Behind the counter, "decimal odds vs american odds" traces back to an estimate. Every price a bookmaker offers begins as an estimate of probability and ends as a number with a margin added. The estimate comes from data, models and traders; the margin comes from the business. Knowing how the two are combined explains why prices move, why they differ between books, and why the chances they imply never add up to exactly a whole.
Do betting odds add up to one? The implied probabilities of every outcome in a market would, if the prices were fair. In practice they add up to more, often one hundred and four or one hundred and five per cent on a two way market and more on markets with many outcomes. That excess is the overround, the book's margin, and it is the reason a bettor backing every outcome loses money for certain.
Are betting odds accurate? As forecasts, closing prices are well calibrated: outcomes priced at a fifty per cent chance happen close to half the time across many events. As prices, they are deliberately a little short of fair. Betting odds are different in different countries mostly in notation and in margin: decimal, fractional and American formats show the same chance, while books serving smaller markets tend to add a wider cut.
News such as injuries, lineups or weather moves them, and so does money, with stakes from sharp bettors shifting prices faster than casual ones.
The amount by which implied chances across all outcomes exceed one hundred per cent, often around four or five per cent on a two way market.
A trading team or a model estimates the chance of each outcome from form, ratings and past results before any margin is added.
The book shortens the side taking most stakes and lengthens the other, so it is never heavily exposed to a single result.
By the start, the closing price has absorbed everything the market knows, so across many events it forecasts outcomes better than the opening one.
The book shrinks every price slightly below fair, so the return on a winning bet is a little smaller than the true chance deserves.