Can someone explain betting odds to me?

[Traab]

Im reading a story right now, there is a pit fight taking place, one of the contestants has 2-1 odds on him. How does that work out for winnings, and what does it mean that they didnt announce specific odds for his opponent? I know in horse racing each horse has its own odds on it so im not sure if the same happens in a 1 on 1 fight like this. I tried looking up how boxing odds work, thinking that would be a good comparison, but couldnt find a good synopsis.

[Douglas]

Each horse having its own odds is only needed because there are more than two of them. In a 1 on 1 contest, the odds for the other contestant are simply the opposite - if one contestant is favored to win with 2-1 odds, then the other has 1-2 odds.

Now as for how the winnings work: If you bet on the one with 2-1 odds and he wins, you get what you bet back plus $1 for every $2 you bet. If you bet on the other one and he wins, you get your bet back plus $2 for every $1 you bet. If the one you bet on loses, you get nothing.

The bookies make their money by a) doing their best to set the odds so that the betters split up among the contestants in the same ratio, so that the winnings they pay out will be paid by the losses from the other betters regardless of who wins, and b) I think they usually charge a fee to place a bet, and that's where the income they count on keeping comes from.

[tomandtish]

Im reading a story right now, there is a pit fight taking place, one of the contestants has 2-1 odds on him. How does that work out for winnings, and what does it mean that they didnt announce specific odds for his opponent? I know in horse racing each horse has its own odds on it so im not sure if the same happens in a 1 on 1 fight like this. I tried looking up how boxing odds work, thinking that would be a good comparison, but couldnt find a good synopsis.

How it works for winnings is that for every dollar bet (or whatever the currency of the realm is), someone would win $2 if he wins the fight.

I assume that whomever wrote the story didn't bother with the odds for the opponent. They were probably doing this to show that he is an underdog.

Note that (in the real world anyway) business like to ensure they make their money. It's not only picking the odds such that enough people bet on each side of the equation, but that the business makes money either way.

So using your example above, you might have a fighter who is getting 3/1 odds (a real underdog). But the betting on his opponent is more likely to be 1/4 (bet $4 to win $1).

Of course, opinions can vary. For example. Mikey Garcia and Adrien Broner have a boxing match 7/29.

The bettor skyBET has Garcia at 1/5 and Broner at 10/3 while PaddyPower and betfair places Mikey at 3/10 and Broner at 5/2.

So all agree that Broner is the underdog, but Skybet thinks Broner is an even bigger underdog. If you wanted to to bet on Garcia, place your bet through PaddyPower. If you want to bet on Broner, go through Skybet.

But all of them have calculated those odds in a way that they believe they'll make money either way.

[Gnoman]

2:1 odds mean you triple your money on a win.

It is not all that complicated, but it can be a bit tricky to explain. The best way I can come up with is this.

Compute the odds ratio. 2:1 becomes 2/1, or 200%. If the odds were 1:2, then it would be 1/2 or 50%

Divide a table into two sections. Place your bet on one side. The bookie will take that bet, multiply it by that percentage, and place that amount on the other side.

If your fighter wins, you take all the money on the table. If your fighter does not win, the bookie takes all the money on the table.



In general, all bets are entirely distinct. One fighter may have odds of 2:1, but that does not mean that the other fighter has odds of 1:2. It also does not mean that the fighter does not have 1:2 odds. That depends entirely on how the bookies decide to weight the payout odds to maximize the amount of betting.



On a related subject, there is a significant difference between payout odds (what we are discussing here) and win (the chance of the better actually winning) odds. In a perfectly fair system, these would be identical - a fighter with 2:1 payout should stand one chance in three of winning, perfectly balancing the payout and win chance. However, there is no guaranteed profit in this. In actuality, such odds would be given for a fighter with one chance in 4 or 5 of winning, giving the bookie a certain guaranteed profit over enough fights. This is called "edge".

Or, for a simple explanation, consider the following game.

I roll a perfectly random D10, and ask you to pick the number that comes up. The game costs 1 dollar to play.

The win chance on every game is 1:10. On average, you will win one time in ten.
If I pay out 10 dollars per win, there is no edge. If played long enough, we will both end up with as much money in our pockets as we started with.
If I pay out 8 dollars per win, there is 20% dealer edge. If played long enough, I will be taking in 20% more money than I am paying out, and eventually all your money will become mine.
If I pay out 12 dollars per win, there is 20% player edge. If played long enough, I will be taking in 20% less money than I am paying out, and eventually all my money will become yours.

This, however, is in the long term. In the short term, even with dealer edge, you can quite easily win several games and profit, and with player edge you can still lose money.

Now as for how the winnings work: If you bet on the one with 2-1 odds and he wins, you get what you bet back plus $1 for every $2 you bet. If you bet on the other one and he wins, you get your bet back plus $2 for every $1 you bet. If the one you bet on loses, you get nothing.

Unless things work differently for bets on events than they do for casino games, you have this backwards. 2 to 1 means $2 for each $1 bet. 1-2 means $1 for each $2 bet.

An underdog will have odds of 2:1, 3:1, or even more because the bookies expect the underdog to lose, so they want to encourage a lot of people to bet on him.

[Traab]

Ok, so the context of the story is, there is a dirty gambling location our hero is fighting in to make some cash. He has been winning every fight and the gambling den owner is losing money. So he says the next battle will include a mystery animal for the champion to fight. He is betting the mystery animal will kill the main character and he intends to recoup his losses by tricking people into betting on the hero.

So if I understand how this works, then the 2-1 odds in favor of his mystery entrant means if you bet 2 you get 3 bucks back if it wins, whereas if you bet 1 on our hero, you will get 3 back should he win. So everyone will bet on the guy who has been winning every fight so far AND has good odds for making a huge profit, then the secret entrant will kill our hero and they will have lost all that money? Do I have that right?

[Lethologica]

That's correct.

[RandomLunatic]

I used to be a pari-mutuel teller, which is a fancy way of saying I took money for horse races. Sometimes I even gave it back.

The way I always told new betters to calculate payouts was to take the odds and convert to (usually) an improper fraction. So 2:1 becomes 2/1. Then add one to that total (2/1 + 1/1=3/1=3). Take this number and multiply by the amount you bet, and that's what you'll get if your ticket wins. A $2 bet at 2:1 odds therefore pays you $6. You get your original $2 bet back, and an additional $2 for every dollar you wagered (that's the 2:1 odds).

Now the odds will depend on what sort of betting venue you're dealing with: pari-mutuel wagering or bookmaking. At an underground pitfight, it's almost certainly the latter.

Bookmakers will assign whatever odds they feel will make them the most money. The bookie's goal is to offer odds generous enough to get people to place bets, but slim enough that he has money left over after paying off the winners. In a two-outcome event like a boxing match, the odds will probably be pretty close to reciprocals of each other, but this isn't a requirement. Bookies will also tend to offer bets like how long the match will last, whether it will end in a KO, and so on in order to drive bets.

Bookmaking is hard, which is why institutions prefer pari-mutuel wagering. The odds are set by the betting crowd themselves, and there's a lot of math involved. Luckily, they use big computers to do the heavy lifting.

All the money bet on a single even is placed into a pool creatively known as the pool. Then, because the house is in the gambling business to make money, they skim a portion off the top, known as the takeout. I can't speak for other types of events, but for horse racing the takeout is typically around 25% of the total pool. The remaining cash is then divided by the amount of cash laid out for an outcome to determine the odds of that particular outcome. This calculation is run separately for each outcome, since you can only have one outcome. Once the event is run, the cash left after the takeout is split amongst the winning bettors in proportion to the amount they wagered.

Say you have a contest with three outcomes, A, B, and C. The takeout is 20%. Bob bets $6 on A. Jim bets $5 on B, and high roller Alice wagers $10 on B. Mike bets 4$ on C.

The total pool is 25$ (5+5+5+10). The house takes out 20%, or 5 dollars, which they keep. This leaves $20 for the winners to collect.

Outcome A has 6 dollars wagered on it. Therefore the odds are (20-6)/6=7:3.
Outcome B has 15 dollars wagered. The odds are a paltry (20-15)/15=1:3
Outcome C has 4 dollars. Odds (20-4)/4=4:1

The event is run and heavy favorite B wins. Jim and Alice go to collect. At 1:3 odds, ever dollar wagered wins them 33 cents. Therefore Jim collects $6.66 (probably rounded off to 6.65 by the computer), while Alice's larger wager nets her $13.33 (again, probably rounded to the nearest nickel).

You may have noticed that a the odds are completely malleable, and they can and will change on you in response to other's bets. This is why there's always a last-minute rush on the betting windows, as those are the most accurate odds you're going to have to work with. This is also why the odds can shift even after a race has started, as the computers work out the final deluge and update the totaliser system.

[Jimorian]

For your situation, the solution has been adequately explained. Just for fun, there are a couple of variations on how odds are "adjusted" according to how people bet.

In the case of events like Boxing, the odds may start out 2-1 vs 1-2 (with enough variation to give the booking agent the advantage as mentioned above), but as people bet and the bookie sees how things are falling, they'll adjust the odds to try to encourage later betting to create that even split between the sides betting so that they cancel out leaving *only* the % of the built in advantage for them. However, if they have to adjust the odds eventually to 4-1 vs 1-4 for example, they'll still honor the original bets at the other odds. It's just as the event draws near, the amount bet increases enough for them to balance properly (most of the time) even if early estimates are off.

In horse racing, which is known as "paramutual betting" what happens is that the original odds published are the "best guess" (as they are at the start of the above) of the booking agent to balance the betting and give people something to gauge their bets, however, once betting is closed, the odds are automatically updated to reflect the actual betting spread for *everybody*. So if there was a 50-1 long shot, and more than half the people bet on that horse anyway, the final payoff would be less than 1-1. This guarantees the house will always come out the winner each and every race.

It's important to keep in mind that when odds are discussed for an event, they aren't necessarily the odds that reflect reality or even expert opinion, they're the odds derived to balance betting based on the potential biases of the subset of the population most likely to bet. For example, many times the "home town favorite" will be penalized in the odds simply because otherwise too many people will bet on them and not the visiting side to balance the booking agent's sheets.

[Edit: those darned ninjas! ]

[BannedInSchool]

Now if everybody just bet on who they thought would win on average we wouldn't need the odds made public. Bookies could just pay out the true ratio of the money bet (minus their take). But if you tell people the odds then you can sucker people who think it's a sure thing to make a little more, and people who think the gamble to make a lot from a little is worth it.

[Lethologica]

Now if everybody just bet on who they thought would win on average we wouldn't need the odds made public. Bookies could just pay out the true ratio of the money bet (minus their take). But if you tell people the odds then you can sucker people who think it's a sure thing to make a little more, and people who think the gamble to make a lot from a little is worth it.

The standard way bookies make money is they try to set the line so that the payout is the same for whichever side bets and then they make the odds for every bet slightly worse so they come out ahead no matter what, which is basically the same as what you described.

If the bookies have a significant information advantage or can take advantage of emotional biases, as in the OP's case, then there's an advantage to stacking the deck--some risk, but more reward.

But on the flip side, it's terrible practice to ask someone to bet when they don't know what the line's going to be.

[Knaight]

Another way to think of it is that given odds of A:B you get A+B back for every B that you bet. So for 2:1 odds, for every 1 that you bet you get 3 back on a win. Bookies will then usually set up odds such that you have A:B paired with C:D, where B/(A+B)+D/(C+D) would be 1 for fair odds. It is then generally less than 1, with the difference indicating the house advantage.

[Lethologica]

Another way to think of it is that given odds of A:B you get A+B back for every A that you bet. So for 2:1 odds, for every 2 that you bet you get 3 back on a win. Bookies will then usually set up odds such that you have A:B paired with C:D, where A/(A+B)+C/(C+D) would be 1 for fair odds. It is then generally less than 1, with the difference indicating the house advantage.

Other way around - A:B odds represent getting A+B back for every B that you bet. Hence the million-to-one chance trope, which would be rather less meaningful if 1,000,000:1 meant expecting a million successes for every failure.

[danzibr]

Dunno how useful this post will be, but there's one thing lacking that I think is important.

Given an event, there are 2 kinds of odds. Odds in favor of, and odds against. Take, say, rolling a d10. Consider the event "roll a prime," which I'll denote E. That'd be 2, 3, 5, or 7. There are 4 ways this can happen, and 6 ways it can't happen (so to speak).

The odds *in favor of* E are 4:6, which you reduce to 2:3. For every 2 ways it can happen, there are 3 way it can't.

The odds *against* E are exactly the opposite, 6:4, which reduces to 3:2.

And when you say the "odds are 10:1" or something, the default is "odds against."

[MaeKrugern]

The odds are calculated by the horse's previous statistics, the horses' age, the experience of the rider, weather, etc.

[Peelee]

The Mod on the Silver Mountain: Don't ever try the over/under on Necromancy.