Understanding betting Odds is a fundamental skill for anyone getting started with Matched Betting. Odds determine how much profit you can make from a bet and also reflect the likelihood of an event occurring, making them central to finding profitable and strategic opportunities.
In this guide, we’ll explain the two main types of betting odds—fractional and decimal—and their importance in matched betting. We’ll also show you how to calculate profits and use an odds matcher tool to find the best matches.
What Are Betting Odds?
Betting odds reflect the likelihood of a specific outcome occurring in an event. They also indicate how much money you stand to win relative to your stake. For example, shorter odds (e.g., 2/1) represent a higher probability of winning but lower potential returns, whereas longer odds (e.g., 10/1) offer greater returns but are less likely to win.
In matched betting, understanding odds is crucial to:
- Minimising qualifying losses.
- Maximising profits from free bets.
- Ensuring your back and lay bets align correctly.
Types of Betting Odds
1. Fractional Odds
Fractional odds are most commonly used in the UK and Ireland. They are displayed as two numbers separated by a slash (e.g., 5/1).
- How They Work:
- The first number represents the potential profit.
- The second number represents the stake required to earn that profit.
- Example:
- Odds of 5/1: For every £1 staked, you earn £5 in profit if the bet wins, plus your original £1 stake back.
2. Decimal Odds
Decimal odds are widely used in Europe and are often preferred for matched betting due to their simplicity.
- How They Work:
- The number represents the total return (stake + profit) for every £1 staked.
- Example:
- Odds of 6.0: For every £1 staked, your total return is £6 (£5 profit + £1 stake).
- Conversion from Fractional:
- To convert fractional odds to decimal: Divide the numerator by the denominator and add 1
- Example: 5/2 = (5 ÷ 2) + 1 = 3.5
How to Calculate Profits
Calculating profits is essential for matched betting to ensure you’re locking in gains. For beginners, understanding these calculations also helps minimise errors, such as incorrect stakes or mismatched odds, which can lead to unexpected losses.
- Fractional:
- Calculation: £10 × (5/1) = £50
- Decimal:
- Example: A £10 bet at 6.0 = £10 × (6.0 – 1) = £50
How Odds Affect Liabilities on an Exchange
When placing a Lay Bet on a betting exchange, the odds directly affect the Liability—the amount you need to have in your exchange account to cover the potential loss if the lay bet doesn’t win. Understanding this is crucial to managing your bankroll effectively.
What is Liability?
Liability is the maximum amount you stand to lose on a lay bet if the outcome you are betting against occurs. This concept is particularly significant in matched betting because it directly influences how much money you need in your exchange account to cover potential losses. However, there is no need to worry—if your lay bet loses and you lose your liability, this loss is offset by the winnings from your Back Bet.
This is calculated so that the two bets balance each other, ensuring you do not suffer a net loss. By understanding liability, you can better manage risk, plan your bankroll effectively, and avoid situations where insufficient funds might prevent you from placing crucial bets. It is calculated based on the lay odds and your stake.
Formula for Calculating Liability
- Liability = (Lay Stake) × (Lay Odds − 1)
Examples of Liability Calculations
- Example 1:
- Lay Stake: £10
- Lay Odds: 3.0
- Calculation: £10 x (3.0 – 1)
- Liability: £20
- If the outcome happens, you lose £20. If it doesn’t, you keep the lay stake.
- Example 2:
- Lay Stake: £5
- Lay Odds: 6.0
- Calculation: £5 x (6.0 – 1)
- Liability: £25
How Odds Influence Liability
- Higher Lay Odds:
- Result in a higher liability as you are betting against a less likely outcome.
- Example: Lay Odds of 10.0 with a £10 stake needs a £90 liability
- Lower Lay Odds:
- Result in a lower liability as the outcome is more likely to occur.
- Example: Lay Odds of 1.5 with a £10 stake needs a £5 liability.
Tips for Managing Liability
- Always check the liability before confirming a lay bet to ensure you have sufficient funds in your exchange account.
- Use a matched betting calculator to simplify the process and avoid errors.
- Start with lower stakes and odds to get comfortable managing liabilities.
Final Thoughts
Understanding betting odds is an essential skill for matched betting, helping you calculate profits, minimise losses, and find the best opportunities. With tools like odds matchers and a solid grasp of how odds work, you can confidently navigate the matched betting process and maximise your earnings.
Ready to practise? Head to OddsMonkey to explore their odds matcher tool and start your matched betting journey today!