In sports betting the most basic wager is a moneyline bet. This can also be termed as a win bet or a fixed odds bet. In its simplest form it is a bet on which team will win the game, or which individual will win the competition.
There are three types of displayed odds that you’ll find on a betting platform, fractional (British), decimal (European) and moneyline (US) odds. They all express the same thing but in different ways, however for the purpose of this article we will just focus on American odds, or moneyline odds.
Favorites and Underdogs
In a head to head matchup between two NFL teams - for example - you will typically be presented with three different types of bets: total points (over/under), point spread (match spread) and the moneyline.
The odds for favorites are accompanied by a minus (-) sign, indicating the amount you need to stake to win $100. Meanwhile, the odds for underdogs are accompanied by a positive (+) sign, indicating the amount won for every $100 staked. In both cases, you get your initial wager back, in addition to the amount won.
| TEAM | SPREAD | MONEYLINE | TOTAL |
| Bucs | (-11) -110 | - 550 | O (46.5) |
| Patriots | (+11) -110 | +400 | U (46.5) |
In the above example, the Tampa Bay Buccaneers are strong favorites against the New England Patriots. The -550 odds indicate you would need to spend $550 in order to win $100 betting on the Bucs, conversely the +400 odds indicate you would need to spend $100 in order to win $400 on the Patriots.
While a spread bet requires the team you have bet on to win by a specified margin, moneyline does not. As such moneyline bets have a wider range of odds. The above table is a more extreme example, often the odds between two very good teams will be a lot closer, but it illustrates what would occur on a straight moneyline bet.
Implied Probability
The original amount of money you place on a bet is assumed to be the risk, whereas the original amount you stake plus the potential profits is the return. Using the same odds as the example above, the -550 odds indicate you would need to spend $550 in order to win $100 betting on the Bucs. So the risk is $550, and the return is $650.
To work out the sportsbook’s probabilities on the matchup you divide the risk by the return giving you a number between 0 and 1.
$550 / $650 = 0.8461 (implied probability) * 100 = 84.61% chance of the Bucs winning.
$100 / $500 = 0.20 (implied probability) * 100 = 20% chance of the Patriots winning.
Looking at the above calculations, we have a 20% chance for the underdog to win, and a 84.61% chance for the favorite to win. When we add those two numbers together however, we get 104.61%. If you notice that extra 4.61%? That would be the vig (also known as the take, margin, cut, juice) which is the fee charged by a bookmaker or sportsbook for accepting a gambler's wager.
Actual Probability
Finding the actual probability of an event will help you handicap your wagers by getting a clearer view of the bookmaker or sportsbooks expectations. This exercise allows you to compare how much a sportsbook has inflated the price on a betting line, or to compare how much vig has been included within the odds at two separate sportsbooks.
To work out the actual probabilities on the matchup you divide the % chance of either outcome by the total implied probability with vig included.
84.61 / 104.61 = 0.8088 * 100 = 80.88% chance of the Bucs winning.
20 / 104.61 = 0.1911 * 100 = 19.11% chance of the Patriots winning.
Why is this important? Because a sportsbook considers profitability rather than just accuracy, as such you need to remove the vig in order to gain an accurate picture oddsmakers assign to each potential outcome.
The goal with any betting line is to ensure that the money coming in on each side of a proposition is optimal, such that they can cover their payout obligations while profiting themselves. This is one reason the odds will change in the lead up to an event: in order to attract more action on one side than another, or to include a higher vig percentage to guarantee profit.