Implied Probability | The Chance Of An Event Occurring

Bookmakers use probability to determine the odds they offer on a particular outcome.

For example, if a bookmaker calculates that a particular football team has a 50% chance of winning a game, they will base the odds around that probability. In this case, the fair decimal odds would be 2.0 (or even money), as the implied odds represent this chance: 1 / 2.0 = 50%. However, the bookmaker will factor in their margin, typically setting those odds at a lower value, such as 1.8, thereby gaining an advantage over the player.

Learn how bookmakers set their odds

If a bettor determines that the probability of an outcome is higher than the implied probability suggested by the odds offered, this would be a wise bet to place.

For example, if a team has a 60% chance of winning a game, and the bookmaker is offering odds of 1.8 on that team winning, the bettor may see value in placing a bet because the implied probability (55.6%) is lower than the bettor’s estimated probability (60%). This is essentially value betting.