Odds are a price. Every price has two parts hidden inside it: how likely the bookmaker thinks something is, and how much you get paid if you are right. Once you can see both parts, every market becomes easier to read.
Three ways to write the same price
Bookmakers around the world write odds in three formats. They look different, but they are the same thing.
- Decimal (3.00) — the total you get back for every £1 staked, including your stake. £10 at 3.00 returns £30: your £10 back plus £20 profit. This is the format used on betting exchanges and across most of Europe.
- Fractional (2/1) — the profit for every unit staked. 2/1 means £2 profit for every £1. To turn it into decimal, divide and add one: 2 ÷ 1 + 1 = 3.00. So 5/2 is 3.50 and 4/6 is 1.67.
- American (+200) — a plus number is the profit on a £100 stake, a minus number is the stake needed to win £100. +200 is 3.00; −150 is 1.67.
We use decimal odds everywhere in Kelly Stake. They are the easiest to calculate with, and they are the format the exchange speaks.
Odds are a probability in disguise
Divide 1 by the decimal odds and you get the implied probability — the chance the price says the outcome has.
- 1.50 → 1 ÷ 1.50 = 67%
- 2.00 → 50%
- 3.00 → 33%
- 10.00 → 10%
This is the single most useful trick in betting. When you see a team at 2.50, do not think “I win two and a half times my stake”. Think “the market says this happens 40% of the time”. Then ask yourself the only question that matters: do I think it happens more often than that?
The margin: why the numbers add up to more than 100%
Take a tennis match with two even players. A fair price would be 2.00 each — 50% plus 50% equals 100%. A bookmaker will offer something like 1.91 and 1.91 instead. Convert those: 1 ÷ 1.91 is 52.4%, and 52.4% + 52.4% = 104.7%.
That extra 4.7% is the bookmaker’s margin, also called the overround or “vig”. It is how they make money. Whatever happens, they have taken a little more than they will pay out. On a football match with three outcomes the margin is often 5–8%; on a big race with twenty runners it can be 20% or more.
The margin is the mountain every bettor has to climb. If a market is priced at 105%, you need to be roughly 5% better than the bookmaker just to break even. That is why the margin matters as much as the odds themselves — and why exchanges, where the margin is usually smaller, are where serious traders operate.
A quick check you can do in your head
Add up the implied probabilities of every outcome in a market. The amount over 100% is what the market is charging you. Two bookmakers can offer the same favourite at the same price and still be very different value once you look at the whole book.
Remember
- Decimal odds = total return per £1, including your stake.
- 1 ÷ decimal odds = the probability the price implies.
- The implied probabilities add up to more than 100%. The extra is the margin.
- A bet is only good value if your probability is higher than the implied one.