Whenever the term “probabilities” is used, the casual or novice sports bettor often feels intimidated due to a lack of mathematical knowledge. However, this shouldn’t be the case. In sports betting, the most important probability statistic you’ll need to know revolves around implied probabilities. Implied probabilities are used when converting betting odds – they can be very helpful. If you don’t know how to calculate implied probabilities, you’ll be hurting your chances of profiting from sports betting. Implied probabilities are useful when betting on single games, futures, props, or live wagers – essentially, they can be applied to every type of bet. In order to determine if one of these wagers offers value, one must understand the implied probability behind the bet. In this article, we’ll dive in and explain the meaning of implied probabilities and how to apply them.
What Are Implied Probabilities?
If your own assessment of the probability of a team winning is higher than the implied probability that the wager is offering, therein underlies a value betting opportunity. Converting betting odds to implied probabilities is quite simple. Most wagers are expressed using American odds (e.g. -110 or +150), fractional odds (e.g. 3/2 or 5/1) or decimal odds (1.50 or 3.30). All three express the same thing – how much money you’ll get back based on the amount of the wager placed. The easiest way to calculate the implied probability from all three different expressions is to first convert into decimal odds. Let’s take a look at how this is done.
Converting From American Odds
If team A is favored to win at -120, the corresponding decimal odds can be calculated as:
(100/120) +1 = 1.83
Similarly, if team B is an underdog to win at +120, the corresponding decimal odds can be calculated as:
(120/100) +1 = 2.20
In order to determine the implied probability, we must take the inverse of the decimal odds. That’s just a fancy way of saying we must divide the decimal odds by one, or place the decimal odds in the denominator, with one as the numerator. Here it is for the two examples:
1/1.83 = 0.546 or 54.6% implied probability of winning
1/2.20 = 0.455 or 45.5% implied probability of winning
If you perform a sanity check, this clearly makes sense. In the first example, since team A is favored to win, it makes sense that its implied probability of winning is greater than 50% (54.6%). Similarly, in the second example, since team B is an underdog, it makes sense that its implied probability of winning is less than 50% (45.5%).
Converting From Fractional Odds
If team A is favored to win at 1/2, the corresponding decimal odds can be calculated as:
1 + 1/2 = 1.50
If team B is an underdog to win at 3/1, the corresponding decimal odds can be calculated as:
1 + 3/1 = 4.00
Here’s the calculation for the implied probabilities of the two examples above:
1 / 1.50 = 0.667 or 66.7%
1 / 4.00 = .250 or 25.0%
Again, by applying the sanity check, you can see that the resulting implied probabilities make sense. Since team A is favored to win, it makes sense that its implied probability of winning is greater than 50% (66.7%). Correspondingly, since team B is an underdog to win, it also makes sense that its implied probability of winning is less than 50% (25%).