Understanding the math behind gambling odds

A 2016 survey suggested the gambling industry in Britain was worth approximately £13.6bn. The largest percentage of this amount belonged to online gambling, which reported a gross yield of £4.5bn between April 2015 and March 2016. This represents 33% of the profits of the entire gambling sector.

Indeed, while traditional forms of gambling show a slight decline, the popularity of online gambling continues to grow. The number of betting shops, bingo halls and gaming machines in the UK is down, but online casinos and betting sites are booming. Online slots alone took £1.8bn in the above period.

The appeal of online gambling 

The reasons for the popularity of online games are not hard to see. Many people feel nervous about going to a casino or even a betting shop alone for the first time, but online games allow you to play in the comfort of your own home without anybody watching. The increase in mobile devices has also contributed, with players responding to the ability to play anywhere at any time of the day or night. Gambling websites are increasingly optimised for mobile use and of course the modern interfaces and creative use of video game technology continue to attract new players who may find traditional gambling drab and old-fashioned. Online games are generally faster paced and employ innovative gimmicks to add appeal and novelty.

Beating the odds 

The bottom line however is that the appeal of gambling is the chance of winning money. You may enjoy the thrill and the fun, understand that your chances of coming out ahead are slim and look at your losses as a fair price to pay for an exciting and enjoyable experience. Nevertheless, the possibility you might win is precisely what generates much of the excitement in the first place. Having money riding on an outcome makes the game all the more exciting.

It’s inevitable that players and pundits should devote so much time and energy to trying to beat the odds. Many systems have been devised, most of them questionable, but it’s clear that understanding the maths behind how gambling odds are calculated is the best way of improving your chances.

Understand the betting margin 

Consider for a moment the humble bookmaker. Bookies make a profit on a bet by offering odds that are higher than they realistically should be. That is, the chances of something happening are usually slightly worse than the bookies’ odds would suggest. The difference is the betting margin.

Have betting accounts with several different sites 

Different bookmakers will offer different odds on the same event, because they have a different betting margin. The odds will also be shortened by the amount of people who back a certain event, even though this doesn’t actually affect the likelihood of an event happening. This is because the odds don’t just represent the chances of something happening; they also represent the amount which has to be paid out if it does. Being able to place bets on different sites will improve your chances of coming out in profit.

Compare the difference between odds and probability 

The probability of something happening is a pure calculation, whereas odds are adjusted according to different factors as outlined above. Every time you place a bet you should try to work out the actual probability of all the different outcomes, compare this to the odds and bet accordingly.

Go for the less glamorous outcome 

In a football match, the probability of a draw is usually pretty high, but because no-one wants to bet on such a dull, non-committal outcome, the odds generally don’t reflect this. People will either back “their team” or will bet on the favourites, to such an extent that their odds will look better than they really are. Mathematically therefore you’re often better off backing a draw between two top sides than you are the side that looks on paper the favourite to win.

Go for games of skill rather than games of chance 

If a game is purely based on chance there’s no way to beat the system as essentially there is no system. The more a game involves skill, the more you can increase your chances of winning through understanding the maths. Good examples are games commonly played at an online casino such as blackjack and video poker. Generally, the more complicated a game appears to be, the better the odds are if you take the time to really study and understand it.

Mathematics plays a major part in how odds are calculated. Understanding this, and also the fact that quoted odds are as much about profitability as probability, can help to make you a better player.

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My name is Gary, a 31 year old Tech Loving marketer passionate about home tech and coffee.

I'm a Programmer for hire working with small to medium businesses.

I network in Warrington, Liverpool and Manchester in the North West, England.

This website is my online notebook dedicated to tech, marketing and finance.

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