Implied Probability: Translating Odds Into Chances
Odds are just probabilities wearing a price tag. Implied probability is how you strip off the price and see what the market actually believes.
Every set of odds implies a probability. A -200 favorite is priced as if it wins about 67% of the time; a +150 underdog as if it wins about 40%. Once you can convert any odds into a probability, you can compare what the market believes to what you believe — and that gap is where value lives.
The formula
For American odds, the conversion depends on the sign. For a minus number, implied probability = odds / (odds + 100). For a plus number, it's 100 / (odds + 100).
+150 → 100 / (150 + 100) = 40.0%
-110 → 110 / (110 + 100) = 52.4%
Removing the vig
Raw implied probabilities from a book always add up to more than 100% — that extra is the vig. To find the market's true belief, compute both sides' implied probabilities, add them to get the overround, then divide each side's implied probability by the overround. The result is the no-vig (or "fair") probability — what the sharp market actually thinks.
Overround = 104.8%
No-vig each = 52.4 / 104.8 = 50.0%
Why this is the foundation of value
Value betting means finding a price where the implied probability is lower than the true probability. If a team is offered at -200 (implied 66.7%) but you believe its true chance is 72%, that bet is +EV. You can't find that gap without first translating odds into probabilities — which is why implied probability is the gateway skill from casual bettor to market-aware bettor.
A quick sanity check
- Convert the odds to implied probability.
- Add both sides to find the overround (the vig).
- Normalize to get the no-vig probability.
- Compare the no-vig probability to your own estimate to spot value.
Key takeaway: Implied probability turns a price into a belief. Strip the vig, compare to your own estimate, and the gap is your edge. It's the single most important calculation in sports betting.