How to Read Odds & Calculate Payouts

Before the US Supreme Court overturned the Professional and Amateur Sports Protection Act in 2018, the two main options for placing bets were in Las Vegas legally or with bookies illegally. At that time, Vegas odds meant everything to sports bettors. Sportsbooks in Vegas set their odds, and the bookies typically just copied them. This gave Sin City a large amount of control over the odds you would see.

Now that betting on sports has become legal in multiple states, though, this raises questions about their odds. Where do the odds come from? Are sports odds regulated? Are they the same in every state? This page will answer all of these questions and more as we examine exactly where sports odds come from.

How do sports betting odds work?

Odds are essentially how we determine the value of a bet. Several factors go into determining odds, and we will discuss that in more detail later. The basics to understanding odds are that in the US, they tend to operate based on $100. For instance, negative odds mean you would need to wager that amount for a chance to win $100. Positive odds, on the other hand, mean you would stand to win the listed amount from a wager of $100. So odds of -150 mean a wager of $150 would have a potential profit of $100, and odds of +150 mean a wager of $100 could win $150.

For a standard moneyline bet, the side with negative odds will be the favorite, and the underdog will have positive odds. You’ll also notice that the odds tend to vary the most for moneyline bets, and moneyline-style odds set what you can win from point spread wagers.

Point spread bets will subtract a predetermined number of points (“the spread”) from the favorite’s score or add those points to the underdog’s score. This is to make the two sides of the wager more even. The actual odds are almost always -110 or close to that, meaning that for a chance to win $100, you would need to wager $110.

Types of sports betting odds explained

There are three main forms of odds. The moneyline formula from above is mainly used in the US and referred to as American odds. This is the one that bettors in Illinois will come across most often.

Fractional odds are most common in the UK. This system uses fractions, and because of that, you will never see negative odds. The fraction will show how much you could win (numerator) and what you would need to wager to win that amount (denominator).

For example, American odds of -300 would appear as 1/3 under this system, meaning that if you placed a $300 wager (denominator), you could potentially win $100 (numerator). Odds of +300, meanwhile, would appear as 3/1.

Finally, there is the decimal system, which is more popular in locations outside of the US and UK. Decimal odds show your potential return for each dollar you wager, including the amount of your wager. Continuing the example from above, odds of +300 or 3/1 would appear as 4 in this format, meaning that for every dollar you wagered, you would receive three dollars back plus your original wager of a dollar, for four dollars total. Odds of -300 or 1/3, meanwhile, would appear as 1.33 in this system.

How do Illinois odds compare to Vegas odds?

The difference between Vegas, online and local odds can be tricky as it really depends on the sportsbook. Today it is common for sportsbooks to copy other sportsbooks’ odds. There are also in-house oddsmakers at top sportsbooks and even consulting firms that produce odds.

Trying to make a blanket statement of which odds are better is impossible. It simply depends on each sportsbook on each play. All sportsbooks usually have pretty similar odds, but there will be differences. Sometimes this can come down to how sportsbooks calculate odds, but it is often due to sportsbooks moving their odds to respond to different levels of action.

If you want to find the best odds available, it is important to shop lines across several sportsbooks.

How are sports odds set?

The actual process of setting odds is complicated, and sportsbooks are understandably secretive about many of the details. In most cases, however, in-house oddsmakers and consulting firms are setting the odds, and the process heavily involves data, math, and simulations.

Ultimately, sportsbooks make the odds, and because of this, those odds don’t necessarily reflect reality. Sportsbooks are a business, and they operate as such. So, when a sportsbook sets odds, it does so to attract bettors to both sides of the wager. This decreases the sportsbook’s risk and prevents major losses. This is also why odds on each side of a moneyline bet are not equal. The sportsbook’s aim is to generate enough room to cover losses no matter the outcome.

Are odds for all sports set the same way?

The short answer here is no. Again, a lot goes into calculating odds. Each sport has different factors that contribute to calculations. While understanding exactly how sportsbooks calculate their odds can be difficult, there is a common understanding of which sports have more value in their odds.

Here is a list of sports leagues, ranked roughly from best to worst on how much value the odds for each one holds:

  • College football
  • NFL
  • College basketball
  • NBA
  • NHL
  • MLB

Why do betting odds change?

Odds can change for a variety of reasons. Injuries, weather, and other events can shift odds. For the most part, though, odds change because of how the public is betting. For instance, if a majority of sports bettors are betting on one side, sportsbooks will need to limit risk. It will do this by making the other side more attractive to bettors in an attempt to even out the action.

How do the odds algorithms work?

Odds algorithms vary from sport to sport and formula to formula. However, the one constant across all algorithms is that you need data, data, and more data. Data includes aspects like home winning percentage, rushing yards, and third-down conversion rate, among many other things. The algorithm will then run all of this several times (usually in the thousands) and will use the average outcome to set the odds. Note that this is a heavily simplified description of the entire process.

What are the “best” betting odds?

In simple terms, the “best” odds are the odds that work best for your play. This is why it is important to shop around and compare the odds at different sportsbooks. We have already discussed that lines change on an individual level as sportsbooks try to minimize risk. Again, they do this by making the other side of the bet more appealing.

Say you like a favorite in an upcoming game. Sportsbook A has that team listed as -3, while Sportsbook B has it listed as -4. In this scenario, Sportsbook A is the pick for you.

Are odds fair?

This is another question that depends on the individual sports bettor. Ultimately if you don’t like the odds or don’t think they are fair, you shouldn’t bet.

When it comes time to bet, also realize that legal sportsbooks in your state are regulated by state authorities to ensure some level of fairness, and they must also compete with other legal sportsbooks in the market. Neither of those things applies to offshore sportsbooks or illicit, unregulated bookies.

Why do different sportsbook sites have different odds?

Sportsbooks can have different odds for a variety of reasons. For one, their odds algorithms could have predicted the results of a game differently. Odds can also be different if a sportsbook wants to attract more users to its site by providing better odds than its competitors. And the users of a sportsbook can also manipulate odds. As discussed above, if a sportsbook is getting too many wagers on one side, it will change the odds to attract more bettors to the other side.

How do “bookies” get their odds?

For the most part, bookies will base their odds on Las Vegas and manipulate them to avoid risk. Some bookies calculate their own odds, but it is rare. Bookies usually have this luxury because their customers don’t have many other options. It is also important to note that legal sportsbooks are much safer than using bookies or offshore sites.

How to calculate your own odds

If this page has stressed anything, it is that calculating odds can be a difficult process. While it will take time and effort if you would like to calculate your own odds, here are some basic tips.

Data collection

While it sounds simple, this can be a tedious and time-consuming process. Data collection is essential to creating an odds algorithm. Without data, you have nothing to make the algorithm work. Luckily, all the data you will ever need is on the internet. While some of it is available for free, it can cost you money at times, as well.

Tip: Invest in data mining software. This can save you weeks of time compared to manually tracking all the data.

Algorithm development

This may be the most essential part of calculating odds, as if your algorithm doesn’t work, the results will not be worth anything. It is important to note that your first algorithm will not be your best. You have to continually test and tweak an algorithm to make it work. You will also have to make adjustments as time goes on and factors change.

Factor in the non-statistics

While sports betting odds are dictated by stats and data, the non-statistics are important too. This can be weather, injuries, and media stories. All of these factor into odds calculations, so to make good odds, you will also have to consider all of these aspects.