Implied Probability

Implied probability is the likelihood of an outcome pulled straight out of the odds a book is offering. It turns odds into a percentage, giving you a sharper read on what the market actually thinks about each result. But here’s the kicker: because the bookmaker’s margin (juice or vig) is baked into the price, the implied probabilities across a market add up to more than 100%. That excess over 100% is the overround — the book’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 splits on the sign. For negative American odds (like -150), it’s the absolute value of the odds divided by (the absolute value plus 100). For positive American odds (like +200), it’s 100 divided by (the odds plus 100).

This stuff matters because it lets you stack the market’s read against your own estimate of an outcome’s true odds. When your number tops 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 to implied probability:

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

Those 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 peg Player B at a 40% shot — north of the market’s implied 37% — the bet on Player B may be value.

Key Points

• Odds are probabilities in disguise: Every price maps to an implied probability. Learn to convert and you can tell whether a bet is fairly priced.
• The overround inflates probabilities: Thanks to the vig, implied probabilities across a market always top 100%. Strip out the overround to get the true, fair probabilities.
• Comparing to your own estimates reveals value: A bet is positive expected value when your assessed probability beats the implied probability once the margin is accounted for.
• Lower implied probability means higher potential payout: Longshots run low implied probabilities and high odds; heavy favorites run high implied probabilities and low odds.