When you see a list of horse names with different numbers quoted next them, these numbers are the odds. They are normally displayed in fractions, example 10/1. This system of displaying the odds is commonly used by bookmakers.
Let us go back to the fraction 10/1 and find out what it means. The 10/1 quoted is the net total to be paid out the winning bettor, which is relative to his wager. On odds of ten-to-one, the bettor would profit a L100 profit from a L10 stake. The bettor likewise stands to get back his original stake, thus he will make a total of L110 from the bookmaker.
What if the odds are 1/1? One-on-one is also referred to as ‘evens.’ It basically means that the bettor will get back the same amount of money as wagered. If you bet on the football evens of L10, you will also get back the same amount. Sounds silly? Not really because you will receive the original amount you bet. This means that if your horse wins, you will get the total amount of L20 from the bookmaker.
Do not confuse the odds 1/4 (one-to-four) with 4/1 (four-to-one). With the 1/4 odds, you are actually getting less than evens money! So, if you bet L10 bet at 1/4, the return money is only L2.50. With the original L10 bet returned to you, your net total is just L12.50.
So, who makes the odds? It is not the bookmakers, contrary to popular notion. Ultimately, it is the bettors who put stakes on the horses that decide the odds. If you are watching the race on television or at the racetrack, you will notice that minute by minute the odds are changing. This is because more people are putting their bets on one horse than another.
Meanwhile, the bookmaker will have to make some adjustments if he wants to make a profit. If too many people were starting to bet on a specific horse, the bookmaker would reduce the odds as a way of discouraging bets on that horse. Conversely, he would increase the odds on other horses to encourage people to bet on them.
If the bookmaker’s calculation is right, he stands to rake in profit no matter which horse wins. This is known as an over round book. All bookmakers employ this over roundness to ensure profits for themselves.