Implied Probability in Sports Betting: What It Means and How to Calculate It

Bettors can increase their chances of success at the betting window by calculating the likelihood of an outcome by converting the listed odds into percentages for an implied probability.

Unfortunately, we never know the outcome of a sporting event until it’s over. Anything can happen and a lot of times it does, making wagering on sports a crap shoot.

What Is Implied Probability in Sports Betting?

Convert betting odds into a percentage form to get a sportsbook's implied probability. This will differ from site to site since odds vary, but for the most part, the numbers will be close.

The likelihood of an outcome can be determined by comparing the odds to other scenarios. This can also improve a bettor's overall knowledge of the betting markets.

While most often used with moneyline odds, implied probability can be calculated elsewhere and is useful in markets with a wide variety of betting options, such as futures.

Why Implied Probability Matters

Rather than just throwing down on your favorite team, calculating the implied probability of an outcome can help you determine if there is value in the wager, which will help you decide whether or not to take the risk.

This is an important tool for sports bettors who wager regularly and improve their bottom line in the long run.

For casual bettors who like to drop a few bucks around the Super Bowl, implied probability isn’t as crucial, but it’s helpful to understand.

Identifying Value Bets

We’re always searching for value, whether it’s at the grocery store or a favorite restaurant. So why not find value when wagering on sporting events?

There are value propositions out there; they just need to be identified.

The key to determining whether a wager has value is when the probability for a specific outcome is greater than the implied probability assigned by sportsbooks.

Odds assigned by sportsbooks never show the true probability since the house cut is factored in.

Also, odds can shift due to outside influences, so they never show the true probability of an outcome.

Sharpening Your Strategy

There’s an adage in sports betting to always bet with your head and never with your heart.

If followed, this removes all the emotion associated with a bet, which quite often leads to dire consequences. Just because you want your favorite team to win doesn’t mean they will, and the odds reflect that.

Players will also deviate from their betting strategy, looking to take advantage of a heater or recoup losses during a dry spell.

Never let the emotional highs and lows of your betting experience determine how and how much you wager.

How to Calculate Implied Probability in Sports Betting

Converting betting odds supplied by sportsbooks into a percentage representing the likelihood of an event occurring, or not occurring, can offer some perspective.

Simply looking at the odds will give you an idea of what oddsmakers believe, but attaching a percentage puts things in context.

Odds come in three main formats, and there is a way to calculate implied probability for each one to help identify value in a betting market.

American Odds Formula

American odds come in two forms, requiring two separate calculations for implied probability.

For an event with negative (-) odds, the following formula is used: divide odds by (odds +100) and multiply the result by 100.

If the Celtics are -500 on the moneyline, they have an 83.3% implied probability. 500 divided by 600 = 0.83. The result times 100 = 83.3%.

For positive (+) odds, use the following: divide 100 by (odds +100), then multiply the result by 100. The Celtics at +450 gives us this implied probability: 100 divided by 550 = 0.181. The result times 100 = 18.18%.

Decimal Odds Formula

With the breakeven point being two, it’s easy to determine the favorite and underdog using decimal odds.

And there’s only one formula to apply for implied probability, which is the following: (1 divided by odds) times 100.

In this game, the Celtics have odds of 5.50 for an implied probability of 18.18%. 1 divided by 5.50 = 0.181. The result multiplied by 100 = 18.18%. Using the same formula with odds of 1.20 gives the Celtics an implied probability of 83.3%.

Fractional Odds Formula

Another way to display betting odds is in fractional format, with the following formula used to determine implied probability: second/bottom number divided by both numbers, with the result multiplied by 100.

For example, the Celtics have fractional odds of 1/5. Divide 5 by 6 =0.833 multiplied by 100 for an implied probability of 83.3%.

Since odds in any format are just a way of displaying the same chance, the same implied probability is calculated.

Comparing Implied Probability to Actual Probability

Understanding the gap between implied probability and actual probability is where smart bettors find their edge. Implied probability is calculated directly from the sportsbook's odds—it tells you what the bookmaker believes (or wants you to believe) the likelihood of an outcome is.

Actual probability, on the other hand, is your own assessment based on analysis, trends, and data. When your calculated true probability exceeds the implied probability, you've identified potential value.

The table below demonstrates how this comparison reveals betting opportunities and shows how the bookmaker's margin (vig) inflates the total implied probability above 100%.

In this example, the Chiefs offer value because your true probability assessment (60%) is higher than the implied probability (54%). The Bills do not, as your 40% assessment falls short of the 52% implied figure. The 6% vig represents the bookmaker's built-in advantage.

Using Implied Probability to Build a Betting Edge

Bettors can gain an edge in the markets by conducting thorough, unbiased research on teams and players.

An edge refers to the bettor's advantage over the sportsbook by exploring stats and trends. When a bettor determines a difference between an event’s probability and the sportsbook's odds, the gap is referred to as an edge.

Certain sports, leagues, and teams are less of a focus for sportsbooks, leaving those vulnerable to bettors getting an edge on the markets.

When Your Estimate Is Higher

Calculating the edge in sports betting is simple. It requires comparing the bettor's perceived probability with the implied probability from a sportsbook’s odds. This is where research plays a major role.

Sportsbooks use complex mathematical analysis to come up with numbers, but they aren’t exact.

When a bettor believes there’s a 60% chance for a certain outcome and betting odds suggest a 50% chance, your edge is 10%. This simple formula can help determine value and whether or not a bet is worth placing, so research and objectivity are critical.

When There’s No Edge in the Odds

A full understanding of implied probability and edge can boost a bettor’s chances of making decisions with a potential positive return.

The value proposition is calculated by searching for differences between your evaluation of an event and what oddsmakers perceive.

This is harder than it seems, though, since sportsbooks have resources and tools and don’t often make errors.

And wagering on a game just to place a wager isn’t a wise strategy. When you determine through your own calculations that there is no edge or the book has an advantage, it’s wise to avoid that bet altogether.