Fixed-odds betting
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Fixed-odds betting is a form of gambling where individuals place bets on the outcome of an event, such as sports matches or horse races, at predetermined odds. In fixed-odds betting, the odds are fixed and determined at the time of placing the bet. These odds reflect the likelihood of a particular outcome occurring. If the bettor's prediction is correct, they receive a payout based on the fixed odds. This means that the potential winnings are known at the time of placing the bet, regardless of any changes in the odds leading up to the event.
Fixed-odds gambling involves placing bets on events with predetermined odds. Bookmakers aim to create an overground, where the sum of probabilities quoted for all possible outcomes exceeds 100%, ensuring profit. Imbalanced books can occur, leading to higher or lower payouts than expected. The advent of the internet and betting exchanges has led to opportunities for fixed-odds arbitrage actions and Dutch books.
When a bet has a positive expected value, it is said to be getting "the best of it." In contrast, "laying odds" refers to a bet in which more is risked than can be won, and rational bettors only engage in this type of bet if the chances of an adverse outcome are low enough. "Lay betting" is when a bettor bets against a specific outcome, effectively taking on the role of a bookmaker.
Odds can be expressed in various formats, including
Calculating fixed odds
It is customary with fixed-odds gambling to know the odds at the time of the placement of the wager (the "live price"), but the category also includes wagers whose price is determined only when the race or game starts (the "
With the advent of Internet and
"The best of it"
In making a bet where the expected value is positive, one is said to be getting "the best of it". For example, if one were to bet $1 at 10 to 1 odds (one could win $10) on the outcome of a coin flip, one would be getting "the best of it" and should always make the bet (assuming a rational and risk-neutral attitude with linear
In an entry for L'Encyclopédie (the Enlightenment-era "French Encyclopedia"), Denis Diderot cites a similar example in which two players, Player A and Player B, wager over a game of dice that involves rolling two six-sided dice. Player A wins if the dice add up to 12, of which there is only one possible case. Player B wins if the dice fall in any other combination, of which there are 35 possibilities.[1] It is mathematically disadvantageous to make a bet if one gets"the worst of it." Accordingly, for the bet to be "fair," the amount each player could potentially lose or gain from the wager should be adjusted, depending on the odds of their success.
Laying odds
When making a bet in which one must put more at risk than one can win, one is
Lay betting
"Lay betting" is a bet that something will not happen, so "laying $50 on a horse" is betting the horse will not win. Bookmakers sell bets based on the odds of a specific outcome, but lay betting allows the bettor (in some English-speaking countries, the "punter") to reverse roles with the bookmaker, using odds to sell the opposite outcome to the bookmaker. In this context, "lay" is used in the sense of "layman", i.e., a bet sold by someone who does not sell bets professionally. [citation needed]
Types of odds offered
There are three widely used means of quoting odds:
Fractional odds
Favoured by
Odds of 4:1 ("four-to-one" or less commonly "four-to-one against") would imply that the bettor stands to make a £400 profit on a £100 stake. If the odds are 1:4 (read "one-to-four", or alternatively "four-to-one on" or "four-to-one in favor"), the bettor stands to make £25 on a £100 stake. In either case, against or on, should he win, the bettor always receives his original stake back, so if the odds are 4:1 the bettor receives a total of £500 (£400 plus the original £100). Odds of 1/1 are known as evens or even money.Not all fractional odds are traditionally read using the lowest common denominator. Perhaps most unusual is that odds of 10:3 are read as "one-hundred-to-thirty".
Fractional odds are also known as British odds, UK odds,[5] or, in that country, traditional odds.
Decimal odds
Favoured in
Decimal odds are also known as European odds, digital odds or continental odds and tend to be favoured by
Moneyline odds
Moneyline odds are favoured by United States bookmakers and as such, are sometimes called American Odds.[4] There are two possibilities: the figure quote can be either positive or negative. Moneyline refers to odds on the straight-up outcome of a game with no consideration to a point spread.
- Positive figures
- If the figure quoted is positive, the odds are quoting how much money will be won on a $100 wager (done if the odds are better than even). Fractional odds of 4/1 would be quoted as +400, while fractional odds of 1/4 cannot be quoted as a positive figure.
- Negative figures
- If the figure quoted is negative, the moneyline odds are quoting how much money must be wagered to win $100 (this is done if the odds are worse than even). Fractional odds of 1/4 would be quoted as −400 while fractional odds of 4/1 cannot be quoted as a negative figure.
- Even odds
- Even odds are quoted as +100 or −100. Some but not all bookmakers display the positive symbol.
Odds conversion
To convert fractional odds to decimal, take the fractional number, convert it to decimal by doing the division, and then add 1. For example, the 4-to-1 fractional odds shown above is the same as 5 in decimal odds, while 1-to-4 would be quoted as 1.25.
The method for converting moneyline to decimal odds depends on whether the moneyline value is positive or negative. If the moneyline is positive, it is divided by 100 and add 1. Thus, +400 moneyline is the same as 5.0 in decimal odds. If the moneyline is negative, 100 is divided by the absolute moneyline amount (the minus signed is removed), and then 1 is added. For example, −400 moneyline is 100/400 + 1, or 1.25, in decimal odds.
Decimal | Fractional | Moneyline | Win% (to break even) |
Return (minus stake) |
---|---|---|---|---|
1.01 | 1/100 | −10,000 | 99.01% | 1.00% |
1.11 | 1/9 | −900 | 90.00% | 11.11% |
1.33 | 1/3 | −300 | 75.00% | 33.33% |
1.50 | 1/2 | −200 | 66.67% | 50.00% |
2.00 | 1/1 | ±100 | 50.00% | 100.00% |
3.00 | 2/1 | +200 | 33.33% | 200.00% |
4.00 | 3/1 | +300 | 25.00% | 300.00% |
10.00 | 9/1 | +900 | 10.00% | 900.00% |
101.00 | 100/1 | +10,000 | 0.99% | 10,000.00% |
See also
- Parimutuel betting
- Full cover bet
- Even money
- Asian handicap
- Betting strategy
- Statistical association football predictions
- Gambler's fallacy
- Fixed odds betting terminal
- Sports betting
References
- ^ "Wager". Encyclopedia of Diderot & d'Alembert - Collaborative Translation Project. University of Michigan Library. June 2009. Retrieved 1 April 2015.
- ^ Listening to America, Stuart Berg Flexner (Simon and Schuster, New York, 1982).
- ^ "Betting School: Understanding Fractional & Decimal Betting Odds". Goal. 10 January 2011. Retrieved 27 March 2014.
- ^ a b c Cortis, Dominic (2015). "Expected Values and variance in bookmaker payouts: A Theoretical Approach towards setting limits on odds" (PDF). Journal of Prediction Markets. 1. 9: 1–14. .
- ^ a b "Betting Odds Format". World Bet Exchange. Archived from the original on May 2, 2014. Retrieved 27 March 2014.
- ^ D., Chris. "What is Fixed odds betting and Due Column betting?". TBR. Retrieved 27 March 2014.
- ^ "Fractional Odds". betstarter.com/. Archived from the original on April 2, 2014. Retrieved 27 March 2014.