## How do Money Line Odds Work? Part I

September 12, 2010 2 Comments

Have you ever wondered how much a bet cost or how much a bet will payout when betting a money line? Or, how to determine the implied probability of money line odds? In this two-part post I will attempt to answer both of these questions. We will need to do a bit of prep work. Here we go.

**Money Line Basics**

A money line is the price/payout for betting on one team to win. Unlike a point spread, which gives the bettor a number or points plus or minus from a tie, the bettor must only select who will win the game or match. In the case where a draw is possible (e.g. Soccer), there is a money line for a each team to win and the draw.

Money line odds are displayed in two ways, positive and negative. For example, a positive money line might be+125 for an underdog. In the same game, the favorite would be -135; the negative money line. An even money line would be +100 or -100. Generally, displayed as +100 but some bookmakers use -100. Both teams won’t be even, as the bookmaker needs to make a profit. When one team is even, the favorite will be -110, give or take a few points.

In the US, you will normally see the price of a point spread and over/under bet also expressed in money line format. For example, an NFL game has an over/under line of 37 and the expressed price is -110. Generally, when a point spread or over/under bet moves to -130 or +120, the bookmaker will adjust the point spread or total points up or down and the associated price for both sides back to -110.

*Money Line Cost and Payout*

Betting a money line is confusing. A negative money line (e.g. -125) is even more confusing. To explain how money lines work, I will use an example from September 12, 2010 Major League Baseball; the New York Yankees (+155) at the Texas Rangers (-165). In this example, the Yankees are the underdog and the money line for them to win is +155. The Rangers are the favorite (because Cliff Lee is pitching at home) and the money line for them to win is -165. For simplicity, we will use $10 betting increments.

Let’s say you think the Yankees will win and want to bet on them. Your betting unit is $10 and the money line is +155. This is the simple example. Your bet will cost $10 and the payout would be $15.50 plus your investment. That means your total return would be $25.50 and your profit would be $15.50. In general terms, on a positive money line divide the line by 100 and multiply that number by your bet amount to get the winning bet profit. Here is the example:

**Yankees +155 with a $10 betting unit**

**+155/100 = 1.55 ==> 1.55 x $10 = $15.50 ==> $15.50 profit + $10 bet = $25.50 total return**

Now for the hard part; the negative money line or the favorite. In this case, the Texas Rangers are the favorite at -165. If you wanted to win 1 betting unit (i.e. $10), you would simply divide the money line by 100 and multiply that number by $10. This yields a $16.50 bet cost to win $10. Here is the example:

**Rangers -165 with a $10 betting unit**

**-165/100 = 1.65 ==> 1.65 x $10 = $16.50 bet ==> $16.50 bet + $10.00 profit = $26.50 total return**

*[A slight variation on the negative money line. If you wanted to just bet your $10 betting unit, you would again divide -165 by 100 to get 1.65. Now divide your $10 bet by 1.65 for $6.06. That would be your profit]*

As you get more familiar with money lines, these calculations will seem simple. You can likely do these in your head, but I use a spreadsheet (Google spreadsheets) with these formulas populated so I can simply plug-in the money lines and my win probability. This allows me to focus on handicapping and not waste valuable time on note taking.

This was part I of a two-part series. In part II, I will explain how to calculate the implied probability from a money line and how to evaluate implied probability against estimate win probability. I will also include a spreadsheet example. *[Feel free to send any questions or clarifications to derekbets@gmail.com]*