Implied probability is the chance of an outcome that a betting price suggests, and you find it by dividing 1 by the decimal odds. An illustrative price of $5.50 implies 1 / 5.50 = 0.182, an 18.2% chance, or two wins in every 11 tries.
The figure comes with the bookmaker's margin built in, so the implied probabilities across a whole market add up to more than 100%. It is the market's view of the chance plus a margin, not the true chance, and the gap between it and your own estimate is where value is judged. How betting odds work sets implied probability beside payouts and fair prices.
How to calculate implied probability
For a decimal price, one division does it:
implied probability = 1 / decimal odds, then x 100 for a percentage
So $5.50 is 1 / 5.50 = 0.1818, or 18.2%. The same chance can be written as 0.182, as 18.2% or as two in 11: one number in three forms. For the other formats:
- Fractional odds: implied probability = denominator / (numerator + denominator). 9/2 is 2 / (9 + 2) = 18.2%, the same price as $5.50.
- American odds with a plus sign: 100 / (odds + 100). +450 is 100 / 550 = 18.2%.
- American odds with a minus sign: the number without its sign / (that number + 100). -150 is 150 / 250 = 60.0%.
Going the other way, decimal odds = 1 / probability: a 35% chance is worth a price of 1 / 0.35 = $2.86. The odds converter does each of these as you type.
Odds to percentage chart: $1.20 to $51.00
The implied chance for each price from $1.20 to $51.00, rounded to one decimal place:
| Price | Implied chance | Price | Implied chance |
|---|---|---|---|
| $1.20 | 83.3% | $3.50 | 28.6% |
| $1.30 | 76.9% | $4.00 | 25.0% |
| $1.40 | 71.4% | $4.50 | 22.2% |
| $1.50 | 66.7% | $5.00 | 20.0% |
| $1.60 | 62.5% | $6.00 | 16.7% |
| $1.70 | 58.8% | $7.00 | 14.3% |
| $1.80 | 55.6% | $8.00 | 12.5% |
| $1.90 | 52.6% | $10.00 | 10.0% |
| $2.00 | 50.0% | $12.00 | 8.3% |
| $2.20 | 45.5% | $15.00 | 6.7% |
| $2.40 | 41.7% | $21.00 | 4.8% |
| $2.60 | 38.5% | $26.00 | 3.8% |
| $2.80 | 35.7% | $34.00 | 2.9% |
| $3.00 | 33.3% | $51.00 | 2.0% |
The percentage falls fast at the short end of the chart and slowly at the long end. A 10c drift from $1.50 to $1.60 takes 4.2 points off the implied chance (66.7% to 62.5%), while the same 10c from $8.00 to $8.10 moves it by about 0.15 points. A few cents on a short-priced runner therefore say more about the market's view than a whole dollar on an outsider.
Why implied probability is not the true chance
With illustrative prices for a match that cannot be drawn:
| Outcome | Decimal price | Implied chance |
|---|---|---|
| Team A | $1.44 | 69.4% |
| Team B | $2.85 | 35.1% |
| Market | 104.5% |
Those two figures cannot both be true chances: one of the two outcomes must happen, yet they add up to 104.5%. The extra 4.5 points is the bookmaker's margin, built into both prices before anyone bets. Divide each by the market total, 1.0453, and the pair adds up to 100%: Team A comes to about 66.4% and Team B to about 33.6%. As prices, those are 1 / 0.664 = $1.51 and 1 / 0.336 = $2.98.
That scaled figure is still an estimate. It assumes the bookmaker cut both prices in equal proportion, which it may not have done. The prices also reflect the money bet and the bookmaker's own view, and either can be wrong. Fair odds covers where a sounder estimate can come from.
Adding up a market to find its margin
Total the implied probabilities across one bookmaker's whole market, and whatever sits above 100% is its margin. A soccer match result market has three outcomes, the draw included. With illustrative prices:
| Outcome | Price | Implied chance |
|---|---|---|
| Home win | $2.35 | 42.6% |
| Draw | $3.40 | 29.4% |
| Away win | $3.15 | 31.7% |
| Market | 103.7% |
The margin is 103.7% - 100% = 3.7 points. Leave the draw out and the two win prices add up to 74.3%, a total that says nothing about value, because a whole outcome is missing from it. The bookmaker margin calculator adds up a market of up to 30 selections from its prices, and bookmaker margin explains how the margin is built in and why it differs between market types.
Implied probability against your own estimate
Value is a comparison of two probabilities: the one the price implies and the one you believe. A price is value when your chance is the higher of the two:
- expected value per $1 = your probability x decimal odds - 1
- your fair price = 1 / your probability
With illustrative estimates:
| Your estimate | Price offered | Chance the price implies | Your fair price | Expected value per $1 |
|---|---|---|---|---|
| 22% | $5.00 | 20.0% | $4.55 | +10.0c |
| 60% | $1.60 | 62.5% | $1.67 | -4.0c |
Working: 0.22 x 5.00 - 1 = 0.10 and 1 / 0.22 = $4.55; 0.60 x 1.60 - 1 = -0.04 and 1 / 0.60 = $1.67. The first gap is only 2 percentage points, yet it is worth 10 cents per dollar staked, because a long price magnifies a small difference in chance. The second outcome is far likelier to win and is still the worse bet, because your 60% is below the 62.5% the price needs.
Your estimate is the weak link. It can come from your own ratings, from a market with the margin taken out or from an exchange price, and each can be wrong. If the real chance of the first outcome were 19% rather than 22%, the same $5.00 would be worth 0.19 x 5.00 - 1 = -5 cents per dollar. How an edge plays out across hundreds of bets is the subject of value betting.
Risk: Betting involves risk. Expected value is an average over many bets, built on an estimate that can be wrong, and a value bet still loses often: if your 22% is right, the $5.00 bet loses 78 times in 100. There is no guarantee of profit; see responsible gambling for limits and support.
Break-even strike rate for a price
The break-even strike rate is the share of bets a price has to win just to finish level. It is the same number as the implied probability: break-even strike rate = 1 / decimal odds.
Say you make 200 bets of $10 at an illustrative $1.80. Break-even is 1 / 1.80 = 55.6%, or 111.1 winners. Each winner makes $8 profit and each loser costs $10:
| Winners from 200 | Profit from winners | Lost on losers | Result |
|---|---|---|---|
| 111 | 111 x $8 = $888 | 89 x $10 = $890 | -$2 |
| 112 | 112 x $8 = $896 | 88 x $10 = $880 | +$16 |
So 112 winners is the first count that shows a profit. Strike rate betting covers how many bets a strike rate needs before it means anything.
Mixed prices: average the probabilities, not the prices
Ten illustrative $10 bets, five at $1.50 and five at $5.00, have an average price of $3.25, which implies 30.8%. That is the wrong yardstick. With mixed prices no single strike rate marks break-even, because profit depends on which bets win: five winners, all at $1.50, is a 50% strike rate and returns only 5 x $15 = $75 from $100.
Judge the record against the winners the prices predict, the average of the implied probabilities: (5 x 66.67% + 5 x 20.00%) / 10 = 43.3%. If every price were exactly fair, you would expect 3.33 winners from the short-priced five and 1.00 from the long five, 4.33 from 10. Judging the record against the 30.8% the average price suggests would flatter it.
Multis, place prices and exchange prices
The same division works on every kind of price, with a twist in each case:
- Multis. For independent legs, multiplying the prices multiplies the implied probabilities. An illustrative double at $1.60 and $2.10 is a $3.36 price, and 1 / 3.36 = 29.8%, the same as 62.5% x 47.6%. A same game multi carries a single price set for the combination, because its legs are related, so its implied probability is not the product of its legs; correlated bets explains why.
- Place prices. A place price implies the chance of finishing in the places, so a fair place market adds up to 300% when three places are paid, not 100%. Market percentage in horse racing works through a place market.
- Exchange prices. A betting exchange shows a back price and a lay price for each selection. An illustrative back price of $9.20 and lay price of $9.60 imply 1 / 9.20 = 10.9% and 1 / 9.60 = 10.4%, so the exchange's view sits between the two. Commission charged on net winnings makes a winning back bet worth a little less than its price.
- Prices from several bookmakers. The best price on each outcome, taken from different bookmakers, can add up to less than 100%. That is the idea behind arbitrage betting: an arbitrage only works if every bet is accepted at the price shown, and bookmakers can limit stakes or void bets under their terms.
Implied chance mistakes and what they cost
With the illustrative numbers above:
| Mistake | What it costs | The fix |
|---|---|---|
| Using 69.4% as Team A's chance | It still carries 3.0 points of margin over the 66.4% scaled estimate | Remove the margin before you compare |
| Averaging prices instead of probabilities | Five bets at $1.50 and five at $5.00 suggest a 30.8% yardstick when the prices predict 43.3% | Average the implied probabilities |
| Totalling a soccer market without the draw | It reads 74.3% instead of 103.7% | Add up every outcome |
| Backing the likelier outcome as if that made it value | Your 60% against a $1.60 price loses 4 cents per dollar on average | Compare your chance with the implied one |
| Reading a place price as a win chance | $1.90 to place implies 52.6% of finishing in the places, not of winning | Compare place prices with place estimates |
| Multiplying the legs of a same game multi | Related legs make the product misstate the combined chance | Judge the combined price the bookmaker quotes |
Implied chances and EV overlays on B337's Terminal
On B337's Terminal, racing and sports prices from 40+ bookmakers sit side by side, and EV overlays set each one against an estimated fair price, shown as expected value. Racing prices are measured against Betfair's own market, and sports prices against a global market reference with the bookmaker margin taken out.
Both references are estimates, not forecasts, and a bet priced above them can still lose. Prices are gathered on a repeating cycle, so check any of them in your bookmaker account before you rely on it.
A free account opens a limited view of the Terminal with live odds. Betfair prices, closing lines and EV overlays are not part of it: they start with Terminal View, and plans and pricing lists what each plan includes. Bookmaker names are trade marks of their owners. B337 is not affiliated with them.
For free and confidential support call 1800 858 858 or visit gamblinghelponline.org.au.
Risk: Betting involves risk. An EV overlay turns an estimated chance into a number, so it is only as good as that estimate, and a bookmaker's terms let it cap your stakes or close your account.