The term isn't solely meant for teams with almost no chance to win, but in fact anyone who is not the favourite to come out on top. For example, if Manchester United are priced at 1.95 and Chelsea are 3.25, then Chelsea qualify as the 'underdog' - they have the least chance of winning.
The term underdog is quite often mis-interpreted in the betting world as meaning a side has little to no chance of winning and is part of a culture that leads to people's willingness to only bet on teams that are expected to win. Many people believe that betting the underdog provides more value opportunities provided the correct research is carried out first.
Lower success rates can still mean reasonable profits
If you increase the odds that you are betting on, winning is going to lead to bigger returns. Betting on an underdog allows you to do this. Bigger returns may mean you can afford to lose more bets in the long run, although you'll need to strike that balance to remain profitable. The bigger the underdog, the lower your implied chance of success, so if you do it regularly, there's an increased chance of longer spells without a win.
Bookmakers typically allow the market to dictate the price, and unsurprisingly the favourite will be backed much more than the underdog. This especially applies to more recreational bettors. Because of this, bookmakers will often have to increase the price of the underdog to try and balance their books - this can create value opportunities.
Away from betting, everyone loves an underdog. Think Leicester City to win the Premier League in 15-16. Betting wise though, they're not as popular. Why? Because most people prefer top back the favourites, so when an underdog wins, more people see their bets lose.
You'll often see professional sports bettors backing the underdog, though for larger underdogs, they may use Asian Handicap to both lower their odds and increase their chance of winning their selection.
Advantages of betting on the underdog
Some would say that a common mistake in betting is to bet on the name and reputation of a club rather than what form, team news and statistics tell you.
One advantage to betting on an underdog as opposed to a home favourite can be the odds. A problem that a lot of bettors encounter is that they are too easily led to believe the odds published by bookmakers. Just because a bookmaker suggest a team or player are 1.25 to beat their opponent it doesn't mean they 100% will. Those odds translate to 80% chance of winning, which leaves a 20% chance of an upset. Bet on this outcome 100 times, and you may win 20 them. If you find and edge, win 30 of 100 and you'll be profitable in the long term, even with only a 30% win rate.
The reality is that at odds of 1.25, they're the more likely victors, But finding value and making a longer term profit with such short prices is difficult - lose 20% of bets at odds of 1.25 and you'll never make a profit.
The disadvantage of betting on the underdog
The major drawback of betting the underdog is that typically you'll win fewer bets than backing the favourite. This isn't too big of a problem, but can come as a shock for some, who see a few consecutive losers and lose discipline. Winning 25% of your bets is awesome if your odds are 5/1 (6.00) and higher, so don't let losing streaks distract you from the main goal - making a long term profit from sports betting.
Although betting on underdogs may result in fewer overall wins compared to backing the favorites, it is important to maintain discipline and focus on the long-term goal of making a profit in sports betting.
If you're feeling comfortable with terminology, it might be the right time to learn about the different bet types and how to use them to your advantage.