Betting Fundamentals
What a price actually is, and why the price you pay decides more than the opinion you hold.
Lesson 1
Odds are prices, not predictions
After this you can: Read any price as a probability, and stop treating the favourite as the correct answer.
A price is not a forecast handed down by the sportsbook. It is the number at which the book is willing to take both sides of a bet and still keep a margin. That distinction matters, because it means a price is a market position rather than a prediction you are meant to agree with.
Every price converts to a probability. Divide one by the decimal odds and you have the chance that price corresponds to. Decimal 2.00 is 50 percent, 4.00 is 25 percent, 1.25 is 80 percent. Doing that conversion turns an unfamiliar number into something you can hold an opinion about.
Once you can convert, the question changes. It stops being who will win, which the market has already told you, and becomes whether the market has the chance right. Those are different questions, and only the second one can make money.
Key takeaways
- A price states an implied probability, not an expectation about who deserves to win.
- Convert every price to a percentage before forming a view on it.
- Disagreeing with a market is the only thing that can produce an edge.
Terms used: Price, Implied probability, Decimal odds, Moneyline
Lesson 2
The vig is the real opponent
After this you can: Explain why picking more than half your bets correctly is not enough.
Add up the implied probabilities on both sides of a market and you will get more than 100 percent. Two sides at -110 each imply about 52.4 percent, which totals 104.8. That extra 4.8 points is the margin the book keeps, and it is charged to you whether you win or lose.
This is why a 50 percent win rate at -110 loses money steadily. You need roughly 52.4 percent just to break even, and that is before considering that most bettors do not get the best available price.
The practical consequence is that beating a market is a pricing problem before it is a prediction problem. Shopping for a better number on the same opinion is often worth more than improving the opinion.
Key takeaways
- Both sides of a market imply more than 100 percent; the excess is the margin.
- Break-even at -110 is about 52.4 percent, not 50.
- Getting a better price on the same view is the cheapest available edge.
Terms used: Vig (hold), Break-even probability, No-vig probability, Price