Implied probability - What it means and how you can use it next time you place a bet

by , 12 July 2018
Implied probability - What it means and how you can use it next time you place a bet
Ever look at the betting odds and wonder what they represent?

I know you all understand what a favourite is and who the underdogs are.

But, the odds tell an even bigger story and it's one I know you'll be interested in hearing.

You see, it's all about…

 
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Implied Probability
 
Implied probability is used to analyse stocks, options, futures and currencies not just creating betting odds.
 
But here’s why it’s crucial to sports betting.
 
To understand implied probability you need to understand the concept of chance.
 
A chance is the likelihood of an event happening. It is often expressed as a percentage and is also referred to as the probability.
 
Ok so a simple example would be to roll a dice.
 
Rolling a dice would give you a 1 in 6 chance.
 
In percentage terms that would equate to a 16.66% chance that any one of the numbers from 1 to 6 could come up.
 
So Implied probability in sports betting allows you to convert the odds into a percentage.
 
Once you know the percentage, you can improve your chances of beating the bookie at his own game which I’ll show you in a moment.
 
But before I do that you need to understand the different types of odds…
 
There are two types of odds you will generally come across in the sports betting landscape.
 
They are: 
 
  • Decimal (1.7)
  • Fractional ( 5/2)

Converting Decimal odds
 
Decimal odds are a simple reflection of the return you will receive for each unit you stake.
 
For example if the decimal odds are 1.7, this means that for every R100 you bet, you will receive R70 in profit.
 
To convert these odds use this simple equation:
 
Implied Probability=1/ Decimal Odds
 
Implied Probability=1 / 1.7=0.588
 
0.588 x 100=58.82% 
 
Your implied probability would be 58.82%
   
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Converting Fractional Odds
 
Fractional odds are the most common form of betting odds, and are expressed as 5/2 which means for every 2 units you bet, you will receive 5 back.
 
So if you were to bet R200 you would receive R500 in profit.
 
To convert fractional odds use this simple equation:
 
Implied probability=denominator/ (denominator + numerator)
 
Implied probability=2 / (2 + 5)=2/7
 
Implied probability=2/7=0.285
 
0.285 x 100=28.5%
 
Your implied probability would be 28.5%
 
Being able to calculate the probability and understand what the odds represent is an essential part of evolving as a sports bettor.
 
And using it next time you place a bet will give you a much better understanding of what the bookie thinks the outcome will be.
 
In next weeks article, I will show you how you can use Implied Probability to beat the bookies at their own game.
 
Until next time,
Christopher Ammon
 


Implied probability - What it means and how you can use it next time you place a bet
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