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• Implied Probability Sports Betting

Implied probability is an important concept in various market based transactions, including the stock, option, bond, futures, currency, and swap markets. It is also a crucial concept in sports betting, whether we are looking at individual game lines, futures, propositions, and live betting markets.

Implied probability in sports betting markets is simply a conversion of traditional odds into a percentage, but it also takes into account the house edge and eliminates it to express the odds as the “true odds” of an event occurring.

Online & Vegas sports betting odds & lines, betting news & picks for 2021. Covers the most trusted source of sports betting information since 1995. Implied probability is useful because if your estimate of the probability of an event occurring is different than a sportsbook’s you can and should adjust your bet accordingly. Say you thought one team had a.

Implied Probability: Simple Example

Let’s take a look at several examples of implied probability in action. We’ll start with a simple example.

Let’s imagine you and a friend are flipping a fair coin. You both get paid even money (+100) on a chosen side, heads or tails. You are betting $100 per flip.

For each time the coin lands on heads, you win $100. For each time the coin lands on tails, your friend wins $100. The implied probability of each side is $100/$200, or 50%. You must take the original amount risked and add it to the amount won to get the total payout of $200 in this case.

This means that for each $100 you risk, you expect to get back 50% of $200, or $100, which makes the bet exactly 50/50.

What happens if we change the payouts?

Now let’s assume your friend gets paid 3.00, or $200 for every tails, while you still only get paid $100 for heads.

Your implied probability remains the same, 50%. However, now the implied probability of tails coming up is only $100/$300, or 33.33%. Adding the two probabilities, we get 83.33%. Clearly there is a 100% probability that either heads or tails will come up, and if we assume a fair coin, your friend has a 16.66% edge over you in this bet (100% minus the 83.33% implied probability).

Implied Probability in Sports Betting

In sports betting, the house edge, or vigorish, means that the implied probability of a set of events will always add up to over 100%. The amount over 100% is the bookie’s over round. This is their expected profit.

Let’s see an example of this in action.

On an NFL game, a sports book lists a game as

Denver -3.5 (1.91)
Oakland +3.5 (1.91)

What is the implied probability of each outcome?

If we bet $110 on Denver -3.5, we have a possible payout of $0 for a loss or $210 for a win.
If we bet $110 on Oakland +3.5, we have a possible payout of $0 for a loss or $210 for a win.

We only have these two possible outcomes. We take the amount we risk and divide it by the total payout to get the implied probability for each outcome:

Denver covers: $110/$210=.524 or 52.4%
Oakland covers: $110/$210=.524 or 52.4%

If we add these two outcomes, we get 104.8%. This means that if we bet both teams, we would need to risk $104.8 to get back $100. The bookies clearly have the edge here, in this case a 4.8% house edge for each dollar wagered.

How do the odds and implied probabilities change for odds other than -110?

The same NFL game has a moneyline of

Denver 1.53
Oakland 2.60

What is the implied probability of each outcome, ignoring pushes?

If we bet $190 on Denver, we have a possible payout of $0 for a loss or $290 for a win.
If we bet $100 on Oakland, we have a possible payout of $0 for a loss or $260 for a win.

If we ignore pushes, we only have these two possible outcomes. Again we take the amount we risk and divide it by the total payout to get the implied probability for each outcome:

Denver wins: $190/$290=.655 or 65.5%
Oakland wins: $100/$260=.385 or 38.5%

If we add these two outcomes, we get 104%. Again, if we bet both teams, we automatically lose, this time $4 for every $100 wagered in the long run. This extra juice is the bookie’s edge.

Implied Probability in the Sports Betting Futures Market

Finally, let us check the implied probability for the sports betting futures market, where there are more than 2 possible outcomes.

For the World Cup soccer tournament, there might be a futures market listed as follows:

Brazil 5.00
Germany 9.00
Argentina 10.00
Italy 11.50
USA 36.00
Field 2.00

What is the implied probability of each team winning? Again, remember that we must divide our amount risked by the total payout to get the implied probability %.

Brazil: 100/500=.2 or 20%
Germany: 100/900=.111 or 11.11%
Argentina: 100/1000=.1 or 10%
Italy: 100/1150=.087 or 8.7%
USA: 100/3600=.028 or 2.8%
Field: 100/200=.5 or 50%

High Probability Sports Betting

Adding all these percentages, we come up with 102.61%. The house edge in this market is actually pretty low, only 2.61%. You can see that the field has a very high probability of winning in this case. Taking the field just means that, in this market, any team other than Brazil/Germany/Argentina/Italy/USA will win the World Cup. Based on these odds, that’s about a 50/50 chance.

Conclusion

Implied Probability Sports Betting

Implied probability is useful in many aspects of markets, especially sports betting. If you have the listed odds, you can figure out the implied probability of an event happening. If you find a team that has a low implied probability, but you think is primed for the upset, you may have a solid bet on your hands. However, the bookies usually don’t mind taking bets on underdogs or long shot teams, because their house edge is built in to each side, and your winnings will be paid out mostly from other bettors who laid the extra juice to play the favorite. Tread carefully but have fun!

Ready For More?

Welcome to the Sports Betting Odds section of The Sports Geek. If you are new to sports betting and don’t understand how to read betting odds (+150, -110, +2200, etc) we will lay it all out for you and help you learn how the betting odds work.

Sports Betting Odds Explained

Many people don’t know how to read or calculate sports betting odds, so below we have done our best on explaining how betting odds work. The most common type of sports betting odds used in North America are the American style odds which we explain below.

American Style Sports Betting Odds

Most online sportsbooks will list their odds in what is called “American Odds”. There are a couple different versions of sports betting odds, but these American Odds are the most common odds used. Reading and understanding sports betting odds can bet a little confusing to beginners, so we have provided an example below using two NFL football teams:

American Odds

• Matchup Odds
• New England Patriots +120
• Pittsburgh Steelers -140

The number shown in the bracket represents the odds. The American Odds have two components to them, the first being the positive or negative sign, and the second being the number that follows the sign.

The sign in front of the number indicates whether placing a wager on that outcome will pay out more money then you have wagered or less money then you have wagered. If the odd is negative (-) it means that outcome is more likely to happen and placing a bet on that outcome would payout less than the amount you wagered, while a positive (+) odd shows that the outcome is less likely to happen and it would pay out more than the amount you wagered.

The next step is figuring out exactly how much the bet pays out, which is where the numbers in the odds come into play.

A listed odd with a – sign in front of it, such as the -140 in our example above, shows us how much money you would need to wager in order to win $100. So using the -140, this would show us that you would need to bet $140 in order to win $100 in profits. You can easily substitute the $100 bet for a $10 bet by moving the decimal place over one spot, showing us that you would need to wager $14 in order to win $10 in profits.

Examples:

A listed odd with a + sign in front of it, such as the +120 in our example above, shows us how much money you would win on a $100 bet. Using the +120 odds, it shows us that a $100 bet on that outcome would pay out $120 in profits. Again this can easily be converted into smaller or larger size bets. A $10 bet on +120 odds would pay out $12 in profits.

Examples:

Below is an example of NFL betting odds taken from an online betting site.

Probability Sports Betting

In this example you can see Los Angeles is listed at +130 ($100 bet pays $130 plus of course your original wager back) and New England is listed at -150 ($150 bet pays $100).

The great thing about betting online is that the online sportsbooks will do the calculations for you before you place your bet. You can click on the outcome or team you would like to bet on, and then input the amount you wish to wager and it will show you your potential pay out before you confirm your bet.

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Decimal Style Sports Betting Odds

Probability Odds Sports Betting

Decimal style odds are used mostly in Europe, and are pretty easy to understand. To calculate the decimal style odds all you will need to do is simply multiply the amount you wish to wager by the decimal odds shown and you will get your payout. For example it may look something like this:

Best Online Betting Sports

If you wanted to place a $10 wager on the USA at 2.40 you would simply need to multiply your $10 wager by the 2.40 odds (10 x 2.40) to find out that the payout is $24. It is important to realize that with decimal style odds it includes the amount you wagered, so to find out profits you would need to subtract your wager ($24 – $10) to find out your potential payout is $14 in profits.

Probability Calculator Sports Betting

If you wanted to place a $10 wager on Brazil you would again just multiply $10 x 1.55 to find out that you would win $15.50 total or $5.50 in profits.

Implied Probability Sports Betting

Decimal style betting odds are very simple to understand, but you won’t see them displayed in many North American sportsbooks. With that said, most online betting sites will allow you to chose the style of betting odds you want displayed, with American odds set as the default.