Understanding Decimal Odds
Match Odds is the most popular bet type in betting exchanges. It allows you to bet on the outcome of a sporting event, such as a soccer match, a tennis match or a horse race.
In Match Odds betting, you can place two types of bets: back and lay bets.
If you are a bettor in America, you are likely familiar with moneyline odds. In the UK, fractional odds are common, while decimal odds are popular in the rest of Europe, Australia, New Zealand and Canada.
Most powered by Betfair Betting Exchanges, such as Winfair24, use decimals to express the odds for both back and lay bets. Decimal odds are straightforward and easy to understand. We will explain what decimal odds are, how to use them, and how they relate to potential profit and liability in back and lay betting respectively.
Understanding Profit and Liability
Profit: When backing, profit is the amount you win in addition to your original stake. When laying, your potential profit is limited to the stake the backer placed.
Liability: When laying, liability is the amount you have to pay out the backer in case your bet loses.
Decimal Odds for Back Bets
Backing is the traditional form of betting where you support a particular outcome to happen.
When you place a back bet, you are looking for a high decimal odds value, which indicates a potentially higher profit. The decimal odds represent the total potential payout, including your initial stake if your bet is successful.
For example, on soccer match between Team A and Team B you believe Team A will win and you choose to back this selection placing a 20EUR back bet at odds of 2.50. Always not that betting exchanges charge you with a commission rate on winning bets which must be calculated and deducted from your net profit. Let’s say you are charged with 5% commission.
Potential Net Profit = Stake x Decimal Odds – Commission
20EUR x 2.50 – 5% =
50EUR – 2.5 EUR =
47.5 EUR net profit
So, if your bet wins, you will receive a total of 47.5 EUR, which includes your 20EUR stake plus 30EUR profit minus the 5% commission rate charged by the exchange on your winning bet.
Decimal Odds for Lay Bets
Laying can be found only on betting exchanges and with this type of bets you can be a bookmaker, taking bets against specific outcomes.
When you place a lay bet, you are looking for lower decimal odds, as this reduces your potential liability. The decimal odds represent the potential loss (liability) you might incur if the outcome you have laid against wins.
Betting Exchanges typically charge a commission on your net winnings from lay bets. Let’s say you pick a soccer match between Team A and Team B where you believe Team A will lose and you decide to place 50EUR lay bet at 4.00 odds with a 5% commission charge by the exchange on your bet if it wins.
Liability = Stake x (Odds – 1) / (1 – commission rate)
50 EUR x (4.00 – 1) / ( 1 – 5%)
50 EUR x (4.00 – 1) / ( 1 – 0.05)
50 EUR x 3 / 0.95
150 / 0.95
157.89 EUR
This is the amount you might have to pay out if the backer’s bet wins.
Why Winfair24 uses decimal odds?
There are several reasons why this format is used in betting exchanges like Winfair24:
- They are simple for most people to understand.
- They offer more flexibility. You can request odds like 2.52, 2.54, 2.56 or 2.58 which are smaller increments compared to the standard fraction of 2.6 (8/5).
- Calculating returns with decimal odds is very straightforward. With fractional odds for example you need to calculate your profit separately, and then add your initial stake to get the total return. In contrast, decimal odds already represent the total return, so you only need to subtract your stake to find your profit.