What is Implied Probability? - Smart Concept in Sports Betting

Implied probability is a tool in different types of buying and selling, like stocks and currency. It's used in sports betting such as individual games, future predictions, special bets as well. Let's understand why implied probability is a good thing to know in the betting market.

What is Implied Probability?

Implied probability is like turning regular odds into a percentage, considering the house advantage and showing the real likelihood of an event happening. It's about understanding how probable a betting outcome is based on the given odds for a match.

  • Implied probability is about possible outcomes based on the provided odds.
  • Bettors can figure out implied probability using specific formulas.

How to Calculate Implied Probability

Implied probability is a way to figure out how likely something is to happen in betting.

For example, if a team has odds of 2.50 to win, you can find their implied probability by dividing 1 by 2.50, which gives you 40%.

Bettors use this to find valuable bets. There are different odds formats and formulas that use the calculator to convert them into implied probabilities.

What is an Implied Probability Calculator

An implied probability calculator assists you in determining the likelihood of winning based on the moneyline odds. By inputting the odds into the calculator, you can get both the implied probability and implied odds.

It doesn't matter which odds formats you are dealing with, the calculator will convert them into implied probability and give you insights into the chances of different outcomes. Here's how it works

If the odds have a “+” sign, just enter the number without the sign.

For example, if the Jaguars have +105 odds, you type “105” into the calculator. After clicking “Calculate,” it shows you that Jacksonville's implied winning probability would be 48.78%.

For “-” moneyline odds, include the “-” sign before the number.

For instance, if the Las Vegas odds are -115, you input “-115” into the calculator, and it calculates a 53.49% implied winning probability for the Raiders.

Implied Probability Example

Imagine there's a basketball game between Team A and Team B. The odds for Team A winning are 2.00. To find the implied probability, you'd use the formula

Implied Probability = 1 / Odds

In this case, it would be 1 / 2.00, which equals 0.5 or 50%.

So, the implied probability of Team A winning is 50%. This means the betting market suggests there's a 50% chance that Team A will win the game. If you believe Team A has a better chance than 50%, you might see this as a potentially valuable bet. If you think their chances are less than 50%, you might consider it a less favorable bet.

Implied Probability in Sports Betting

To determine how likely a sports bet is about to happen, you can use a formula to change the odds into a percentage. This percentage shows you the chance of an outcome compared to other possibilities, just based on the numbers. Implied probability helps you see the odds more clearly.

Let's use Smarkets odds for the 2016 Australian Open final between Andy Murray and Novak Djokovic as examples

  1. Djokovic's Odds:
    • Decimal odds: 1.20
    • Fractional odds: 1/5
    • American odds: -500
    • Implied probability: 83.3%
  2. Murray's Odds:
    • Decimal odds: 5.50
    • Fractional odds: 9/2
    • American odds: +450
    • Implied probability: 18.1%

Implied Probability Formula

Converting Decimal Odds to Implied Probability
  • Use the formula: (1 / decimal odds) * 100 = implied probability
  • Example for Murray: (1 / 5.50) * 100 = 18.1%
Converting Fractional Odds to Implied Probability
  • Use the formula: denominator / (denominator + numerator) * 100 = implied probability
  • Example for Murray: 2 / (2 + 9) * 100 = 18.1%
Converting American Odds to Implied Probability

For Negative American Odds:

  • Use the formula: Negative American odds / (Negative American odds + 100) * 100 = implied probability
  • Example for Djokovic: 500 / (500 + 100) * 100 = 83.3%

For Positive American Odds:

  • Use the formula: 100 / (positive American odds + 100) * 100 = implied probability
  • Example for Murray: 100 / (450 + 100) * 100 = 18.1%

In summary, these calculations help us understand the implied probability of winning based on different types of betting odds. Whether presented in decimals, fractions, or American format, they all express the chance of an event occurring.

What is Considered to Be a Good Implied Probability?

Good implied probability means there's a high chance that the outcome you want will happen. For instance, when you see Moneyline odds of -200 or higher, it suggests an implied probability of at least 66%.

If the Moneyline odds fall between -150 and -199, the implied probability is at least 60%. Basically, higher Moneyline odds indicate that the teams are expected to win more often in the match.

Can Implied Probability Help with Different Types of Bets?

While implied probability is commonly used for moneyline odds, it can also be applied to other bet types as well.

For instance, in standard spread or total bets with odds like -110, the implied probability shows that the chances of either outcome are close to a coin flip.

For more practical use, it's beneficial to focus on bets with multiple choices, like in futures markets for different sports or player props. In these scenarios, implied probability can provide more insightful information.

Implied Probability in Futures Betting Market

Implied probability in sports betting for future events. There are more than two possible outcomes. Imagine there's a futures market for the World Cup with teams like Brazil, Germany, Argentina, Italy, and the USA, along with an option for “Field” covering any other team.

Here's the implied probability for each team winning

  • Brazil: 20%
  • Germany: 11.11%
  • Argentina: 10%
  • Italy: 8.7%
  • USA: 2.8%
  • Field: 50%

When we add these up, it goes slightly over 100% to 102.61%, but the house edge is low at only 2.61%. This means the “Field” has a high chance of winning, suggesting that any team other than Brazil, Germany, Argentina, Italy, or the USA has about a 50/50 chance based on these odds.

Implied probability is in various markets, including sports betting. It helps you understand the likelihood of an event based on the given odds. If you spot a team with a low implied probability but believe they could pull off a surprise, it might be a good bet.

Keep in mind that bookmakers are okay with accepting bets on underdogs or unlikely teams. They factor in their advantage in the odds, and your winnings usually come from other bettors who took the risk on the favorite. So, be cautious when betting.