Implied probability

Implied probability translates betting odds into the probability the odds represent. For decimal odds, it is calculated as 1 / decimal odds; for American odds, the formula differs depending on whether the number is positive or negative. A team priced at decimal odds of 2.00 implies a 50% chance of winning; odds of 1.33 imply roughly a 75% chance.

This differs from a bookmaker's true assessment of an outcome's likelihood, because published odds also embed a profit margin, often called the overround or vig. Adding the implied probabilities of every outcome in a market typically sums to more than 100%, with the excess representing that margin rather than a real probability of an extra outcome occurring.

Bettors and analysts use implied probability to compare odds across bookmakers, to judge whether a bet offers expected value, and as a baseline for assessing closing line value, since both the opening and closing lines can be expressed on the same probability scale. The common pitfall is treating a single bookmaker's implied probability as the market's best estimate without removing the overround first, which overstates every outcome's true chance and can make a bet look more attractive than it actually is.