The basics – an introduction to betting

This section is for those who are relatively new to betting. We'll try to keep it simple to start with and get a little bit more technical as we go along. If you're more experienced you may want to scroll down and see if there are any headings that take your interest.

What is a bet?

In simple terms a bet is an agreement struck between two parties, whereby a payment will be made from one party to the other, with the direction and the amount of the payment being depending on the outcome of a particular event.

Example: Dan bets Mike £5 that West Ham will beat Liverpool on Saturday. If West Ham win, Mike pays Dan £5. If they don't, Dan pays Mike £5 instead.

This bet only has two outcomes, either West Ham win or they don't. The fact that the amount is £5 in either direction means the bet is said to be at 'Evens'.

What are odds?

Many would argue that Mike has got himself a good deal in the example above – with Liverpool not only at home but arguably the stronger team, most pundits would suggest Liverpool are highly likely to at least come away with a draw. If Mike agreed then he might be prepared to offer Dan 'odds' of say 2/1 (two to one) that West Ham win. In which case if West Ham do win, Mike pays out £10, whereas if Liverpool win or draw, Dan pays Mike just £5.

Odds of 'something to one' are known as fractional odds and are a widely used format in the UK, especially with the high street and track–side bookmakers. Fractional odds make it fairly simple to work out the profit or loss you could expect from a bet: "for every £1 I stake I can expect to make x pounds profit if I win". But its not always 'something to one', you will often see odds like 5/2 (five to two) or 11/4 (eleven to four).

In the case of 11/4 it follows that for every £4 you bet you could make £11 profit. Or, if you find it easier, you could divide 11 by 4 to give you 2.75 and think in terms of "two and three quarters to one; if I bet £1 I could make £2.75 profit".

Bookmakers

Bookmakers, also known as 'bookies' or (in the High Street) 'betting shops' are the commercial equivalent of Mike in the examples above. William Hill or Ladbrokes might offer odds of 2/1 on West Ham winning. The main difference is that it will be assumed you have lost that West Ham don't win when the bet is made and Dan will have to hand over his £5 before the match has even been played. If West Ham do in fact go on to win, the bookie will pay Dan £10 for the win and return his £5 stake, a total payout of £15.

Bookmakers are everywhere and the level of choice is greater than it has ever been and this is largely due to the advent of the internet. Most shops and internet bookmakers now take a wide variety of bets on a range of sports. Competition for your business is strong and you need to be aware that the terms and odds offered can vary significantly from one bookie to the next. If you are going to take your betting seriously and you genuinely intend to make a profit then you'd be wise to shop around for each and every bet you place. Obviously this isn't going to be easy if you're on foot and this is why the internet has proved such a blessing for the betting public. It is certainly not unusual to have a dozen or more different online accounts set up to call on when you're looking to place a bet.

It is important to point out that not all bookmakers are as reputable as others. Some internet bookmakers, especially those outside the UK, may not benefit from the same high levels of regulation.

Further reading:

Getting the best odds

'Odds on' or 'odds against'

The 2/1 example above would accurately be stated as '2/1 against', against meaning that that the odds suggest there is more chance of Dan losing his bet than winning. On another outcome you might find odds of 1/2 ('two to one on') meaning that the expectation of success is much higher and that Dan would need to stake £10 to make just £5 profit if successful.

Odds of 'Evens' (i.e. one to one) is the crossover point between 'odds on' and 'odds against'.

Decimal odds

We've looked at fractional odds which are still widely used in the UK. An alternative and increasingly popular way of presenting odds, particularly online and in Europe, is the decimal format. The fractional 2/1 above would become 3 (or 3.00) in decimal reflecting the total return of the bet including the stake. Some more examples are given in the summary below.

Summary so far

You might want to follow these five examples to make sure you are comfortable working with fractional and decimal odds.

For completeness we should mention the American odds format, although you shouldn't need to worry too much about this if you are betting in the UK or Europe. A number is shown with a + (plus) or – (minus) in front of it. If + the number is the amount you would profit for a stake of 100, whereas if – the number is the amount you need to put down to win 100. For example +50 would equate to 1/2 or 1.5 decimal, –50 would be 2/1 or 3 decimal.

Betting exchanges

Perhaps the most significant change to the world of betting in recent years (online poker aside) was the arrival of internet betting exchanges. Exchanges allow you to back or lay the outcome of an event and, rather than dealing with a bookmaker, you'll be matching your bet with another user of the exchange. If the odds you want aren't available then you can request them and see if someone will come along and match the other side of the bet with you. This extract from Betfair, the leading exchange, shows odds ahead of the Denmark v Portugal Euro 2008 qualifier:

The first thing to notice is that Betfair quotes odds in the decimal format. If you wanted to back Denmark to win, then the best price (odds) on offer was 2.66. If you had taken this then the £105 in the blue area would have reduce by the amount you had bet and your bet will be 'matched'. If however you had decided to hold out for better odds, of say 2.68, then you could have request this and it would appear as an increase to the amount shown in the pink area, but your bet will be 'unmatched' until someone is prepared to 'lay' England at 2.68 (and there are £443 worth of bets ahead of yours to be matched first).

As long as a bet remains unmatched, i.e. no one is interested in giving you the odds you have requested, then you have no bet in place. If this remains the case until that betting market closes you will win nothing and lose nothing – the request is null and void. So if you do request higher odds than offered on the blue side, do not assume it will get matched. You should return regularly before the event starts to check the position on unmatched bets and if necessary adjust your requirements.

Let's assume you did back Denmark at 2.66 to the tune of £10 and that they went on to win the match. Your gross return would be £26.60 include your stake.

Commission

Betting exchanges typically take a 5% commission on the gross profit you make so in the above Denmark example you will pay 5% of £16.60 (£10 stake deducted to give gross profit). Your actual net profit is £15.77, with the exchange getting £0.83 in commission. This deduction means the effective 'true odds' are 2.577. A quick calculation to adjust for commission to get the true odds is:

True odds = (quoted odds – 1) x (1 – commission rate) + 1

Conventional bookmakers don't take a commission since their profit margin is built in to the prices they quote. Therefore it is a appropriate to use the true odds based on this formula when making comparisons between betting exchanges and bookmakers