Implied Probability In Sports Betting
Implied probability in sports betting markets is essentially the percentage chance of an outcome happening as it relates to betting odds.
Converting odds allows us to examine the house’s edge on each bet and helps us calculate our true chances of winning. We can convert any type of odds, including sides, totals, moneylines, and futures into implied probability, using simple arithmetic.
Implied probability in sports betting is a concept that few novice sports bettors take into account when they look at betting markets. This is a rookie mistake and one that will cost bettors dearly in terms of long-term profits.
The Implied probability is not exclusive to betting. You’ll find it in all sorts of market-based interactions, like in the stock market, currency exchanges, and swap markets. Having a clear understanding of the implied probability, and the odds will certainly help you to place profitable bets.
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Sports Betting Probability Explained
One of the simplest examples to illustrate implied probability is a coin toss. We all understand the concept a flipping a coin. Both heads and tails have a 50/50 proposition or a 50% chance of coming up on each flip.
If you’re flipping a coin with a friend and the coin hasn’t been altered or gimmicked in any way, then you each have an equal chance to win.
Also, since you’re betting head-to-head with your friend, there is no third-party (sportsbook) that charges commission or vigorish on this bet.
Moneyline Odds for the Coin Toss
In American or moneyline odds, an even-money bet with no added vigorish would be displayed at +100. We can calculate the implied probability of any wager by dividing our stake with our potential payout.
In this case, we can do the math in our head, but it’s worth showing the work as a baseline for figuring out our implied probability and the oddsmaker’s edge on each wager. The math is obviously the same for both sides.
- Tails $100/$200 = 0.50
- Heads $100/$200 = 0.50
Both sides come to the same calculation of 0.50. We can multiply this decimal by 100 (0.50 * 100) to get our implied probability, which equals 50%. Since there’s no bookmaker’s vig on this wager, this makes sense.
Implied Probability Betting on NFL Football
Let’s take the same wager, but instead let’s make it a coin toss bet on an NFL game. This is an extremely common bet that is offered at just about every sportsbook online. It’s also a huge sucker bet.
We’re dealing with a coin flip, but two NFL teams have been introduced at the participants and the sportsbook is now offering the market and taking vigorish on our bet.
Let’s say the Patriots are playing the Bills and we decide to bet on the coin toss.
Typical sportsbooks odds may look something like this. Coin Toss – New England Patriots at Buffalo Bills:
- Heads -105
- Tails -105
It’s very clear that this bet is the same premise as our previous wager with our friend, but the odds have clearly changed. We’ll be staking $105 to win $205, and if we win, a net profit of $100.
- Tails $105/$205 = 0.512
- Tails $105/$205 = 0.512
When multiplied by 100, we get a percentage of 51.2% for both sides. If we add these percentages together, (51.2% + 51.2%) we get 102.4%. The 2.4% percent is the bookmaker’s juice or vigorish on this market. The profit a sportsbook makes on each bet or amount of 100% of each market is also known as the bookmaker’s ‘overround’.
Regardless of which side we bet on this wager, we’ll be paying 2.4% vig to the sportsbook. Implied probability is also synonymous with breakeven percentage. When we determine our implied probability, we’re determining the “true odds” on our wager that implies zero vig on the offer line.
Implied Probability Betting On MMA Fights
Let’s look at another example with a larger extreme between the favorite and underdog. This is most common in boxing or mixed martial arts (MMA) contests. We’ll use a fictional example from that contest.
- Max Holloway (-245)
- Dustin Poirier (+185)
The difference between the favorite and underdog here is quite large. This is often the case with boxing or MMA betting markets, as the sportsbook takes a much larger amount on the favorite compared to the underdog.
Let’s calculate the implied probability and overround of this market, using the same formula as above.
- Holloway $245/$345 = 0.71 = 71.0%
- Poirier $100/$285 = 0.35 = 35.0%
These two numbers added up equal 106.0%. The bookie’s hold on this wager is 6.0%.
Implied Probability With No-Vig Odds
We’ll go one step further in this example and figure out our exact implied probability on each side with no-vig odds. To do this, we simply divide each percentage by 106.0.
- 71.0/106.0 = 0.67 (67%)
- 35.0/106.0 = 0.33 (33%)
To get the no-vig odds, we still need to convert this percent into moneyline or American odds. To do this, we use the formula of Percent / (100%- Percent) x (-100). To speed up this method, we recommend using an implied probability calculator, but here’s the math:
- 71 / (100 – 71) x (-100) = -244.82
- 71 / 29 x -100 = -244.82
Max Holloway’s no-vig odds are -224.82 or if we round up -225. Let’s calculate it for Poirier. If the percentage is less than 50%, the formula changes slightly.
- (100% – Percent) / Percent x 100
- (100 – 33) / 33 x 100 = 203.03
Since it’s below 50%, we know this an underdog line and the odds will come with a plus (+) rather than a negative (-). Our no-vig odds here are +203.03 and if we round down, +203.
If our sportsbook is posting efficient markets, we can use these no-vig prices to find the best odds available.
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The Importance Of Implied Probability In Sports Betting
Remember, this can be done for any type of betting market. We figured out implied probability and no-vig for NFL futures markets. The math we did above can be done automatically by using a no-vig calculator.
In conclusion, analyzing your implied probability and converting lines into no-vig odds is paramount as a sports bettor. Not only does allow you to line shop effectively, but it also helps you evaluate potential wagers.