The basic wager in sports betting, the money line bet is made on one of the teams or athletes in a competition. The only point of money line wagers is to pick the winner.
Other types of bets, like point spreads, may be derivatives of or similar to money line bets, but they are not considered money line bets.
Money line bets are usually explained using an example of $100. Wagers on the favorite team or athlete are represented by a negative number. Wagers on the underdog are represented by a positive number.
The odds are denoted like this:
- Favorite -200
- Underdog +200
The negative number represents how much the bettor must wager to win $100. The positive number represents how much the bettor wins on a $100 bet.
Other types of odds or bets have no effect on the money line ratios. They are set by bookmakers (or bookies) based on how likely either competitor is to win and how much interest there is in either side of an event.
Bettors turn to sportsbooks and bookmakers for money line bets. The industry serves an important if complicated role in the sports betting process. Money line bets are very popular among gamblers and bookmakers alike, although these types of wagers have strengths and weaknesses.
How bookmakers profit from money line bets
Bookmakers serve an important role in sports betting. They collect and hold all bettors’ wagers, ensuring that winners are paid what they are owed. As a middle man the bookie must adjust the odds slightly so as to leave some money on the table for a commission.
The bookie’s commission is called “vigorish” or simply “the vig.” The word is borrowed from Yiddish, which borrowed it from Russian. The original Russian word meant “winnings” or “gains.”
There are two types of vigorish: proportional vigorish and disproportional vigorish. It’s easiest to understand how they work this way:
Proportional vig is deducted from both sides of an even-money wager. If two bettors wager $100 each on an event, the winner would only be paid a percentage, maybe $95, regardless of who won.
American bookmakers favor disproportional vig, where one side of the wager is larger than the other. The fee is built into both sides of the equation, but disproportional vig allows bookmakers to incentivize one side of the bet with a greater payout.
How money line betting works
The wager is based on the underdog’s likely performance. The more likely someone is to lose, the more incentive bettors need to place wagers on the underdog. Without bets on both sides, the bookmakers must take on the risk of losing directly.
By the same token, the more likely a competitor is to win, the less incentive bettors need to stake wagers on that competitor. Bookies may adjust the odds up or down as more wagers are placed on one side or another.
Bookies prefer to stay in the middle, earning profit from commissions for balancing wagers on both sides. To cover all the action they give, bookies may lay off some bets with other bookmakers, thus reducing their risk for covering customers’ bets.
Many sports bettors calculate profit potential or potential profit for money line wagers with two simple formulas.
When betting on the underdog, potential profit = wager x (positive odds / 100).
Potential profit for a $10 wager at +200 odds = 10 x (200 / 100) = 10 X 2 = 20.
When betting on the favorite, potential profit = wager / (negative odds / 100).
Example: Potential profit for $10 wager at -200 odds = 10 / (200 / 100) = 10 / 2 = 5.
Because the bookie holds both wagers, the payout equals the original wager plus winnings.
How odds work in sports betting
There are three ways to set the odds for a wager.
American bookmakers prefer the money line odds method using negative and positive numbers described above.
British bookmakers prefer to use fractional odds, which are also used in horse racing. The fractional odds system never uses negative numbers. The fractional ratio represents how much the bettor wins (left side) compared to the bettor’s wager (right side).
The third way to denote odds is called the decimal method. Decimal odds are used outside of the United States and Great Britain. Sportsbooks may use the terms “European odds,” “digital odds” or “continental odds” instead of decimal odds.
Decimals represent how much bettors win compared to their wager.
Converting American odds to decimal odds requires two formulas:
- If the American odds are positive, divide the value by 100 and then add 1.
- If the American odds are negative, divide 100 by the absolute value then add 1.
If the bettor must stake $200 to win $100, then the decimal odds are given as 1.5. If the bettor must stake $100 to win $100 the decimal odds are 2. And if the bettor must stake $50 to win $100, then the decimal odds are 3.
Are money line bets good or bad?
Money line bets are straightforward wagers on the outcome of an event. They are an all-or-nothing proposition.
One advantage of money line betting is its simplicity. If you like the odds, you make the bet and wait.
Another advantage of money line betting is that it doesn’t require much thought. The oddsmakers have already worked out who is most likely to win and factored that into the stakes.
Money line bets make it easy for you to see which contests are very uneven. The odds provide a fast way to decide if looking for point spreads or other bets offers a better wagering experience.
Because bettors must wait for sporting events to be played to conclusion, money line bets make it easy to “bet and forget.” It’s a more relaxed form of betting for many people.
One disadvantage of money line betting is the inflexibility of the wager. Bookmakers offer alternative bets such as point spreads to entice bettors who want a little more flexibility.
Another disadvantage of money line betting is that the bettors don’t set the odds. The simplicity of these wagers may not be enough for people who want to adjust their risks.
Sports bettors who want to enjoy real-time gambling are more likely to move on to other types of bets because money line bets take so long to resolve. Prop bets are popular with gamblers who want to feel more engaged during sporting events even if they make the bets well in advance of the games.
How are money line odds calculated?
The professional oddsmakers employed by bookies are called “traders.” Their jobs are somewhat like actuaries in the insurance industry. Both oddsmakers and actuaries are expected to estimate risks or likely outcomes of events and assign some sort of probability estimates.
A sports betting trader might determine that two teams or athletes are evenly matched based on their season records, performance statistics, injuries and past performance against other opponents.
But the bookmakers cannot earn a profit if they offer even-money bets, so they must pick a favorite. They may choose the competitor with the larger number of wins, or public interest in one side or another may provide the traders with a demand factor.
The traders must be thoroughly versed in the sports for which they set the odds. They may rely on intuition for making close calls, but their knowledge and research play vital roles in setting the odds.
To bring in enough bets on both sides, the bookmakers must decide where bettors are more willing to risk their money.
So much of sports betting vocabulary is based on money line bets and their derivatives that every tutorial on sports betting begins with an explanation of money line bets. So many people bet on sports that betting expressions like “odds on favorite” are now used to describe things outside of sports and sports betting.
Their all-or-nothing simplicity makes money line bets very appealing for gamblers of all levels of experience. Bookmakers leverage money line bets in an open and transparent way. Everyone understands the bookie earns a little money on each wager.
Despite the apparent simplicity of the system, money line betting succeeds because of the expertise and math required to set the odds. Because of their professional staffs, bookmakers have an advantage over bettors who set up their own bets. Gamblers trust oddsmakers to assess the probabilities as well as can be expected.
The money line wager has proven its’ worth over time. It is a fair method of staking a wager on a sporting event, and the rules of money line wagering are easy to learn and understand.