Glossary

Glossary of commonly used terms in betting, esports, and quantitative analysis:

Arbitrage: Simultaneously taking opposite sides of a trade or bet on different platforms to take advantage of relative mispricing without any exposure to the outcome of the trade or event.
Best-of-X: (often abbreviated e.g. bo3, bo5) A multi-game match in which a maximum of X games are played, until one team has won more than half. X must be odd to determine an absolute winner, but often bo2 matches are played in the context of leagues where overall record is tracked throughout a season and individual matches can result in a tie. In this case, both games are always played.
Bookmaker / Oddsmaker: An entity that allows you to place bets on events at set lines/odds, and makes a profit by taking a vig.
Expected Value: The average outcome of a random event, if it was repeated infinitely; basically a generalization of weighted average given probabilistic weights. See this article for more information and how it applies to betting.
Favorite: The team in an event that is more likely to win; i.e. its probability of winning is greater than 50%.
Gambler's Fallacy: A logically false belief that an event that has happened more frequently than normal in the past is less likely to happen again in the future, and vice versa. For example: "the roulette has turned up black four times in a row, it's bound to land on red now!" In reality, these events are statistically independent and their probabilities do not change.
Hedging: Placing multiple bets (often on different outcomes, typically at different odds) to limit your exposure to the exact outcome.
Implied Odds: The probability of an outcome, derived from the odds offered by an oddsmaker on it. See this article for an in-depth explanation of how this is calculated.
Kelly Criterion: A formula for determining the theoretical optimal size of a bet, in order to maximize expected future growth of capital.
Law of Large Numbers: A theorem that states that the average result of a series of random trials should approach the expected value as the number of trials increases.
Monte Carlo Simulation: A method for computationally solving probabilistic problems by repeatedly simulating random processes. Especially useful in situations where prior results inform future outcomes, such as in tournaments.
Odds: the payout offered by an oddsmaker for each side of a bet, in three common forms:
- American Odds: e.g. +234, -190. If positive, the amount of profit (net of stake; see payout and profit) from a $100 stake. If negative, the stake you would have to put up to win $100 in profit. Even money (i.e., implies 50/50, see implied odds) at +100, which is equivalent to -100.
- Decimal / European Odds: e.g. 1.46, 3.81. The payout (including initial stake) from a $1 bet. So, 1.46 means you get your $1 back, plus an additional $0.46. Even money (50/50 implied) at 2.00.
- Fractional Odds: e.g. 4/1, 1/3. Also written out as, e.g., four-to-one. The numerator is the profit you get (net of stake) for a stake equal to the denominator. Even money (50/50 implied) at 1/1.
Parimutuel Bet: Also known as pool betting, a type of bet where all bets of a particular type or side are placed together in a pool, and the winning pool pro-rate splits the money in the losing pool.
Parlay: A type of bet in which multiple bets are strung together sequentially before any of them happen. All bets must be won to get a payout, but the payouts are multiplicative (equivalent to just taking your winnings from the first bet and placing it all on the second bet, etc., but with the ability to do so up front on simultaneous events).
Payout: The amount of money returned to you by an oddsmaker for a won bet; this includes your initial stake. For example, a payout of 1.46 means you get your initial bet back, plus 46% of it in profit.
Profit: The overall gain (or loss) of money from a bet, net of your initial stake. If you bet $100 and get paid out $146, you're up $46 from where you started, so your profit is $46.
Quantile / Percentile: The percentage of the distribution of possible outcomes that is below a given outcome. For example, a 90th-percentile outcome for a random process means that there was a 90% chance of having a worse outcome.
Stake: The size of your bet, that you have to pay up front when placing your bet.
Statistical Independence: The property of unrelated events that their outcomes do not depend on the outcomes of other events. For example, the odds of getting a heads on a coin flip does not depend on the results of prior flips (see Gambler's Fallacy).
Underdog: The team in an event that is less likely to win; i.e. its probability of winning is less than 50%.
Variance: The deviation of a random variable from its expected value. Colloquially, also used as shorthand for the spread of outcomes from a random event.
Vig: The oddsmaker's rake; quoted as a percentage of the total stakes on both sides of a bet that the oddsmaker keeps for themselves.