One of the keys to success in sports betting is having the ability to pick winners. However, it’s important to realize that this is just one aspect of a profitable strategy. Correctly predicting, say, 8 out of 10 outcomes doesn’t necessarily mean you made a profit. In fact, you could consistently hit 80% of your bets and still lose money.
For example, if you won eight of ten $100 bets with each wager having decimal odds of 1.10, your $1,000 investment would net a total return of $880. In other words, your seemingly impressive 80% hit rate would have resulted in a $120 loss. Conversely, a 10% hit rate could theoretically be profitable. This illustrates the importance of understanding the odds in terms of how they relate to probability and potential profitability.
The Difference Between Betting Odds and Probability
Imagine that you want to place a wager on the Super Bowl coin toss. This proposition has just two possible outcomes. The coin can either land on heads or it can land on tails. The probability of either outcome is therefore 1/2 or 50%. Now, when you search the internet for “betting sites best odds” and find a reputable bookie, you will likely find that the bookmaker’s odds aren’t exactly in line with those probabilities.
Instead of the bookie offering even odds on that wager as you might expect, it likely has the odds set at somewhere around 9/10 or 1.90 in decimal form. This is because the bookmakers factor a small commission into their odds. This is how they make money. So, if you stake $100 at 1.90 on the coin flip, you’ll earn a profit of $90 and not $100. Now you need to correctly predict the outcome 52.63% of the time just to break even over the long run. The odds aren’t in your favor.
Calculating Probability
Calculating probability is quite easy. In short, you take the number of unfavorable outcomes and divide it by the number of favorable outcomes. Let’s say you have two dice and you want to bet that you can roll a six. There are three ways to achieve this. You could roll a 5-1, 4-2, or 3-3. On the flip side, there are 33 combinations that would yield an unfavorable result. So, there are 33 ways to lose and 3 ways to win. Thus, the true odds of rolling a six are 33:3 which boils down to 11:1.
Finding Value
We will now go back to using a coin flip to illustrate the concept of value in betting in a somewhat exaggerated manner. As mentioned, the probability of correctly predicting the outcome of a coin flip is 50%. If you bet on heads at 9/10 or 1.90, you need to have a long-term hit rate of 52.63% just to break even. This represents negative value because the betting odds are lower than the probability.
However, what if the bookmaker’s odds for the coin toss are 11/10 or 2.10? Well, you have found positive value. This is where the bookmaker’s odds are higher than the true probability. If you make this particular coin flip bet multiple times, then you only have to be right a little over 47% of the time. In this case, the odds are in your favor.
Conclusion
Yes, you need to pick winners if you want to profit from betting. However, it is equally if not more critical to understand the concept of probability in relation to the bookmaker’s odds. By understanding the role of each and being able to find positive expected value, you significantly increase your chances of making money through betting.
