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Understanding Odds

How do odds work?

Betting odds explained: Odds are the payout of a winning bet, but also how likely an event is to happen. What do the formats Decimal and Fractional mean?

Odds tell you how likely an event is to happen

Betting odds are a way to represent the probability/likelihood of an event occurring.

  • Low odds means something is likely to happen
  • High odds means something is unlikely to happen

Who will win Eurovision Song Contest?

The lower the odds for a participant are, the more likely is it that the participant will win Eurovision.

The higher the odds for a participant are, the more unlikely is it that the participant will win Eurovision.

Odds is the payout of a winning bet

Odds show how much money you will win, if you bet on an event to happen. The higher the odds are, the more you will win, relative to your stake.

Who will win Eurovision Song Contest?

The lower the odds for a participant are, the less money you will win.

The higher the odds for a participant are, the more money you will win.

Why do odds change?

As we have previously described, odds tell you how likely an event will happen. However, this is not the whole story. We look at 4 factors that can influence odds:

Betting trends

Money is the most important factor for a bookmaker. Bookmakers exist to earn money. And they try everything they can for not risking losing money on improperly priced odds. They constantly analyze which participants their customers place their bets on. This even happens completely automatically. If a lot of customers bet on a specific song, it is a hint that customers consider it a good bet – or in other words: the odds of the song are too high, compared to the customer's expectation of payback. Therefore, the bookmakers will automatically lower this song's odds so that the bookmakers do not lose money.

Neighbours

The bookmakers look a lot at the other competing bookmakers' odds. Both to be competitive, but also to read trends. If a neighbour suddenly lowers odds on a particular song, it can either mean that the neighbour's customers have bet more on this song, or maybe the neighbour has some insider information that you don't have. Therefore, it is better to "play safe" and follow the neighbour than risking a loss on a song. This mechanism is often referred to the "Lemming effect".

History

Historical statistics have a great influence on how the oddsmakers price each participant's song. If a country has been statistically successful at Eurovision, oddsmakers will take this into account in their odds pricing. This is particularly happening in the initial phase, where the song is not even released.

Evaluation

The oddsmakers evaluate each songs' qualities. Is it an objective good song, or do all agree that it is incredibly bad? The judgment can be influenced by many factors, such as the trend of time, what types of songs are suitable for Eurovision?

Decimal Odds

Decimal Odds are most popular in Europe, Australia and Canada, and many think that they're the easiest format to understand.

With decimal odds, the figure quoted is the amount that will be paid out if the bet is a winner, relative to your stake.

Fractional Odds

Fractional Odds are popular in United Kingdom and Ireland, and can be a bit tricky to understand and compare. Whenever you see two numbers separated by a slash, i.e. 14/1, this is a fractional odd.

Fractional odds allow you to calculate how much money you will win on your bet in comparison to you stake. The number on the left (e.g. 14) is how much you will win. The number on the right is how much you need to stake.

As an example, with odds of 14/1, for every €1 you bet, you will win €14.

Winning chance

The winning chance of an outcome is simply a conversion of the odds into a probability percentage chance of success.

  1. The average of each outcomes' odds are calculated
  2. Then the Implied Probability (IP) for each outcome are calculated (= the inverse of the average odds)
  3. Then all the event's IP's are summed up. An event's total IP will always adding up to more than 100%. The total IP over 100% is the bookmaker's profit.
  4. Then each IP's are divided by the total IP to get each outcome's percentage chance of succes.

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