Implied Probability

Implied probability is the chance of an outcome as derived from the odds a book offers. It converts odds into a percentage, showing what the market thinks about each result. But because the book’s margin (juice or vig) is baked into the odds, the implied probabilities for every outcome in a market add up to more than 100%. The amount over 100% is the overround – the book’s built-in edge.

To convert decimal odds, divide 1 by the decimal odds and multiply by 100. American odds use a different formula by sign. For negative American odds (such as -150), implied probability is the absolute value of the odds divided by (that absolute value plus 100). For positive American odds (such as +200), it is 100 divided by (the odds plus 100).

Implied probability matters because it lets you compare the market’s view against your own estimate of true likelihood. When your estimate beats the implied probability, the bet may carry positive expected value.

Example

A book lists a tennis match with Player A at -200 and Player B at +170. Converting:

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

These sum to 103.7%. The 3.7% excess is the book’s overround. The true (no-vig) probabilities are roughly 64.3% and 35.7%. If you think Player B has a 40% chance – above the market’s implied 37% – a bet on Player B may be value.

Key Points

• Odds are probabilities in disguise: Every set of odds maps to an implied probability. Converting between them helps you judge whether a bet is fairly priced.
• The overround inflates probabilities: Because of the vig, implied probabilities across a market always sum to more than 100%. Strip the overround to get true probabilities.
• Compare to your estimates for value: A bet has positive expected value when your assessed probability beats the implied probability after the margin.
• Lower implied probability means higher payout: Longshots carry low implied probabilities and high odds; heavy favorites carry high implied probabilities and low odds.