Implied probability is the percentage chance of an outcome suggested by the betting odds. It is the bookmaker's pricing of an event expressed as a probability rather than a price. Converting odds to implied probability is the foundation of value analysis — it allows direct comparison between the bookmaker's view and your own probability estimate.
Conversion formulas:
- Decimal odds: 1 ÷ decimal odds (e.g. 3.50 → 28.6%)
- Fractional odds: denominator ÷ (numerator + denominator) (e.g. 5/2 → 2 ÷ 7 = 28.6%)
- American positive odds: 100 ÷ (odds + 100) (e.g. +250 → 100 ÷ 350 = 28.6%)
- American negative odds: |odds| ÷ (|odds| + 100) (e.g. -200 → 200 ÷ 300 = 66.7%)
Margin inflation: in a three-way football market, the implied probabilities of all three outcomes sum to more than 100%. This excess is the bookmaker's margin. To find the "true" implied probability (adjusted for margin), divide each selection's implied probability by the total sum. If probabilities sum to 104%, divide each by 1.04 to find the margin-adjusted estimate.
Using implied probability for value: if you estimate a team has a 40% chance of winning and the bookmaker's implied probability is 33.3% (odds of 3.0), you believe you have a 6.7 percentage point edge. This constitutes a value bet because your estimated true probability exceeds the bookmaker's implied probability.
Example
Match odds: Home 1.80 (55.6% implied), Draw 3.50 (28.6%), Away 4.50 (22.2%). Total implied probability: 106.4%. Margin: 6.4%. Margin-adjusted probabilities: 55.6/1.064=52.3%, 28.6/1.064=26.9%, 22.2/1.064=20.9%. These adjusted figures better represent what the bookmaker believes will happen, stripped of their profit margin.