Implied Probability

Implied probability is the chance of an outcome happening as inferred from the odds a sportsbook posts. It converts odds into a percentage, handing bettors a sharper sense of what the market thinks about each possible result. Because the bookmaker’s margin (the juice or vig) is folded into those odds, however, the implied probabilities for every outcome in a market add up to more than 100%. The portion 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. American odds use a different formula depending on the sign. For negative American odds (say -150), the implied probability equals the absolute value of the odds divided by (that absolute value plus 100). For positive American odds (say +200), it is 100 divided by (the odds plus 100).

Grasping implied probability matters because it lets you set the market’s view against your own read of how likely an outcome truly is. When your estimated probability tops the implied figure, the bet may carry positive expected value.

Example

A sportsbook prices 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%

Those probabilities total 103.7%. The 3.7% surplus is the bookmaker’s overround. The true (no-vig) probabilities work out to roughly 64.3% and 35.7%. If you reckon Player B holds a 40% chance of winning, above the market’s implied 37%, then a bet on Player B may represent value.

Key Points

• Odds are probabilities in disguise: Every price corresponds to an implied probability. Learning to move between the two helps you judge whether a bet is fairly priced.
• The overround inflates probabilities: Thanks to the vig, implied probabilities across a market always exceed 100%. Stripping out the overround leaves the true or fair probabilities.
• Comparing to your own estimates reveals value: A bet carries positive expected value when your assessed probability of an outcome clears its implied probability once the margin is accounted for.
• Lower implied probability means higher potential payout: Longshots show low implied probabilities and long odds, whereas heavy favourites show high implied probabilities and short odds.