How Are Decimal Odds Payout Calculated?

The sports betting industry has experienced growth ever since more bookmakers got involved with online sports betting. This allowed people with limited access to local sportsbooks to place bets on their favorite sports.

However, before you can place bets, whether it is online or in your local sportsbook, you need to understand the system behind betting. Sports betting is the activity of predicting sports results or other things that might happen in a sporting event and placing a wager on the outcome.

In return for a winning bet, you’ll get profits that will be determined by the amount of risk you are willing to take. If the bet is less probable, you’ll receive more money than if the bet is highly probable.

The amount of money you receive on your wager is determined by the odds given by the sportsbook before the match.

What is the Purpose of Sports Betting Odds?

All sportsbooks calculate the probability of an outcome occurring in a sporting event. Since it would be bad for businesses to display probability chances for certain things in a sporting event, they use odds.

Odds are a numerical way of describing the probability of certain things happening in a sporting event. Bookmakers calculate them in a way that they put a small profit margin.

For example, on a coin toss where the chances are 50/50, bookmakers might offer odds of 49/50 to take some profits.

The most important thing you need to understand about odds is how they work and calculate them. Nonetheless, if you need help, some websites give some assistance. For example, you can click here to access the TwinSpires sports betting calculator.

There are three common types of odds displayed in popular bookmakers:

  • Decimal
  • Moneyline (American)
  • Fractional

Depending on the region you live in or the sports you want to bet on, you might encounter different types of odds.

In today’s article, we will focus on decimal odds and dig a bit deeper to find out how they work in the real world.

What is Decimal Odds?

Decimal odds are a way of displaying odds in an easy-to-understand manner. Decimal odds are among the most used odds in popular online sport betting websites (especially in Europe) because they are easier to understand than traditional fractions and provide more betting options.

Decimal odds are displayed with a number, and the return of decimal odds will always be above $1. The number represents how much money you’ll earn if you wager $1. For example: if the odds are 6.50, you’ll get $6.5 for every $1 you invest.

How are Decimal Odds Calculated?

Calculating decimal odds is fairly simple. All you need to do is multiply your stake with the odds.

Let’s look at some examples. If you calculate the return of investment for a match with odds of 1.82, the math is very simple. If you wager $100, you’ll get $182 in return.

Formula: Original Bet x Decimal Odds = Potential Winnings

Yes! That’s it!

For more complex bets where you wager on more than one match, the odds are multiplied with every new match and multiplied by the original bet you want to wager.

For example:

Bet: Includes 3 matches with odds – 2.5 x 1.85 x 1.39= Total odd of the ticket is 6.43! If you multiply this by the amount of money you want to wager, you’ll get your potential winnings.

Unlike other bets, decimal odds don’t indicate your net profit. In other words, you’ll get your potential winnings, but you still have to subtract your original stake from your winnings to get your net profits.

For example:

If you wager $100 on a 3.25 odd match, your potential winnings are $325, but your net profits are $225 once you subtract the $100 you wagered at the beginning.

Why Use Decimal Odds?

As we mentioned before, decimal odds are highly popular with bookmakers in Europe, but in recent times more sportsbooks have started accepting decimal odds because they are simpler to calculate and allow many betting opportunities.

However, there are also some benefits for the bettors that use decimal odds.

The biggest reason you should consider switching to decimal odds is that you can easily convert them into probabilities. It is not the same as working with a favorite or underdog.

Knowing the probability of certain things happening in a sporting event will give you an edge over the bookmaker and help you make wiser bets. Remember, sportsbooks start by creating probability for each bet in a game, then they transform that number into odds to avoid telling you your potential chances for winning.

To convert decimal odds into probabilities, all you need to do is use this formula:

(1 / Decimal Odds) x 100

It is very simple!

For example: If you place some money on a 2.9 odd match, here is how you can calculate the probability of the odd:

(1 / 2.9) x 100 = 34.48%

This means that there is a 34.48% chance of that happening.

As odds go smaller, the probability rises.

For example, a 1.3 odds match will have a probability of 76.92%, which is very high. But that’s why the odds are small, reflecting smaller profits.

How to Convert Decimal Odds

Since you know all about decimal odds and how to calculate them, it is time to learn how to covert other types into decimal odds.

Converting American Into Decimal Odds

If the value in an American odd is positive (with a + sign), use this formula:

1 + (American Odds / 100)

For example, A +200 Moneyline odd is 3.00 in decimal odds.

You should add one and remove the two zeros.

If the value in American odd is negative (with a – sign), use this formula:

1 – (100 / American Odds)

The values used in the formula are identical, but they are in a different order.

For example, A -200 Moneyline odd is 1.5 in decimal odds.

Converting Fractional Into Decimal Odds

The process for converting fractional into decimal odds is also very straightforward. All you need to do is divide the fractions and add one.

For example: 7/2 fractional bet will result with 4.5 decimal odd. (7 / 2) + 1 = 4.5

If all of this looks too complicated for you, you can always use a betting calculator or converter to make the job much easier.