Decimal Odds and Overround
Decimal odds can make it relatively easy for you to calculate how much overround has been built into any particular betting market. If you haven't come across the word before, overround can best be described as the percentage of profit that a sportsbook operator has determined to try and make from a betting event.
In a perfectly fair betting market the book would total 100%, which means the decimal odds would be set in such a way that that, if betting activity was as the market maker predicted, every penny accepted in bets would be paid out to the eventual winners. Of course, such perfectly fair betting markets would not give the sportsbook operator any profit, so he creates one artificially by offering slightly unfair decimal odds that total more than 100%. The excess is the overround, and the higher it is the more profit the event should make for the sportsbook. The lower the overround percentage, the fairer the market is for the people who are actually betting.
Although it is perfectly possible (with quite a bit of work) to calculate the overround of any given betting market using fractional odds, decimal odds make the task much more straightforward. All you have to do is convert all of the decimal odds in a given market into their percentage equivalents and then total them up.
The calculation required to convert decimal odds into a percentage equivalent is: 100 divided by the decimal odds on offer.
Consider a seven runner horse race where the decimal odds of the runners are as follows:
- 2.75
- 4.00
- 5.50
- 8.50
- 9.00
- 10.00
- 23.00
If we perform the previously described calculation (100 divided by the decimal odds) to each of these runners, the results would be:
- 100 divided by 2.75 = 36.36%
- 100 divided by 4.00 = 25.00%
- 100 divided by 5.50 = 18.18%
- 100 divided by 8.50 = 11.76%
- 100 divided by 9.00 = 11.11%
- 100 divided by 10.00 = 10.00%
- 100 divided by 23.00 = 4.34%
When we add up all of these percentages we get a book total of 116.75%. That means that the market has an overround of 16.75%.
Knowing how to calculate the overround using decimal odds is a very useful skill, because it allows you to concentrate on betting markets that have the lowest overround figures. Since these are the markets that – in theory at least – give you the fairest deal, focusing on them (and avoiding markets with excessive overrounds) should make it easier for you to make a long term profit from sports betting.
Now that you have learned to convert decimal odds into their percentage equivalents you also have a skill that you can use to take a ‘dutching’ approach to profitable betting – see our Decimal Odds and Dutching page for further information on that topic.
