FRACTIONAL ODDS EXPLAINED
Any time you place a bet with a bookmaker you will receive ‘odds’ on that bet. Odds are important as they help you understand what kind of VALUE you’re getting.
For instance the likelihood of a coin toss being heads or tails is roughly 50/50 (we reserve a billionth of a percentage point for the coin landing on its edge). A bookmaker would call this an even chance. This might be displayed as; evens or 1/1 meaning if your bet wins you will win an even amount of money plus your stake back.
If I offer you evens on the toss of a coin and you put £10 on heads, if the coin lands on heads then I owe you £10 winnings plus your £10 stake back, doubling your money.
Note: if anyone ever offers you more than evens for a coin toss, they are either mad, a cheat or a compulsive gambler, if you know they are the first or last thing, take their offer.
Evens or 1/1 is an example of neutral odds, as your return is exactly the amount you put on, now let’s look at positive and negative odds.
Positive odds are when your winnings are bigger than your original stake, positive odds are always represented by a larger number being on the left than the right for example:
10/1 when speaking these odds you will say; ‘ten to one’ but for the beginner it is probably easier to swap the word ‘to’ for the word ‘for’, ten for one. So in other words I will get back £10 for £1 staked plus my original £1 stake, making a return of £11.
Note: Remember your return and your winnings are two different things, your winnings are your profits, what you have on top of your original stake. Your return is your stake plus your winnings, this is important because when you place a bet some online bookmakers will show what your return will be and some your winnings.
Negative odds; (more commonly refereed to as ‘odds on’) are when your winnings are smaller than your original stake, this can be a bit of a confusing concept for the new gambler, but as long as you remember that winnings and returns are two separate things, your return on a winning bet will ALWAYS be bigger than your original stake.
So if you place a bet at 1/10 (1 for 10) then this simply means that for every £10 staked you will receive £1 plus your stake back so now to gain a return of £11 I have to put on £10, if I put £1 on this then my return will be £1.10 my original stake plus one tenth.
DECIMAL ODDS EXPLAINED
The Betfair Exchange uses decimal odds, let's take a look at how they differ from fractional odds:
The main thing to remember with decimal odds is unlike fractional odds you don’t have to add on your stake after to work out your total winnings, the odds you receive are used to calculate your return.
For instance odds of 2 are the same as odds of evens, this is because the 2 represents the amount of times you multiply your stake by.
e.g. If I place a £10 bet on Arsenal at odds of 2 then if I win I will get back £20 because 10×2= 20.
When trying to calculate potential returns using fractional odds, always remember to add stake back on. i.e. £10 placed at 2/1 equals £20 winnings plus £10 stake back making a total return of £30.
When trying to calculate potential returns using decimal odds simply multiply your original stake by the number being offered, i.e. £10 placed at odds of 3 = 10×3= 30 making a return of £30.
Negative Odds In Decimal Form
So what about negative or odds on odds? Well it's no different, you still use exactly the same formula to work out your returns.
So negative odds expressed in decimal terms are any numbers that are smaller than 2, because as you remember from above 2 is equal to evens and that is worked out by multiplying your stake by 2.
So for instance odds of 1,9 would be classed as negative or odds on, so to work out your return would be the same £10 x 1.9 = £19. Odds of 1.5 would mean your £10 stake is multiplied by 1.5, giving you £15.
The smallest possible odds you will ever see on Betfair are odds of 1.01 which represents one hundredth of your stake, in fractional terms 1/100 so £10 x 1.01 = £10.10.
If you are new to Betfair you may be thinking that you will never use odds of 1.01 as you can't envisage a scenario where you would be willing to risk an amount of money just to win back a measly 1%. Well one of the advantages of using Betfair over the other online bookmakers, is the market stays open till the very last moment; whereas on sites like Bet365 it doesn't.
This is because a traditional online bookmaker doesn't want a scenario whereby they leave themselves vulnerable to "sure thing" bets right at the end of an event. However Betfair have no such concern as you are betting against other Betfair users and Betfair make money from every transaction made on the exchange, so it's in there interests to keep the market open right till the fat lady has sung her last note.
So for instance it is a game of football the home team is 2-0 up and cruising, the 90 minutes are up and the game is into the last couple of minutes of added on time.
In this scenario the odds for a home win could be 1.01, now it wouldn't benefit you greatly to make your first bet at this point because as we've seen a bet of £10 would win you 10p. However if you had earlier backed the home team with say £10 at odds of 3 then you would be looking a £30 return because £10 x 3 = £30 so you would have a green £30 next to the home team and a red £10 next to the draw and the away team.
If you then go and lay the home team at odds of 1.01 this means you will be able to ask for £100 for a cost of £1 so your book would have £29 next to the home team and £100 next to the away team and draw.
Nine times out of ten you will have just shaved £1 off your win, however if a goal for the away team goes in the odds will rise, therefore giving you a chance to back the home team at higher odds giving you a chance to bump up your profits.