There are two distinct types of sports bets that can be placed – fixed odds bets and spread bets. In this article I will go into the details of fixed odds betting and its variants. In the next article I will talk about spread betting.
Fixed odds betting is by far the most popular of the two bet types. When you go to the casino and bet on red or number 36 in roulette for a fixed return, that is fixed odds betting. When you back a horse at the races at 13/1, that is fixed odds betting. The simple definition of fixed odds betting in the UK is that the odds tell you the profit you will make for a given stake.
To expand on the above example, if you back a horse at 13/1, it means that you will profit $13 for every $1 staked. Or in other words, you will get a return of $14, which is the $13 profit + your $1 stake returned to you. It is much easier for a casual punter to understand these mechanics than it is to understand spread betting, which is a big factor in why fixed odds are the more popular of the two.
It does get a little more complicated than that. In the UK, fractional odds are the norm and so prices will be expressed in the terms detailed above. However, this does vary from country to country. In Australia, Canada, New Zealand and much of Europe excluding the UK, odds are expressed in decimal form. The equivalent to 13/1 odds in the UK is $14 in Australia. This is because the Australian odds include the stake being returned to you. Confusing, I know! It would be much easier if everyone followed the same rules.
The USA have their own system. Odds in the USA are expressed in the form of a moneyline – that is, either how much you have to bet to win $100 for the favourite, or how much you would win for betting $100 on the underdog. If the team is ‘odds-on’, that is, they are less than 1/1 in fractional odds or less than $2 in decimal odds, their moneyline odds will be expressed with a minus (-) symbol, which indicates that is the amount you need to bet to win $100. If the odds are expressed with a plus (+) symbol, that indicates the amount you would win for betting $100.
Let’s take a market – say, Chicago Bulls vs New York Knicks. In this example the Bulls are heavy favourites. Here are how the same prices would look in each odds system detailed above.
It is worth taking the time to learn the difference between fractional and decimal odds. If you are betting in the UK, the Betfair exchange, an absolute must for serious punters, expresses odds in decimal form, so you will need to understand both to maximise your betting potential. Unless you live in the USA or bet a lot into NBA, NFL and Baseball, you will likely have no reason to learn their betting system (which I still find confusing to look at!).
There are a few other odds systems that come into play, particularly in southern Asia, but I will leave those off this list as you are highly unlikely to ever need to know them.
Another branch of fixed-odds betting, offered primarily on the Betfair Exchange, is lay betting. While normal fixed-odds betting involves backing a selection to win, lay betting is the opposite. What you are doing when you place a lay bet is backing that selection not to win. Another way to think about it is that when you place a bet with a bookmaker, that bookmaker is ‘laying’ the bet to you. When you lay a selection on Betfair, you are ‘laying’ that bet to another person who is ‘backing’ it. There are some great uses for lay betting. One is for live trading, which I will go into depth on in a later article. One of the great perks of Betfair is that you can back and lay a selection repeatedly on the exchange without needing to increase your investment.. This is a little bit confusing, so I will outline an example below.
Say you backed England to beat Australia in the cricket at 2.00 on the Betfair Exchange and had $100 on it. Your position is +100 if England win, and -100 if they lose. Say they are now 1.10 which you think is too short and you want to back Australia or ‘lay’ England. You can choose to lay a $100 bet on England at 1.10, provided there are enough people trying to back England at that price. You can do this even with an empty account. Betfair will then update your position to the following;
Make sense? If England win, you get your original $100 profit, minus the $10 you need to payout to the person who you ‘laid’ a $100 bet to at $1.10. If Australia win, you lose your original $100 bet on England, but you gain the $100 stake from the person you laid the bet on England to.
The great thing about doing this is as soon as your position updates to Australia 0, England +90, is that Betfair will release the $100 you originally staked back into your account as you no longer have that liability.
If you followed this same process with a corporate bookmaker, there are a number of downsides. For one, you cannot ‘lay’ a selection with them. You can either back the other team (which means you will need to front up extra cash on top of your initial stake), or you can cash out. The downside to both options is that the bookmaker will take margin out of each transaction you make. The more backing or cashing out you do, the more you are penalised. At Betfair, you are actually rewarded for ‘trading out’, as the commission is only calculated on your final net position, rather than each transaction. As a side note, cashing out with corporate bookmakers should be avoided nearly all of the time. The only exception is when a price is very wrong and you can cash out before it moves. Otherwise, the cash out fee is simply too high to ever be economical. This does not apply to the Betfair Exchange’s cash out feature, which simply places the required back/lay bets for you to effectively ‘cash out’.
So in summary, you will need to learn the mechanics of both fractional and decimal odds and the difference between back and lay betting to further your performance as a punter. USA odds are worth learning if you bet on a lot of US sports and would benefit from comparing odds at US bookmakers, but if not, focus your energy on learning the UK and European systems.