Definition
Implied probability is the conversion of betting odds into a percentage that represents the likelihood of an outcome occurring, as priced by the bookmaker. It includes the bookmaker's margin, so the sum of implied probabilities for all outcomes in a market always exceeds 100%. Understanding implied probability is essential for identifying value bets.
How It Works
For decimal odds: Implied Probability = 1 / Decimal Odds x 100. For American odds: if positive, IP = 100 / (Odds + 100) x 100; if negative, IP = |Odds| / (|Odds| + 100) x 100. The total implied probability across all outcomes reveals the bookmaker's overround (margin).
Example
Football match: Home 1.90 / Draw 3.50 / Away 4.20
- Home: 1/1.90 = 52.6%
- Draw: 1/3.50 = 28.6%
- Away: 1/4.20 = 23.8%
- Total: 52.6 + 28.6 + 23.8 = 105.0%
The extra 5% above 100% is the bookmaker's margin. To find the true implied probability, divide each by the total: Home = 52.6/105 = 50.1%.
Why It Matters
Implied probability is the bridge between odds and expected value. By converting odds to probabilities, you can compare the bookmaker's view with your own estimate. If you believe a team has a 55% chance of winning but the implied probability is only 50%, that is a value bet. Without understanding implied probability, you cannot systematically identify edges. It is also essential for comparing odds across different formats (decimal, fractional, American).
Use our odds converter to see implied probabilities alongside different odds formats, and our no-vig calculator to strip the margin and see true market probabilities.