What Is Implied Probability?
Implied probability is the conversion of betting odds into a percentage chance, representing the likelihood of an outcome implied by the price. For decimal odds it is 1 ÷ decimal odds; the figures across all outcomes sum to more than 100% because of the bookmaker margin.
For decimal odds, implied probability = 1 / odds (e.g. odds of 2.00 imply 50%). For positive American odds it is 100 / (odds + 100); for negative American odds it is −odds / (−odds + 100).
Comparing implied probabilities is the basis of value betting (is the price too generous?) and arbitrage (do the best odds across books sum to under 100%?). The excess over 100% across a market is the bookmaker's margin, or "overround".
Frequently Asked Questions
How do you convert decimal odds to probability?
Divide 1 by the decimal odds. For example, odds of 2.50 give an implied probability of 1 / 2.50 = 0.40, or 40%.
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