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# Betting Odds Explained

Odds are simply the predicted chance something will occur. Every fractional or decimal odd represents a percentage chance of something happening. For instance the flip of a coin has a 50% chance of being tails. A 50% chance in fractional odds would be 1/1 more commonly known as Evens. As there are only two possible outcomes the chances of either option happening is 100%. The odds on all outcomes combined in betting markets should add up to 100%. This isn’t possible however as bookmakers need to add a profit margin.

Bookmakers Margin

In order for bookmakers to stay in business, they must create a profit margin. This margin is made by making the combined odds of all outcomes more than 100%. This is known as the over-round. Most competitive bookmakers will operate between 102- 108% as an average over-round. As there is no bookmaker involved at Betfair, popular markets normally have a maximum over-round of 102%.

Decimal Odds

Decimal odds are differ from fractional odds as your stake is included in your return. Decimals are used on betting exchanges and are most commonly seen on non UK bookmakers, although UK bookmakers have the option to switch between both fractional and decimal odds. Decimal odds are easier to understand and your potential return can be worked out with a simple equation.

To work out a decimal odds return you simply multiply the price by your stake eg: You place a bet at the odds of 3.5. Your stake is £15. To work out your potential return you multiply 3.5(odds) x 15(stake) making a total return of £52.50.

If you are betting on a short priced favourite the formula is exactly the same. If you placed a £50 bet on a selection priced 1.25 your potential return would be 1.25(odds) x 50(stake) making a total return of £62.50.

Fractional Odds

Fractional odds are traditionally used by UK bookmakers both online, in betting shops, and on racecourses. An example of fractional odds is 5/1 (pronounced five-to-one). This fraction implies that you will win 5 times the value of your stake. Your stake is also returned. So if you placed a £10 bet on a selection that won at 5/1 your total return would be £60, which is £50 profit plus your £10 stake.

The calculation for working out fractional odds is as follows.

We will work out the return for a stake of £50 at the odds of 6/4 (six-to-four)

Firstly add the numbers of the odds together: 6+4. Then divide this by the second number of the price which is 4. This will leave you with the decimal figure of the odds. Multiply this by your stake and your return will be revealed.

(6+4)/4= 2.5

2.5 x 50(stake)= £125

When betting online your potential return will always be shown before you proceed with bet placement.