What is Implied Probability and How to Calculate it?

Implied probability is the chance of something happening, expressed as a percentage, based on the odds given. In fact, it’s the conversion of betting odds into a percentage, so you can easily understand the likelihood of an event occurring.

In simple terms:

• Lower odds = higher probability (the event is more likely).
• Higher odds = lower probability (the event is less likely).

How to calculate implied probability? 

The formula for implied probability depends on the type of odds. Here are the calculations for the three main types of odds: Decimal, Fractional, and American.

Decimal odds to implied probability

Decimal odds can be converted into implied probability using this formula:

Fractional odds to implied probability

Fractional odds (e.g., 5/2) represent the ratio of profit to the stake.

American odds to implied probability

• Positive odds (e.g., +200): Show potential profit on a $100 bet.
• Negative odds (e.g., -200): Show the stake required to profit $100.

Formulas:

• For Positive Odds:

Implied probability = 100/(american odds + 100)

• For Negative Odds:

Implied probability = -100/(-american odds+100)

Bottom line

In conclusion, implied probability helps you understand the likelihood of an event based on betting odds. By converting odds into percentages, it’s easier to compare and make informed decisions. Using the formulas for decimal, fractional, or American odds, you can quickly calculate the chances of an outcome and improve your betting choices.