# How Do Decimal Odds Work? Decimal Betting Odds Explained

#### UNIT 2.3 – HOW TO READ DECIMAL ODDS

## Introduction To Decimal Odds

Decimal betting odds, also frequently referred to as European odds, are an intuitive odds format used across most of the world. If you’ve ever seen odds written as 2.6, 1.5, or so on, you’ve seen decimal odds before. Because of their simplicity in calculating payouts and stakes, decimal odds are useful for all bettors to become familiar with. Like American odds and Fractional odds, decimal odds communicate both the potential return of a wager, in addition to the probability, or risk, involved with the bet. Unlike American odds, however, which are based around betting or winning $100, decimal betting odds are concerned with every $1 spent instead.

The key benefit to decimal odds is their simplicity for calculating implied probability. Implied probability is a concept that compares how likely the sportsbook thinks an event is to occur, versus how likely it actually is. You’ll use implied probability as a sports bettor if you’re truly interested in identifying opportunities to beat the sportsbook and win some profit.

In all, this article covers:

*This article is part of The Ultimate Beginner’s Guide to Sports Betting, a course by **Canada Sports Betting.*

## How To Read Decimal Odds In Sports Betting

Decimal odds, often referred to as European odds, express the potential total return from a bet, which includes both the initial stake and the profit earned. Unlike other odds formats such as Fractional or American odds, decimal odds show the total amount of money you get back for every $1 spent – not just the profit. This simplicity is one of the main reasons why decimal odds are favoured by many bettors across Europe.

Decimal odds always display the full amount that you’ll receive for every one unit wagered – whether that be euros, dollars, or pounds. This total includes the original stake, so the figure signifies the cumulative amount you’ll collect if your bet wins. For instance, if you’re given odds of 2.5 on an outcome, it means that for every one dollar you bet, you’ll receive $2.50 back if you win – your original stake of $1 plus $1.50 of profit. Because decimal odds represent the total return on one dollar, they are very easy to calculate and understand. The main downside to this format is that it is less intuitive to calculate the actual profit you’ll win.

With decimal odds, the larger the number, the more money you can make if your bet wins. That said, a higher number also means the outcome is less likely to happen. A lower decimal means you’ll receive a smaller payout, but the event is seen as more likely to happen. If you’re comparing two different bets, you can easily determine which is riskier by whichever has the higher odds.

## Identifying The Favourite Vs. Underdog In Decimal Odds

Decimal odds that are greater than 1 and but less than 2 usually indicate the favourite. Remember that decimal odds include your original wager, so they will never be less than or equal to 1. Any decimal above 2 is considered to be the underdog.

As with all forms of betting odds, the favourite usually requires a bettor to wager more than their potential profit. The bettor has to be willing to risk a bit more, because the likelihood of winning is in their favour. On the other hand, a decimal greater than 2 is the underdog because your profit will be, at a minimum, slightly more than your stake. For instance a bet of $1 at odds of 2.1 wins a profit of $1.1, and $1.1 is larger than $1.

Finally, 2 is considered even money. Even money means you’ll win an amount equal to your bet. So if you bet $1 and the odds are 2, you’ll get $2 back – $1 being your original wager, and $1 in profit.

## How To Calculate Decimal Odds

In this section, we explain how odds, stakes, and profits relate to each other through formulas. While these formulas are not vital to remember, they can help you learn to do quick mental math while betting. Alternatively, you can use our sports odds calculator here.

By far, decimal odds are the easiest of all formats to calculate. That said, there are more variables which you may wish to solve for. This is because decimal odds show the total return, rather than the profit that you earn from winning. This means adding an extra step if you wish to calculate your profit only, or calculate your required stake to earn a desired profit. Let’s look at some examples.

### How to Calculate Total Return and Profit in Decimal Odds

To calculate your total return on a bet with decimal odds is incredibly simple. Simply multiply your stake by the odds given. We can use the following formula:

**Your Total Return = Stake * Odds**

Let’s look at an example. You’re given odds of 1.5 that your team will win. You have $80 that you’d like to wager. What will be your total return if you’re successful?

**Your Total Return = $80 * 1.5**

**Your Total Return = $120**

Your total return on $80 will be $120. Remember, decimal odds show how much you will take home in total, including your original wager. If you want to calculate your total profit, you can subtract your wager from the total return. In this case, that would be $120 – $80, which equals $40 in new profit.

Alternatively, you can subtract 1 from the odds before calculating to return your profit. By subtracting 1, you remove the stake from the multiplier, and are left with the profit return only. This works for both the favourite and the underdog. For example:

**Your Profit = Stake * (Odds – 1)**

**Your Profit = $80 * (1.5 – 1)**

**Your Profit = $80 * 0.5 **

**Your Profit = $40**

### How to Calculate Your Stake in Decimal Odds

Let’s say instead you’d like to win a certain amount, and you want to know how much you should stake. You can calculate that amount using this formula:

**Stake = Your Total Return / Odds**

For this example, say you want to earn a return of at least $200 on odds of 2.5. How much should you bet? The calculations look like this:

**Stake = 200 / 2.5**

**Stake = $80**

In this case, you should stake $80 to make a return of $200. Again, if you wanted to determine your profit in this situation you would subtract $80 from $200, which would give you $120 in profit.

Alternatively, you may want to make a certain profit, rather than total return, but are unsure what you should stake. Instead of subtracting out your stake at the end (like we did above), you can calculate it all in one step.

In this case, our formula changes slightly because we have to subtract our profit from our total return. We can use the following formula to calculate a required stake, given a desired profit:

**Stake = Profit / (Odds – 1)**

Let’s use the same example as above. You would like to earn $120 in profit (your total return minus your stake) on a bet with odds of 2.5. In this case, we would put the following into our formula:

**Stake = $120 / (2.5 – 1)**

**Stake = $120 / 1.5**

**Stake = $80**

We know this is correct because in our previous example, a stake of $80 on 2.5 odds gives us $200 in total return, and $120 in profit. This formula returns the same answer.

## How To Convert Decimal Odds to American Odds

While not necessary to memorise, it can be useful to understand how decimal odds convert into American odds. To make the conversion, there is a formula to use for favourites, and a formula to use for underdogs. Largely this is because American odds use negative numbers for favourites, which doesn’t convert well in one formula. That said, to convert decimal odds to American you can use the following formulas:

To convert a decimal of 2.0 or more (inclusive):

**American Odds = (Decimal Odds – 1) *100**

Here’s a simple example. We know that even money odds of 2 translate to even money American odds of +100. Let’s check this is true with our formula.

American Odds =** (2 – 1) *** 100

American Odds =** 1 * 100**

American Odds =** **100

Alternatively, you may have to convert odds under (and not including) 2, which is for a favourite. To convert a decimal of less than 2, use the formula:

**American Odds = -100 / (Decimal Odds – 1)**

Let’s look at one last example. Say you’re given odds of 1.5 and want to know what this is in American Odds. Let’s plug 1.3 into our formula:

American Odds = -100 / **(1.5 – 1)**

American Odds =** -100 / 0.5**

American Odds =** -200**

We know this is correct because staking $200 at -200 American odds will return $100 in profit, or half of your stake. Odds of 1.5 also return half of your stake in profit, indicated by the “0.5”.