Implied probability
The chance of an outcome that a set of odds represents, worked out from the price before any margin is removed.
Every price can be turned into a percentage. That percentage is the implied probability: what the odds say the chance of an outcome is. If you think the true chance is higher than the implied one, the bet has value; if lower, it does not.
Formulas
- Decimal odds: 1 / odds.
- American odds, minus price: odds / (odds + 100), using the number without its sign.
- American odds, plus price: 100 / (odds + 100).
Worked example
An NHL game priced at Dallas -175, Nashville +155 (illustrative).
- Dallas: 175 / 275 = 63.64%.
- Nashville: 100 / 255 = 39.22%.
- Total: 102.85%. The 2.85% above 100 is the overround.
To get a no-margin estimate, scale each side down by the total: Dallas 63.64 / 102.85 = 61.9%, Nashville 38.1%.
Using it
Say you rate Nashville at 42% to win. The book's implied 39.22% is lower, so at +155 the bet has positive expected value: 0.42 × 1.55 minus 0.58 × 1 = +0.071, or about 7 cents per dollar staked. That is an estimate, not a promise; your 42% could be wrong.
Crypto note
Implied probability does not change with the currency. A price of 2.55 means the same thing whether you stake CAD, BTC or USDT.