.
Parlay A bet that combines multiple individual bets into one, increasing the potential payout but also the risk.
Arbitrage A betting strategy that takes advantage of differences in odds between different bookmakers to guarantee a profit.

Resources:

Types of Odds Formats
Format Example
Decimal Odds 2.00
Fractional Odds 1/1
American Odds -110

Odds Conversion
Decimal Odds Fractional Odds American Odds
2.00 1/1 -110
1.50 1/2 -200
3.00 2/1 +200

Calculating Payouts
Odds Format Formula Example
Decimal Odds Payout = Stake x Odds Stake $10 on odds of 2.00, Payout = $10 x 2.00 = $20
Fractional Odds Payout = Stake x (Numerator + Denominator) / Denominator Stake $10 on odds of 1/1, Payout = $10 x (1 + 1) / 1 = $20
American Odds Payout = (|Odds| + 100) x Stake / |Odds| Stake $10 on odds of -110, Payout = (|-110| + 100) x $10 / |-110| = $19.09

Understanding Favorites and Underdogs
Favorite Underdog
Lower odds Higher odds
Higher probability of winning Lower probability of winning
Less payout More payout

Bankroll Management
Principle Description
Set a budget Determine the amount of money you are willing to risk.
Bet within your means Never bet more than you can afford to lose.
Manage your winnings Set aside a portion of your winnings for future bets or withdrawals.
Avoid chasing losses Don’t bet more money just to try and recover losses.

Betting Strategies
Strategy Description
Value betting Identifying and betting on outcomes with odds that are higher than the true probability of winning.
Hedging Placing multiple bets on different outcomes of the same event to reduce risk.
Arbitrage Taking advantage of differences in odds between different bookmakers to guarantee a profit.
Martingale Doubling your bet after every loss to recover your losses (not recommended).

Common Betting Mistakes
Mistake Explanation
Betting on hunches Relying on gut feelings or superstitions instead of data and analysis.
Chasing losses Trying to recover losses by betting more money.
Ignoring bankroll management Betting more money than you can afford to lose.
Not researching odds Failing to understand the odds and the true probability of winning.
Overbetting Betting a larger percentage of your bankroll than recommended.