Betting odds explained: What are betting odds and how do they work?
Betting odds are the foundation of sports betting and determine how much a bettor can win from a successful wager.
Whether betting on football, rugby, basketball or horse racing, understanding odds is one of the most important skills for any bettor.
Odds not only show the potential return on a bet, but also reflect how likely bookmakers believe a particular outcome is to occur.
What are betting odds?
Betting odds represent the probability of an event happening and the amount a bookmaker is willing to pay if that outcome is successful.
In simple terms, odds tell bettors:
How much they can win.
How likely an outcome is considered to be.
For example:
Team A to win – 1.50
Team B to win – 2.50
The lower the odds, the more likely the bookmaker believes the outcome is.
The higher the odds, the less likely the outcome is considered to be.
READ MORE: Value betting explained: How smart bettors find an edge
How do decimal odds work?
Decimal odds are among the most common formats used by bookmakers.
To calculate potential returns:
Stake × Odds = Total Return
For example:
Stake: R100
Odds: 2.00
Calculation:
R100 × 2.00 = R200
Total return: R200
Profit: R100
Example 2
Stake: R100
Odds: 3.50
Calculation:
R100 × 3.50 = R350
Total return: R350
Profit: R250
Why do favourites have lower odds?
Bookmakers assign shorter odds to outcomes they believe are more likely to occur.
For example:
Springboks to beat a lower-ranked nation: 1.20
Opponent to win: 4.50
The Springboks may be expected to win comfortably, meaning the payout is lower because the perceived risk is lower.
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Why do underdogs have higher odds?
Underdogs are considered less likely to win.
As a result, bookmakers offer larger returns to attract betting interest.
For example:
Favourite: 1.40
Underdog: 5.00
A successful underdog bet would generate a much larger return.
What is implied probability?
Odds can be converted into implied probability.
This shows the percentage chance bookmakers assign to a particular outcome.
Formula:
100 ÷ Odds = Implied Probability
Examples:
2.00 odds = 50%
1.50 odds = 66.7%
4.00 odds = 25%
Understanding implied probability can help bettors compare their own assessment of an event against the bookmaker's pricing.
ALSO CHECK OUT: What is Over/Under betting and how does it work?
Do lower odds mean a guaranteed win?
No.
One of the most common misconceptions in betting is that low odds guarantee success.
Even heavy favourites lose.
Odds simply reflect probability, not certainty.
A team priced at 1.20 can still lose.
A team priced at 5.00 can still win.
How bookmakers make money
Bookmakers build a margin into their odds, often referred to as the overround.
This means the combined implied probabilities of all possible outcomes usually exceed 100%.
The margin helps ensure bookmakers remain profitable over time regardless of individual results.
Common mistakes when reading odds
Assuming favourites always win
Low odds do not guarantee success.
Chasing large odds
Higher odds may offer bigger returns but generally come with greater risk.
Ignoring value
Successful bettors often focus on whether odds accurately reflect the likelihood of an outcome rather than simply backing favourites.
READ MORE: What is a handicap bet and how does it work?
Why understanding odds matters
Every betting market is built around odds.
Whether placing:
Match winner bets.
Handicap bets.
Over/Under bets.
Accumulator bets.
Understanding odds allows bettors to make more informed decisions and better evaluate risk versus reward.
Final thoughts
Betting odds are far more than numbers attached to a sporting event.
They provide insight into how bookmakers view a contest and determine potential returns from successful bets.
Learning how odds work is one of the first steps toward becoming a more informed bettor.
The better a bettor understands odds, the easier it becomes to identify value, manage risk and make smarter betting decisions.