I enjoy gambling. On sporting events, at the poker table, or an election. Heck, give me some odds on the number of claps this post will get, and I’ll make a bet.
In the betting world, the more likely event is called the favorite, whereas the less likely event is called the underdog. Over the past 36 hours, the betting markets for the next president of the United States have been all over the place. First favoring the challenger, Joe Biden, then favoring current President Donald Trump, before swinging back to having Biden heavily favored (which is where we stand as I finalize this post).
While it is important to know who is the favorite and who is the underdog in certain contests, how much of a favorite or underdog is just as important. That is where the betting odds come into play. The three most popular betting odds are American odds, fractional odds, and European (or decimal) odds.
American odds are what I’m most familiar with as most US sportsbooks — the clearinghouse for legal sports betting in the US — use these types of odds.
When looking at American odds, you want to think about relating the presented number to a $100 bet. A plus (+) sign indicates the amount of money you would win from a $100 wager. A minus (-) sign indicates the amount of money you would need to wager to win $100.
For example, at the time of this writing, BetOnline.ag has the following betting lines for Joe Biden and Donald Trump:
For Biden, since we see the minus (-) sign in front of the odds, you must risk $650 to win $100. Of course, you can do larger or smaller amounts, depending on limits. For example, you could risk $65 to win $10. Or $6,500 to win $1,000. But it’s easiest to think of the odds in terms of $100 amounts.
For Trump, since we see the plus (+) sign in front of the odds, you will get $500 for every $100 risked. Of course, you can do larger or smaller amounts, depending on limits. For example, you could risk $200 to win $1,000. Or $10 to win $50. But it’s easiest to think of the odds in terms of $100 amounts.
Fractional odds are used around the globe and are usually the easiest to read. You see these mainly in horse racing and futures bets (The term futures refers to bets that will not settle in the near term. For example, betting on the Super Bowl in early November).
When looking at fractional odds, you see exactly what you receive per dollar bet. You can also think of it as the numerator is what you win if you bet the denominator.
Today, I looked up some horse racing odds for the Breeders Cup at USracing.com.
Authentic is currently listed at 11/2 or “eleven to two.” Meaning that, for every $2 wagered, you would win $11.
Notice they also have the American odds listed, which gives a good sense of how the two are related. $2 to win $11 is the same as $1 to win $5.50, which is the same as $100 to win $550 or +550 American odds.
European (Decimal) Odds
European, or decimal, odds are less common in the US but will pop up from time to time when only offshore books can offer a certain bet. When looking at odds that use the decimal system, you need to think about a $1 bet and the return together.
Here is another example from tonight from the politics section of betfair.com. The winner of Pennsylvania. It has the democrats (Biden) at 1.3 and the republicans (Trump) at 3.5. Meaning, if you bet $1 on Biden and he wins, you will return your bet of $1 and $0.30 to equal 1.30. If you bet $1 on Trump and he wins, you will return your bet of $1 and $2.5 to equal 3.5. The lower number is the favorite as you are getting less of a return.
I hope you enjoyed the quick rundown of betting odds. I find all types of markets fascinating as an economist. Perhaps that’s why I’m drawn to gambling. Does anyone want to take bets on the number of claps this article receives?
James Tierney is an improviser and economics instructor. Follow him on Twitter for some amusement. He mainly writes humor and economics articles. Here’s one of each he likes:
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