Implied Probability

Implied probability is the chance of an outcome occurring as extracted from the odds a sportsbook posts. It converts odds into a percentage, giving bettors a precise read on what the market assigns to each possible result. Because the bookmaker’s margin (juice or vig) is embedded in the odds, however, the implied probabilities across all outcomes in a market add up to more than 100%. The portion above 100% is 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 calculation splits by sign. For negative American odds (such as -150), implied probability equals the absolute value of the odds divided by (the absolute value of the odds plus 100). For positive American odds (such as +200), it equals 100 divided by (the odds plus 100).

Grasping implied probability is essential because it lets you weigh the market’s read against your own estimate of an outcome’s true likelihood. When your estimated probability exceeds the implied probability, the bet may carry 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 price maps to an implied probability. Learning to convert between the two lets 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 out the overround yields the true or fair probabilities.
• Comparing to your own estimates reveals value: A bet holds positive expected value when your assessed probability of an outcome exceeds its implied probability once the margin is accounted for.
• Lower implied probability means higher potential payout: Longshots carry low implied probabilities and high odds, while heavy favorites carry high implied probabilities and low odds.