How the implied probability calculator works
Every price is a probability in disguise. Implied probability is the chance of an outcome that a bookmaker's price assumes, margin included. Comparing it with your own estimate is the whole question of whether a price is worth taking.
- Convert the price to decimal odds if it is not already.
- Implied probability is 1 divided by the decimal odds, as a percentage.
- Across a market the implied probabilities add up to more than 100%; the excess is the bookmaker's margin.
Worked example
A price of 2.10.
- 1 ÷ 2.10 = 47.6%.
- In fractional terms that is 11/10; in American, +110.
If you believe the true chance is 50%, this price is value; if you believe it is 45%, it is not.
Questions
- What is implied probability in sports betting?
- The chance of an outcome that a price implies: 1 divided by the decimal odds. It is what you are being asked to believe by taking the price.
- How do you convert American odds to implied probability?
- For positive odds, 100 divided by (odds + 100). For negative odds, the absolute odds divided by (absolute odds + 100). +110 is 47.6%; −110 is 52.4%.
- Why do the probabilities in a market add to more than 100%?
- Because the bookmaker prices every outcome a little short. The amount over 100% is the margin, and it is why a fair price is always a little bigger than the offered one.
