Sports Betting

Guide

Understanding the Concept of Implied Probability Betting

Dive into the world of implied probability betting and learn how to convert betting odds into implied probabilities. Discover how understanding these probabilities can help you make informed betting decisions and identify value in various sports bets.

James Pacheco

Sports Betting Editor

Last Updated: 2024-07-03

Fact checked by:

A. Tzamantanis

Sports Betting Editor

7 minutes read

Image Credits: Unsplash

Table of Contents

Anyone navigating through a Sportsbook or actually placing bets will come across odds on thousands of different outcomes, whether they’re expressed as fractional, decimal, American odds or some other format. Many of the best sports betting sites allow you to view odds in more than one format so that customers have a choice as to what suits them best.

But what do those odds actually mean? How can you tell what are the mathematical chances of that bet winning at those odds? The answer is you can convert odds into the implied probability of that event happening. Understanding probability in sports helps you know what the chances of each bet you place are in terms of it going on to win.

What is Implied Probability?

Whether you’re a gambler or not, most people will find it very easy to get their head around the concept that a horse that is priced up at 7/1 has a one-in-seven chance of winning the race.

But converting betting odds to implied probability allows you to visualise those odds as a percentage rather than just as odds.

Whatever you’re betting on at any given Sportsbook, whether it’s a football match or a tennis player, all those odds can be converted into implied win probability. So that’s all odds are: the Sportsbook giving you their opinion on the chances of a named event occurring. Then it’s up to you to decide whether you think it’s a good bet at those odds and worth investing in, or not.

Why odds aren’t the exact probabilit

We’ll come to how to convert betting odds into implied probability in a second but first let’s just point out that both the odds and the implied probability aren’t the exact chances of an event occurring.

Let’s take the coin toss in cricket as an example. As everyone knows, there’s a 50/50 chance of it being heads or tails; so the chances of England winning the toss against India are evens in terms of odds and exactly 50% in terms of probability. Except a bookmaker won’t offer you evens/50% when placing that bet. They might offer you odds of 1.85 or 1.9. That’s because of the vigorish (vig), also known as the house edge.

That’s the ‘cut’ the bookie takes for being in business and providing you with a service and it’s why Sportsbooks are profitable.

So even though the odds on England winning the toss are 1.9, implied probability of 52.6%, the actual implied probability is 50%. In other words, the house edge has made the odds shorter than they actually should be and, in the process, distorted the actual implied probability. So, odds give you a very good indication of an event happening but not the exact probability.

Calculating Implied Probability

To convert betting odds into implied probability requires you to use the implied probability formula.

Let’s say it’s a tennis match between Carlos Alcaraz and Casper Ruud with Alcaraz 1.2 and Ruud 5.5.

The implied probability formula is always: (1/decimal odds) * 100 = Implied probability.

Let’s start with Alcaraz:

(1 / 1.2) is 0.8333 * 100 = implied probability of 83.3%

And now Ruud:

(1 / 5.5) is 0.1818 = 18.1%.

The formula can be used to work out the implied odds on any type of bet.

So, if it was a points spread in an NFL match, it might look something like this:

Miami Dolphins -12.5 points @ 1.9
Philadelphia Eagles + 12.5 points @ 1.95

Let’s start with the implied probability of Miami overcoming a 12.5-point handicap:

(1 / 1.9) is 0.526 * 100 = implied probability of 52.6%

And now Philadelphia to stay within the handicap:

(1 / 1.95) is 0.512 * 100 = implied probability of 0.512.%

So, Miami have a slightly higher implied probability of being the winners on the point spread than Philadelphia do.

Using Implied Probability for Advantage

So now you know how to calculate implied probability, why does it matter? The answer is it allows you to make good betting decisions based on betting value.

Let’s say that after considering all the main factors such as players available, recent form, group opponents, the manager, past tournament form and a few others, you think Brazil have a 25% chance of winning the 2026 FIFA World Cup. That translates into odds of 4.0.

Now you check different Sportsbooks for the odds on Brazil winning:

Brilliant Bookie offers odds of 3.5 on Brazil (implied probability 28.6%): In this case the odds are shorter than you think they should be, and the implied probability is higher. So, you won’t get paid out as much as you think you should if Brazil go on to win, meaning it’s a poor value bet based on your own calculations.
Better Bookie offers odds of 4.5 on Brazil (implied probability 22.2%): Here the odds are bigger than what you make them, and the implied probability is lower. So, the payout if Brazil win will be bigger than what you think it should be and you have a good value bet, so you should back it.

Limitations of Implied Probability

First things first, when working out the odds and implied probability of something happening, you should always take into account as many factors as possible. These will obviously differ from sport to sport. For tennis they might be:

•    Player’s ranking.
•    Recent form.
•    Head-to-head record against that opponent.
•    Record at that tournament.
•    Fitness levels including any recent injuries.
•    Overall record on that particular surface.

So, you should consider all these and as many additional ones as possible.

The other thing to remember is that odds and implied probability aren’t an exact science. If you backed a 5/1 shot five times, it wouldn’t necessarily win exactly one out of those five times as the odds suggest. Also, remember that because of the house edge, a 5/1 chance doesn’t have a 16.7% implied probability as such; it’s actually less than that because the bookie’s odds are always a bit shorter than they should be. The actual odds of it winning might only be 15%.

One thing to be aware of are short odds-on shots. It may seem like a 1.1 chance, implied probability 90.9% is the equivalent of buying money but strange things happen in sport and hot favourites don’t always deliver. You’re better off betting based on value where odds are bigger than they should be than assuming short-priced favourites always go on to win.

James Pacheco Sports Betting Editor

James has been writing about cricket, football and tennis betting for the best part of 20 years for some of the biggest operators, websites and publications in the industry. Heroes and heroines include Paul Scholes, Chris DiMarco, Anastasia Myskina, Richard Gasquet, Nat-Sciver Brunt and Kumar Sangakarra.