Implied Probability

Implied probability is the likelihood of an outcome occurring as derived from the betting odds offered by a sportsbook. It translates odds into a percentage, giving bettors a clearer picture of what the market believes about each possible result. However, because the bookmaker’s margin (juice or vig) is built into the odds, the implied probabilities for all outcomes in a market will sum to more than 100%. The amount exceeding 100% represents the overround — the sportsbook’s built-in edge.

To convert decimal odds to implied probability, divide 1 by the decimal odds and multiply by 100. For American odds, the formula differs depending on whether the number is positive or negative. For negative American odds (such as -150), the implied probability is the absolute value of the odds divided by (the absolute value of the odds plus 100). For positive American odds (such as +200), it is 100 divided by (the odds plus 100).

Understanding implied probability is critical because it allows you to compare the market’s assessment with your own estimate of an outcome’s true likelihood. When your estimated probability is higher than the implied probability, the bet may 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%

The sum of these probabilities is 103.7%. The 3.7% excess is the bookmaker’s overround. The true (no-vig) probabilities are roughly 64.3% and 35.7%. If you believe Player B has a 40% chance of winning — higher than the market’s implied 37% — the bet on Player B may represent value.

Key Points

• Odds are probabilities in disguise: Every set of odds corresponds to an implied probability. Learning to convert between them helps you evaluate whether a bet is fairly priced.
• The overround inflates probabilities: Because of the vig, implied probabilities across all outcomes in a market always sum to more than 100%. Removing the overround gives you the true or fair probabilities.
• Comparing to your own estimates reveals value: A bet has positive expected value when your assessed probability of an outcome exceeds its implied probability after accounting for the margin.
• Lower implied probability means higher potential payout: Longshots have low implied probabilities and high odds, while heavy favorites have high implied probabilities and low odds.