Implied Probability

Implied probability is the likelihood of an outcome happening, worked out from the odds a sportsbook is offering. It turns odds into a percentage, giving you a clearer sense of what the market thinks about each possible result. Keep in mind, though, that because the bookmaker’s margin (the juice or vig) is baked into the odds, the implied probabilities for all outcomes in a market add up to more than 100%. That amount above 100% is the overround — the sportsbook’s built-in edge.

To turn decimal odds into implied probability, divide 1 by the decimal odds and multiply by 100. With American odds, the formula changes depending on whether the number is positive or negative. For negative American odds (like -150), the implied probability is the absolute value of the odds divided by (the absolute value of the odds plus 100). For positive American odds (like +200), it’s 100 divided by (the odds plus 100).

Getting a handle on implied probability really matters, because it lets you stack the market’s view up against your own read on how likely an outcome truly is. When your estimate comes in higher than the implied probability, the bet might offer positive expected value.

Example

A sportsbook lists a tennis match with Player A at -200 and Player B at +170. Converting to implied probability:

• Player A: 200 / (200 + 100) = 66.7%
• Player B: 100 / (170 + 100) = 37.0%

These probabilities add up to 103.7%. That 3.7% excess is the bookmaker’s overround. The true (no-vig) probabilities work out to roughly 64.3% and 35.7%. If you reckon Player B has a 40% chance of winning — higher than the market’s implied 37% — then the bet on Player B may be value.

Key Points

• Odds are probabilities in disguise: Every set of odds maps to an implied probability. Learning to switch between the two helps you judge whether a bet is fairly priced.
• The overround inflates probabilities: Because of the vig, implied probabilities across all outcomes in a market always total more than 100%. Strip out the overround and you’re left with the true or fair probabilities.
• Comparing to your own estimates reveals value: A bet has positive expected value when your assessed probability for an outcome beats its implied probability after you account for the margin.
• Lower implied probability means higher potential payout: Longshots carry low implied probabilities and high odds, while heavy favorites carry high implied probabilities and low odds.