Implied Probability

Implied probability is the likelihood of an outcome based on the odds a sportsbook is offering. It turns odds into a percentage, giving you a clearer read on what the market thinks about each result. But because the bookmaker’s margin (juice or vig) is built into the odds, the implied probabilities for every outcome in a market add up to more than 100%. That extra bit over 100% is the overround, which is the sportsbook’s built-in edge.

To turn decimal odds into implied probability, divide 1 by the decimal odds and multiply by 100. For American odds, the formula changes depending on whether the number is positive or negative. For negative American odds (like -150), take 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 implied probability is key because it lets you stack the market’s view against your own read of how likely something really is. When your estimate is 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%

Those probabilities add up to 103.7%. The 3.7% extra is the bookmaker’s overround. The true (no-vig) probabilities are roughly 64.3% and 35.7%. If you think Player B has a 40% chance to win, higher than the market’s implied 37%, then a bet on Player B might be value.

Key Points

• Odds are probabilities in disguise: Every set of odds matches an implied probability. Learning to switch between them helps you spot whether a bet is fairly priced.
• The overround inflates probabilities: Thanks to the vig, implied probabilities across all outcomes always add up to more than 100%. Strip out the overround and you get the true or fair probabilities.
• Comparing to your own estimates reveals value: A bet has positive expected value when your own read on an outcome beats its implied probability once you account for the margin.
• Lower implied probability means a bigger potential payout: Longshots have low implied probabilities and high odds, while heavy favorites have high implied probabilities and low odds.