What Is Implied Probability In Sports Betting?

If you’re a fairly new or casual bettor, you might not have heard the term implied probability. If all you want to do is to have the odd flutter on a major match, you probably have no need to understand all the complicated details and calculations that can go into sports betting.

But if you decide to have a go at Matched Betting, or if you’re considering value betting, it’s best to have a more in-depth understanding of how odds relate to probability. When you start to look into the detail and mathematics of sports betting, it can sometimes feel overwhelmingly complicated - but don’t worry, we’ll lay it all out clearly and straightforwardly, so by the end of this article you know all there is to know about implied probability in sports betting.

What Is Implied Probability?

Implied probability refers to the likelihood of an outcome implied by the odds from a bookie.

You probably already know that odds and probability are deeply intertwined. In common parlance, ‘what are the odds of that?’ is used to mean ‘what is the likelihood of that happening?’, as though they mean exactly the same thing.

That isn’t quite the case, of course. What odds directly represent are the winnings a bettor can expect to receive if their bet is successful. However, the odds offered on any event are heavily dependent on what a bookie considers to be the likelihood of any outcome - with odds being higher for unlikely outcomes, and lower for more likely outcomes.

This means that we can work out the probability implied by any odds, based on just how high or low they are.

How Do You Calculate Implied Probability?

There are a few different types of odds, and a slightly different calculation you need to make for each. You can find the formulas for each of the main three odds formats used in the western world (fractional, decimal and moneyline - check out our full guide to reading betting odds for a full explanation of each) below.

Fractional odds

To turn fractional odds into probability (as a percentage), you can use the following formula, with the odds expressed as x/y:

(y / (x + y)) * 100

So for example, you would do the following calculation for odds of 2/1:

(1 / (2 + 1)) * 100

(1 / 3) * 100

0.33 * 100 = 33

= 33% probability

Decimal odds

Decimal odds are perhaps the easiest to convert to probability - the formula is simply 100/odds.

For example, for decimal odds of 4.0, you would do the following calculation:

100/4 = 25

= 25% probability

Moneyline odds

Moneyline odds are probably the most awkward to convert to probability, as you have two different calculations to perform depending on whether the odds are positive or negative.

Underdogs

For underdogs (with positive odds), we use a similar method to fractional odds. First, divide the odds by 100, and then use the formula (1 / (x + 1)) * 100 to work out the probability.

For example, for moneyline odds of +400, you would do the following calculation:

400 / 100 = 4

(1 / (4 + 1)) * 100

(1 / 5) * 100

0.2 * 100 = 20

= 20% probability

Favourites

For a favourite, we use the same formula, but then subtract the end result from 100.

For example, for moneyline odds of -400, you would do the following calculation:

400 / 100 = 4

100 - ((1 / (4 + 1)) * 100)

100 - ((1 / 5) * 100)

100 - (0.2 * 100)

100 - 20 = 80

= 80% probability

Odds conversion tools

If all that calculating sounds like a lot of work (which to us it certainly does), the easier alternative is to use an odds conversion tool. All you have to do is enter the odds you have in their current format, and it’ll tell you their equivalents in other odds formats, as well as their implied probability.

How Do Bookies Gauge The Probability Of An Outcome?

As a large part of a bookie’s profit is dependent on their accurately assessing the likelihood of every outcome of any event, they invest a lot of time and money into ensuring their odds are as accurate as possible.

There are a number of factors that go into their calculations, the most significant of which are below:

Performance

Form is one of the most significant factors when it comes to assessing the likelihood of a team or competitor winning an event, and for good reason. If a competitor is clearly having an especially good run, that’s a strong sign that they’re more likely to continue winning, and bookies will lower the odds on that competitor accordingly.

Historical data

Individual performance data is extremely important, but it’s not enough on its own. Bookies have access to enormous quantities of data about every past event in almost any sport - and specifically every previous meeting between any two teams or players. This allows them to fine-tune their odds on that basis.

If a particular player is having an exceptional run, for example, but is about to encounter a player they’re never managed to beat before, the bookies will balance these two factors when assessing the chances of that player winning this time round.

Injuries or suspensions

For team sports, injuries and suspensions can have a huge impact on an otherwise strong team’s chances of winning. If an otherwise strong team can’t field its strongest player, its chances of winning will be appropriately downgraded by a bookie.

Similarly, if a strong individual player is known to be struggling with injury, their otherwise excellent likelihood of winning a match will be reduced on a betting site’s books.

Weather and other environmental considerations

Weather can have a major impact on sports - and while in theory, it should affect all participants equally, that isn’t always the case. A football game postponed by poor weather might result in greater fatigue for the eventual winning team in their next match, for example, while at Wimbledon, hard court specialists may have an advantage if their tennis match is played under a roof, rather than in the open air.

What’s The Difference Between Implied Probability And ‘True’ Probability?

It’s important to note that the implied probability you can work out from the odds offered by a bookie is not the same as the actual probability of that outcome occurring. There are a couple of major reasons for this.

The ‘overround’

This is the method bookies use to build in profit to their odds. When it comes to true probability, the percentage probability of all possible outcomes will always add up to 100%. For example, in a football match between England and Spain, the true probabilities might be as follows:

England to win - 38%

Draw - 21%

Spain to win - 41%

However, the odds you’ll see on a bookie’s site won’t exactly reflect those probabilities. If you were to take this theoretical match and convert the odds offered to probability, you might end up with something like this:

England to win - 2.5 odds = 40% implied probability

Draw - 4.35 odds = 23% implied probability

Spain to win - 2.33 odds = 43% implied probability

As you can see, those probabilities would add up to 106%, which is of course impossible. But that extra 6% is the bookie’s overround, where they make their profit.

When you take out that extra 6% and recalculate the probabilities, you have what’s known as the ‘fair odds’. However, even though the fair odds don’t include the bookie’s margin, that doesn’t mean they necessarily represent true probability either.

Balancing betting

The bookie’s profit margin isn’t the only thing that influences the odds they offer. A bookie’s aim for any event is to have a balanced book, where the volume of betting on all sides of an event is roughly even. This means that, no matter the outcome of the event, they stand to make the same profit regardless.

So, if the betting on a particular event is unbalanced, they’ll adjust the odds to influence bettors’ behaviour. This might mean making a favourite less appealing through lower odds, and an underdog more appealing through higher odds, to encourage bettors to go for the less likely outcome. Or alternatively, they might do the opposite, if a favourite isn’t getting as much traction as a bookie had expected.

As a result of these factors, the implied probability from a bookie’s odds can be quite significantly different from true probability. For the most part, this is what allows a bookie to make its vast profits - but there can sometimes be opportunities for bettors as well, as we’ll see below.

How To Take Advantage Of Implied Probability When Betting

It’s possible for systematic bettors to take advantage of implied probability when betting, primarily through what’s known as value betting. This is the practice of placing bets that are more likely to win than suggested by the bookmaker’s odds.

This doesn’t mean that you have any guarantees of winning your bet, of course, but, over the long term, value bettors are often able to make consistent profits by identifying bets with positive expected value (EV).

There are a few different tools you can use to take advantage of overvalued selections through value betting - click the links for a detailed guide to each:

Steam Chaser

This software alerts you to bets with rapidly dropping odds - indicating that something has changed, making that selection much more likely to win. When this happens, bookies will scramble to amend their odds accordingly - but not every bookie will be as quick to do so as others. If you’re able to get a bet in before a bookie manages to adjust their odds, you’ve got the perfect opportunity to reap the rewards of odds that are higher than they should be, with correspondingly larger profits in the long term.

Extra Places

An extra place offer is when a bookmaker states they will pay out on more places than usual, for example, the top four instead of the normal top three places. By placing an each way bet, and laying both the win and the original number of places, if your horse comes in the extra place, you win your back and lay bets, making for huge profit potential. Outplayed’s Extra Place Master tool identifies selections with positive expected value, allowing you to massively boost your profits in the long run.

Lucky Finder

The Lucky Finder is a tool that tracks down combinations of horses for Lucky 15 bets where the chances of at least some of your horses winning or placing are higher than the odds would imply. This means that you’re statistically very likely to end up making a profit over the long run when using this tool.

It’s worth noting that these are advanced tools for those who are already comfortable with the principles of value betting. If you’re less experienced, we’d advise you to try out Matched Betting first, which has zero risk (when done correctly) and offers guaranteed profits.

Summary

Implied probability is fundamental to the way odds are calculated by bookies, but it’s important not to mistake it for the true probability of an event occurring. Because a bookie’s odds include an overround, and because they will manipulate odds to ensure profits, there can be a significant discrepancy between the implied probability of their odds and the true probability of each outcome of an event.

For the most part, this discrepancy is to the detriment of gamblers, but there are ways for canny bettors to take advantage of it, through what’s known as value betting. However, for the less experienced and/or risk-averse, Matched Betting is an excellent alternative, as it offers guaranteed profits with zero risk.