How to Calculate Odds and Payoffs

By Jeff Gordon

The primary forms of sports wagering involve either the final scoring differential of a game or the odds of a team or individual achieving something. When you lose a bet, you lose the money you risked. When you win, you get your stake back plus earnings often defined by the "moneyline" on the event. When a bet results in a "push" -- with neither the bettor or bookmaker winning -- you get your stake back minus the commission (or "vigorish") the bookmaker collects. Never bet more than you can afford to lose. Be aware than sports gambling can become addictive.

Moneyline Odds

The moneyline is the basis for much wagering. For instance, most NFL point spread bets are posted with -110 moneylines. That means you must wager $110 to earn $100 -- plus your $100 stake back -- with a winning bet. If the money line is posted at +110, the you would clear $110 on a winning $100 bet.

Setting Point Spreads, Odds

Oddsmakers do more than predict the outcome of games. They weigh myriad factors to determine which team is favored by how many points. In individual sports or group events, they set odds on which individual or team is most likely to win. They set odds that spread the betting -- encouraging bets on the underdogs and discouraging bets on heavy favorites. Their goal is to create higher betting volume and more wins than losses for the sports book.

Understanding Point Spreads

If a team is a 5-point favorite, its odds are -5. If a team is a 5-point underdog, its odds are +5. From the oddsmakers' perspective, the underdog starts the game with a 5-0 lead and the favored team starts with a 0-5 deficit. If you bet on the favored team and it wins by only four points, it doesn't cover the spread and you lose. If you bet on the underdog and it loses by only four points, it beats the spread and you win. Your winnings would be based on the moneyline. Typically it is -110 for point-spread games, meaning you would have to bet $110 to earn $100.

Understanding Straight Money Line Bets

Bettors who prefer just picking winners and losers of games -- regardless of point, run or goal differentials -- can place moneyline bets. If the Boston Red Sox are favored over the New York Yankees, the moneyline might be -130 for the Red Sox and +110 for the Yankees. To clear $100 betting on the Red Sox to win by any margin, you would have to wager $130. Conversely, a $100 bet on the underdog Yankees would earn you $110 if they won.

Understanding Fractional Odds

These are the simplest bets to understand. If an individual or team is a 4/1 favorite to win, a winning $1 bet would earn $4, plus the return of your $1 stake. When there is an extreme favorite -- such as California Chrome in the 2014 Preakness Stakes horse race -- you might see inverse odds. California Chrome opened at 3/5, meaning you would have to bet $5 just to earn $3 if the horse won.

Understanding Decimals

These are simple odds to understand. If a team is posted at 2.35 to win, then you multiple the money you bet by 2.35 to determine your total return -- stake plus earnings. A $20 bet on those odds would return $47, including a $27 profit. Favored teams get smaller decimals, offering smaller payoffs, while underdogs get bigger decimals and payoffs.

Parlay Bets

Bettors can wager on a combination of events through a parlay bet. If you pick correctly on all the events in your parlay, you collect an exponentially higher payoff than on a straight-up bet. For instance, a six-team parlay might pay off at 40 to 1. But if you pick wrong on any of the outcomes, you lose the whole bet.

References

About the Author

Jeff Gordon has been reporting and writing since 1977. His most recent work has appeared on websites such as eHow, GolfLink, Ask Men, Open Sports, Fox Sports and MSN. He has previously written for publications such as "The Sporting News" and "The Hockey News." He graduated from the University of Missouri-Columbia School of Journalism in 1979 with a bachelor's degree.

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