Using Implied Probability for Sports Betting

What is Implied Probability?

Implied probability is the conversion of sportsbook odds into percentages. It gives you an idea on how bookmakers view a team’s chances of winning. 

For example, implied probability would show you that +150 odds translate into a 40% win probability.

You can compare these percentages to true probabilities based on your own research and spot potential inefficiencies. 

A bookmaker might have the Boston Celtics at -200 odds (66.7% win probability). If your research indicates the true odds are -300 (75%), you’d gain value on this bet.

Implied probability is also useful for separating a sportsbook’s profit margin—or overround—from the bookies’ listed odds.

For instance, you might run the implied probability formula on two teams and find they have 62% and 42.5% probabilities. These numbers add up to 104.5%, indicating a 4.5% overround (a.k.a., vig) for the sportsbook.

How to Calculate Implied Probability

The implied probability formula differs for American, decimal, and fractional odds. Let’s discuss how you can quickly run calculations for each type of odds.

What Implied Probability Tells You About a Wager

Implied probability can give you a deeper look at a wager to help you decide if it’s worth it. 

For starters, you can figure out if a sportsbook’s overround is fair. Going back to our Chiefs-Broncos examples, their implied probabilities add up to 104.9% (75 + 29.9). The extra 4.9% is the bookmaker’s theoretical profit margin.

A 4.9% overround is fair compared to the average moneyline. You’ll want to be careful, though, once the overround hits 7% and beyond.

Implied probability helps out with another concept called expected value (EV). This term refers to whether you’re getting positive (+EV) or negative (-EV) value on a wager.

You start by determining the bookie’s implied probability on a bet. Once you know this, compare your perceived true odds/probability with the sportsbook’s probability.

Overall, implied probability is useful for a long-term approach to sports betting. It doesn’t guarantee you success on the next bet. However, it can be powerful when combined with expected value and ensuring overrounds are reasonable.

How to Use Implied Probability Like a Sharp

A sharp bettor has many tools for winning, and implied probability is one of them. So how do you use this skill to become more like sharps?

The first thing you can do is remove the overround from implied probabilities. This step will give you a more accurate representation of what sportsbooks are thinking.

A quick way to remove the overround involves dividing each team’s implied probability by their combined percentages.

Here’s an example:

• The OKC Thunder and Houston Rockets have implied probabilities of 62.5% and 42.5%, respectively.
• These numbers add up to 105%.
• 62.5 / 105 = 59.5% probability with no overround for the Thunder.
• 42.5 / 105 = 40.5% probability with no overround for the Rockets.

We still prefer including the vig in our overall strategy because it provides a complete picture. Again, though, these no-vig probabilities give you a closer result for what sportsbooks truly think.

Another aspect behind using implied probability like a sharp is knowing how to properly calculate value. 

Simply put, you study various factors (e.g., stats, matchups, injuries) to determine the true odds. You then subtract the sportsbook’s figures from your own. 

Here’s an example:

• You’re interested in betting on the Chicago Bears at +165 odds.
• 100 / (165 + 100) * 100 = 37.7% implied probability (includes overround).
• Your research indicates that the true odds should be +140.
• 100 / (140 + 100) * 100 = 41.67% implied probability (includes overound).
• 41.67 – 37.7 = +3.97% expected value 

You can see where implied probabilities become important when figuring out if a betting outcome offers long-term value. 

Common Mistakes Bettors Make When Using Implied Probability

Implied probability isn’t overly complicated once you have the formulas down. But like any betting concept, it leads to mistakes when used improperly. Here are a few potential pitfalls to avoid.

Not determining the vig

If you’re putting the work into calculating implied probability, you might as well figure out the overround too. You simply add up implied probabilities for all associated outcomes (e.g., 48.5% + 56% = 105.5%, or 5.5% vig).

Misusing the formula

You always want to use the correct formula for the relevant odds. Also, don’t mix up the positive and negative American odds formulas. Other mistakes to avoid include putting numbers in the wrong places and writing/typing the formula wrong.

Overestimating your ability to beat the market

The next step to success is combining implied probabilities with expected value. This involves comparing your true odds against the bookmaker and seeing if you’re getting +EV. However, we caution against being overly confident because most sportsbooks lines are pretty tight.

Guessing on if the bookies are right

A common square bettor mistake is to calculate implied probability, only to guess if the sportsbook is right/wrong afterward. You should do proper analysis of stats, injuries, and trends when determining true odds.

Implied Probability is Just the First Step

Implied probability is worth calculating whenever you’re thinking of placing a wager. It gives you insight into the bookmaker’s take on the odds. 

You’ll gain even more value from implied odds when combining them with expected value. Assuming the EV is positive, you’ve got a worthwhile bet on your hands.

If you’d like to put your newfound implied probability skills to the test, you can do so at our top sports betting sites. We’ve ranked these online sportsbooks high due to their favorable odds, betting markets, bonuses, safety, and customer service.