What is Calculating Odds?
Calculating odds is the process of determining how likely an outcome is to occur, against the combined chance of the outcome not occurring. In gambling, players will often use mathematical systems to determine the actual and/or probable odds of an outcome, and calculating odds can improve the chances of making a betting system or a spread bet work. For casinos and bookmakers, calculating odds means working out the true odds of an outcome, and factoring in a profit for the house.
Calculating Odds Explained
In gambling, players stake cash against an outcome occurring, and if their prediction is successful they receive a return on their bet. Payouts are based on the chance of the outcome occurring. For example, if a player bets $1 on a coin toss, the odds are 1:2 – there is one chance to win and one chance to lose, making two total outcomes. If the player wins, they get $2 – the $1 won and the original bet returned. If a player tosses two coins, the odds are now 1:4. There are four possible outcomes – H-H, H-T, T-H and T-T. Betting on two heads has a one in four chance of winning, while betting on any head-tail combo gives a two in four chance of winning.
Calculating odds becomes more complicated when considering sports betting, because the odds are not fixed and are subject to some interpretation. For example, a bet on two sports teams where one is a little stronger than the other does not give an even 50-50 chance, and if some incident in the match disadvantages the stronger side, the chance of the other team winning increases.
The job of the bookmaker is to calculate the most accurate odds with the information available (whilst factoring in their own profit). Players can opt whether to take the bet at the posted rate – bookmakers must calculate the odds in a way which will attract players buying bets. In the case of spread betting, series betting and betting systems, players calculate the odds of multiple outcomes and make bets that will be profitable even when betting against the favourite outcome.