Understanding Implied Probability: Convert Odds Like a Pro

Every set of betting odds implies a probability. Understanding this concept is fundamental to becoming a more informed bettor and recognizing when odds might offer value.

What Is Implied Probability?

Implied probability is the conversion of betting odds into a percentage. It represents the bookmaker's view of how likely an outcome is to occur, plus their built-in margin (the "vig" or "juice"). This margin is how sportsbooks make money regardless of the outcome.

When you understand implied probability, you can compare the sportsbook's assessment to your own analysis. If you believe a team has a 50% chance to win but the implied probability is only 40%, that's potentially a value bet.

The Formula for American Odds

American odds are displayed as either positive (+) or negative (-) numbers. The formulas differ slightly for each:

For Negative Odds (Favorites)

Implied Probability = |Odds| / (|Odds| + 100) × 100

Example: If a team is -150 to win, the calculation is: 150 / (150 + 100) × 100 = 60% implied probability.

For Positive Odds (Underdogs)

Implied Probability = 100 / (Odds + 100) × 100

Example: If a team is +200, the calculation is: 100 / (200 + 100) × 100 = 33.3% implied probability.

The Vig Explained

If you add up the implied probabilities of all outcomes in a market, the total will exceed 100%. This overage is the vig, or the sportsbook's built-in profit margin. For a standard -110/-110 market, each side has ~52.4% implied probability, totaling 104.8%. That extra 4.8% is the vig.

Practical Application

Use implied probability to make smarter decisions. Before placing a bet, ask yourself: "Do I believe this outcome is MORE likely than the implied probability suggests?" If yes, you might have found value. If no, it's probably best to pass.