This means that the potential winnings are known at the time of placing the bet, regardless of any changes in the odds leading up to the event.
Fixed-odds gambling involves placing bets on events with predetermined odds.
Bookmakers aim to create an overground, where the sum of probabilities quoted for all possible outcomes exceeds 100%, ensuring profit.
The advent of the internet and betting exchanges has led to opportunities for fixed-odds arbitrage actions and Dutch books.
Converting between these formats requires specific calculations depending on the type of odds used.
In the more usual case of an imbalanced book, the bookmaker may have to pay out more winnings than what is staked or may earn more than mathematically expected.
An imbalanced book may arise since there is no way for a bookmaker to know the true probabilities for the outcome of competitions left to human effort or to predict the bets that will be attracted from others by fixed odds compiled on the basis personal view and knowledge.
Accordingly, for the bet to be "fair", the amount each player could potentially lose or gain from the wager should be adjusted, depending on the odds of their success.
[citation needed] There are three widely used means of quoting odds: Favoured by bookmakers in the United Kingdom and Ireland and common in horse racing, fractional odds quote the net total that will be paid out to the winning bettor relative to the stake.
The term "fractional odds" is something of a misnomer, especially when visually reinforced by using a slash (as opposed to, e.g., a colon or the word "to" or "on") to separate a potential gain from the amount that a bettor must wager in order to receive it upon a win, because the "fraction" in question represents not the odds of winning or even the reciprocal of the odds of winning but rather the fraction (for any odds longer than "even money" or chances of winning less than 50%, an improper fraction) of the amount at stake that the upside outcome represents.
Favoured in Continental Europe, Australia, New Zealand and Canada, decimal odds differ from fractional odds by taking into account that the bettor must first part with their stake to make a bet; the figure quoted, therefore, is the winning amount that would be paid out to the bettor.
Moneyline refers to odds on the straight-up outcome of a game with no consideration to a point spread.