Converting Odds into Probabilities… and Vice Versa

Maths test

If you can’t convert odds into the probabilities they imply, you are going to struggle in the long term to make money from your betting. How can you assess value if you don’t first know the probabilities the betting market is indicating?

It’s not a difficult thing to do and with a little practice you will be able to do it automatically every time you look at a betting market.

First we’ll look at conversion of fractional odds to probabilities as those are still the predominant type used in the UK.

 

Converting Fractional Odds

Fractional odds simply reflect  the return you will get if your selection wins – bet £20 on a 4/1 shot and you’ll get £80 – 4 x £20 – back (plus your original stake of £20). However, they also reflect the bookmaker’s assessment of the chances of that selection winning . In addition, there’s an adjustment in there to cover the bookmaker’s profit margin (the overround) but for the purposes of this exercise we’ll ignore that.

So what percentage chance does the bookmaker think a selection has if he is offering 4/1?  Here’s the calculation:

Divide the number on the right of the fraction by the total of both numbers in the fraction:

1 divided by (4+1) = 0.20

Then multiply that by 100 to give a percentage probability:

0.20 x 100 = 20%

So a 4/1 chance has an implied 20% chance of winning! Simples

 

Converting Decimal Odds

Again, like fractional, decimal odds are a reflection of the return you will receive if you win, including your stake. So if you have £20 on a winner with decimal odds of 7.0, you will receive £20 x 7 for a return, including stake, of £140 (£120 profit). To convert those odds into a probability, here’s the calculation:

Divide 1 by the decimal odds then multiply by 100 to give a percentage

1 divided by 7 = 0.143

0.143 x 100 = 14.3%

So a selection priced at 7.0 in decimal format has an implied 14.3% chance of winning!

 

These are very simple calculations and with experience you will be able to look at a betting market and instantly calculate the implied winning chance of all the runners based on the odds on offer.

Vice Versa

If you have reached the point where you are compiling your own tissue prices as part of a value finding exercise (and that should be your aim!), you will need to be able to convert percentage probabilities back to odds format for the purpose of comparison.

 

Converting Probabilities to Fractional Odds

 

Based on your own assessment methods, you have determined that a horse has a 10% chance of winning a race. To convert that into fractional odds format the calculation is

(100 divided by percentage probability) -1

(100/10) -1

10-1 = 9

So a selection with a 10% chance of winning should be priced at 9/1

 

Converting Probabilities to Decimal Odds

 

In this example you’ve found a horse that you think has a 60% chance of winning it’s race. To calculate it’s odds in a decimal format:

Divide 100 by the percentage probability

100/60 = 1.66

So a 60% chance is expressed as 1.66 in decimal odds format.

So there you have it. However, an even easier way to do it is to memorise the major odds and their respective implied probabilities using the table I have put together below!

Odds Conversion

 

Technorati Tags: , ,

 
This entry was posted in Betting Theory, Blog and tagged , , . Bookmark the permalink.

6 Responses to Converting Odds into Probabilities… and Vice Versa

  1. Mike Dixon says:

    HAVEN’T YOU GOT IT WRONG RE THE 7/1 WINNER WITH £20 WAGERED.YOU STATE THAT THERE IS A RETIURN OF £140, INCLUDING STAKE AND THUS A PROFIT OF £120.THE PROFIT IS IN FACT £140 WITH STAKE OF £20 RETURNED.

     
    • Kieran says:

      Hi Mike

      Thanks for your comment.

      The example is of a horse priced at 7.0 in decimal format – which in fractional format is actually 6/1 (not 7/1), so the returns outlined are correct.

      Hope that helps

      Kieran

       
  2. Robert DAY says:

    Very good info although I have known this for some years nothing new to me.
    However we all still have to find a horse good enough to win in the particular race
    under scrutiny that takes more time skill and experience + a good Method,
    you can apply all the systems on the net none of them work even in the short time
    tipsters forget them should be shot at dawn.
    Price is every thing, that is where profit lies and also where your % comes in under 3/1
    you need a very high s/r some where around 60% over 3/1 4/1 is better but beyond that you will wait longer for them to hit as your %s show, it’s a hard game and not many make as I see every day in Hills, it’s sad but they never win.
    What is your opinion on laying I do very well on B-F looking at the first 3 in betting
    it is surprising how many favs/2nd favs flop 87% s/r over 12 months started with $100 now have $1500 that’s using stats %s form of horse over last 3 races, it takes
    time but very rewarding.
    Yours Bob.

     
    • Kieran says:

      Hi Bob

      Thanks for your comment.

      I agree that laying can be a very profitable betting strategy and it certainly sounds like you’ve found an interesting method!

      I have to disagree though with your thoughts on systems and tipsters. I know of many systems and tipping services (including my own) that make excellent profits year in and year out.

      All the best

      Kieran

       
  3. Stu says:

    Brilliant Kieran!
    More educational pieces like this please!

    Stu.

     
    • Kieran says:

      Hi Stu

      Thanks for that – much appreciated!

      I’ll do my best to come up with more articles in the same vein.

      Thanks again

      Kieran

       

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>