Even a casual punter will have seen betting odds displayed in at least a couple of different formats and it can get a little confusing. This is what the bookies want. They just want you to see a number representing the amount of money you can win. Blind you by the excitement of all that extra cash in your pocket. This is why odds are always displayed in relation to returns on your stake, and never on the chances on the selection winning – but this is where implied probability comes into play.
Implied probability is a number between 0 and 1 that indicates the chance of something happening, and once converted to a percentage this makes it easy to visualise.
Compared to odds formats this is a great help to punters. It isn’t obvious if you see odds of 1.25 in decimal or 1/4 in fractional odds that the selection has an 80% change of winning. Of course these odds makes it easy to see what your betting returns will be, but before placing a bet you should always consider are you getting value. If you think a football team has a 90% chance of winning and bookies are offering 1.25 then you should be betting on it.
Bookmakers don’t really want you to see implied probabilities, and not because they help people make more money or better decisions. Because the average mug punter is always going to just bet on their favourite team or the person they like most. They don’t show implied probability because it let everyone know by how much you are getting short changed. Let’s look at a typical football match to demonstrate what I mean. The below graphic shows two images of the same match, one with the decimal odds and one with the image edited to show implied probability.
If you can easily look at the decimal odds section and work out the bookies advantage, then you must be some kind of idiot savant math genius. The implied probability example on the other hand could be worked out by any one that has mastered simple addition.
By adding together the three percentages you get 106%. This value is called the bookies hold amount; it signifies that for every £106 pound the bookmaker takes in bets he only pays out £100, making them a £6 profit. Let me say at this point that it is a bit unfair of me to use bet365 graphics to have made this point, as they generally offer pretty competitive odds along with a great bonus structure. In fact a 106% book is only 1% off the best you’ll get with the betting exchange Betfair (after commission). And if you decide to check other bookies out after I show you how to work out implied probability you will be shocked to see that some bookmakers have books as high as 112% on 3-way markets such as match result.
When the odds are displayed in a decimal format it is pretty easy to calculate the implied probability of each selection. You just do the multiplicative inverse (reciprocal) of the number; for those of you that didn’t study maths this might sound pretty tricky. But all you have to do is 1 divided by the odds. Once you have the implied probability simply multiply by 100 to get the percentage.
Now although this is very easy it is still generally something that can’t be done with simple mental arithmetic, so having a bet calculator or a basic hand held calculator will normally be needed. Let’s look at the example given above to see how easy this is. We will round the numbers as we have above, but you should at least keep a couple of decimal point when doing it yourself.
Home team = (1 / 1.75) x 100 = 57%
Draw = (1 / 3.75) x 100 = 26%
Away team = (1 / 4.33) x 100 = 23%
Really easy and takes no time at all, so no excuse for not having a look a implied probability on betting markets with a small number of selections.