Learning how to calculate implied probability (IP) is vital when it comes to finding value in sports betting odds. By converting odds into a percentage, bettors can gain a clearer understanding of bookmakers’ prices.
If you want to learn how to calculate implied probability in sports betting, you have come to the right place. In this guide, we explain how to calculate the house edge using IP and why the method is useful for sports bettors.
How to Calculate the House Edge Using Implied Probability
Understanding how to convert betting odds into implied probabilities is essential for successful betting, as it allows you to evaluate the potential value in any given market.
When you convert the odds, you can compare the implied probability with your own assessment. If the implied probability is lower than your evaluation, it indicates that there may be betting value on offer.
The most common odds formats are American, decimal and fractional. In order to figure out IP, you need to know how to convert each odds format into a percentage. Below, we explain how to do just that.
Converting Negative American Odds – Convert the odds to a positive number, then divide it by the positive odds plus 100. Finally, multiply this number by 100.
Converting Positive American Odds – Divide 100 by the odds plus 100, then multiply this number by 100.
Converting Decimal Odds – Divide one by the odds and then multiply this number by 100.
Converting Fractional Odds – Divide the denominator by the denominator plus the numerator, then multiply this number by 100.
For example, odds of +100 (2.00 or 1/1) have a 50% implied probability, while odds of -400 (1.25 or 1/4) have an 80% implied probability. We recommend trying out the equations for yourself to get familiar with the process.
Why Implied Probability Is Useful for Sports Bettors
Calculating implied probability can make all the difference when it comes to sports betting, especially if you’re someone who is serious about beating the bookies on a consistent basis.
First and foremost, IP makes things easier to understand. Looking at lists of odds can often be pretty daunting, especially if you’re not used to the format, but implied probability simplifies everything. For example, here are some made up outright odds for the FIFA World Cup:
United States (+5000)
These numbers won’t mean much to a lot of people, but an IP percentage will be far more helpful. These odds translate to: Brazil (50%), France (25%), England (10%), United States (2%) and Canada (1%). Much easier, right?
On top of that, implied probability helps sports bettors find value in the bookies’ odds. If you compare prices with IP percentages, you will be able to find out whether a potential wager is worth backing.