Implied Probability

Implied probability is the chance of an outcome as extracted from the odds a sportsbook posts. It converts odds into a percentage, clarifying what the market believes about each result. Because the bookmaker’s margin (juice or vig) is embedded in the odds, the implied probabilities across all outcomes in a market sum to more than 100%. The amount above 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 two formulas. For negative odds (e.g., -150), implied probability equals the absolute value of the odds divided by (that absolute value plus 100). For positive odds (e.g., +200), it equals 100 divided by (the odds plus 100).

Grasping implied probability matters because it lets you weigh the market’s read against your own estimate of an outcome’s true likelihood. When your estimate exceeds the implied figure, 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%

These sum to 103.7%. The 3.7% excess is the book’s overround. True (no-vig) probabilities are roughly 64.3% and 35.7%. If you peg Player B at 40% — above the market’s implied 37% — the bet on Player B may hold value.

Key Points

• Odds are probabilities in disguise: Every price maps to an implied probability. Converting between them helps you judge whether a bet is fairly priced.
• The overround inflates probabilities: Thanks to the vig, implied probabilities across all outcomes always exceed 100%. Stripping the overround yields the true, fair probabilities.
• Comparing to your own estimates reveals value: A bet carries positive expected value when your assessed probability tops the implied probability after the margin is accounted for.
• Lower implied probability means higher potential payout: Longshots pair low implied probabilities with high odds, while heavy favorites pair high implied probabilities with low odds.