For a gambler, the term ‘odds’ has two different meamngs, depending on the context in which it is used.
Chances of winning or losing
Before making a bet you will want to know your chances of winning or losing. In this context the ‘odds’ is a comparison of the chances of winning and losing and is expressed as a ratio. For example, 2 to 1. A shorter way of writing the odds is to put a slash between the two numbers, so 2 to 1 becomes 2/1.
Consider the tossing of a coin. There are two possible outcomes – the coin could land on heads or, just as easily, on tails. Suppose two people, we’ll call them A and B, decided to bet on the tossing of a coin. A predicts it will land on heads and B thinks it will land on tails. They each bet £10 and agree that the person predicting the outcome wins the money.
The coin lands on heads so A wins a total of £20 (£10 from B and the £10 he staked) and B loses £10. A has made a £10 profit and B has made a £10 loss. This is gambling in its simplest form. The amount of money that each player risked was £10. This is called the stake. For A there was one chance that he would lose and one chance that he would win. As a ratio this is 1/1 or odds of one to one. Where the odds are 1/1, it is called evens or even money.
This can be applied to any game to find the chances of winning. Suppose A and B were to bet on the throwing of a six-sided die. Here, there are six possible outcomes. Numbers 1,2,3,4,5 or 6 could be thrown. If A were to bet on throwing a 6, he would have five chances of losing and only one chance of winning (if he threw a 1,2,3,4 or 5 he would lose). The odds against him winning would be 5/1 (five to one).
To calculate the odds in any game, you need to work out how many chances you have of winning and how many of losing.
Winnings compared to stakes
The term ‘odds’ is also applied to the ratio of winnings compared to stakes. In the coin tossing example, A had the chance of winning £10 for a £10 stake. Expressed as a ratio this is 10/10 or 1/1 (even money). Here, the odds against winning are the same as the odds paid. In other words, the true mathematical odds are being paid.
The odds are quoted as two numbers, for example 2 to 1 and 8 to 1. The number on the left of the odds is the amount won if the number on the right is staked. So, with odds of 2 to 1 if one chip is staked two chips will be won. The player also keeps the stake so in total three chips will be won. For odds of 3 to 2 if 1 chip is staked one and a half chips will be won and the piayer keeps the stake. Total winnings are two and a half chips. For a five-chip bet on odds of 2 to 1, you simply multiply the odds by 5; so 2 to 1 becomes 10 to 5. For a five-chip bet 10 chips are won and the player keeps the stake giving total winnings of 15 chips.