How can I understand horse racing odds?

In horse racing, odds represent the ratio of the probability of a favourable outcome for the punter (a winner) to the probability of an unfavourable outcome (a loser). However, as Mark Twain put it, “It is the difference of opinion that makes horse races,” so it is worth noting that probability, here, is nothing more an expression of the expectation of the bookmakers.

Simply, odds tell you how likely a horse is to win, in the eyes of the bookmakers, and what your payout will be if your bet is successful. If, for example, bookmakers offer a horse at odds of 3/1, the implied probability of that horse winning is 3/4 – that is, the odds divided by one plus the odds – or 0.75, which equates to a 75% chance of winning and a 25% chance of losing. A successful £1 win bet on said horse would yield a payout of £3 in winnings, plus the original £1 stake, making a total return of £4.

In Britain, odds are traditionally displayed, as above, in fractional format, as two numbers separated by a slash. The number on the left of the slash, e.g. 3, indicates your winnings if your bet is successful, while the number on the right of the slash, e.g. 1, indicates the stake required to achieve those winnings.

Nowadays, online bookmakers also offer the option of displaying odds in decimal format, as is popular elsewhere in Europe, Canada and Australia. Decimal odds are expressed as a single number, which represents the total payout on winning bet, including the stake. Thus, fractional odds of 3/1 become 4.00 in decimal odds and you can calculate your total return by simply multiplying your stake by the decimal number. Decimal odds facilitate easier side-by-side odds comparison, particulary in the case of less straightforward fractions, such as 11/8, 13/8 and so on.