Implied Probability Explained
Implied probability is the chance a set of odds is telling you an outcome will happen. Take any decimal price, divide 1 by it, and you get the market's implied percentage. A $2.00 favourite carries an implied probability of 50% (1 ÷ 2.00). A $5.00 roughie carries 20% (1 ÷ 5.00). That's the whole engine of every price you see across Australian bookmakers — and once you can read it, you can judge whether a line is worth backing or whether the bookmaker's margin is doing the heavy lifting.
This guide shows the exact formula for decimal odds (the standard here), works through a full three-way football market, strips out the margin so you can see the true numbers, and explains how to compare implied probability across bookmakers when you're pricing up an actual fixture.
The formula: decimal odds to implied probability
For decimal odds, the calculation is a single step:
- Implied probability = 1 ÷ decimal odds
- Then multiply by 100 for a percentage
Worked quickly:
- $1.50 → 1 ÷ 1.50 = 0.667 → 66.7%
- $2.00 → 1 ÷ 2.00 = 0.500 → 50.0%
- $3.40 → 1 ÷ 3.40 = 0.294 → 29.4%
- $8.00 → 1 ÷ 8.00 = 0.125 → 12.5%
The shorter the price, the higher the implied probability — the bookmaker is saying the outcome is more likely. To go the other way (probability back to odds), flip it: decimal odds = 1 ÷ probability. If you reckon a horse is a genuine 40% chance, that's a fair price of $2.50 (1 ÷ 0.40). If the bookmaker is offering $3.00 on the same runner, the market rates it less likely than you do — that gap is where value lives.
Why the percentages add up to more than 100%
Total the implied probabilities of every runner or result in a market and you won't get 100% — you'll get something higher, usually 104% to 108%. That surplus is the bookmaker's margin (also called the overround, vig or juice). It's how the book is priced to return a profit over time regardless of the result.
Take a two-way tennis match priced at $1.90 / $1.90:
- Player A: 1 ÷ 1.90 = 52.6%
- Player B: 1 ÷ 1.90 = 52.6%
- Total = 105.2%
The 5.2% above 100% is the margin baked into that market. On a true 50/50 contest with no margin, both players would be $2.00. The book has shaved the price to $1.90 on both sides to build in its edge.
Margins vary by bookmaker and by market. Across sampled prices in our odds data, average margins sat around 4.9% for Sportsbet and roughly 7.4% for bet365 — a meaningful difference on the exact same event. Lower margin means the implied probabilities are closer to the true chance, which means better value for you.
Implied Probability Calculator
Worked example: a three-way A-League market
Say an A-League fixture is priced like this:
- Home win: $2.20
- Draw: $3.40
- Away win: $3.30
Convert each to implied probability:
- Home: 1 ÷ 2.20 = 45.5%
- Draw: 1 ÷ 3.40 = 29.4%
- Away: 1 ÷ 3.30 = 30.3%
- Total = 105.2%
The overround is 5.2%. Now strip it out to see the market's true view. Divide each implied probability by the total (105.2% or 1.052):
- Home: 45.5 ÷ 1.052 = 43.3%
- Draw: 29.4 ÷ 1.052 = 28.0%
- Away: 30.3 ÷ 1.052 = 28.8%
- Total = 100.0%
Those de-margined figures are the market's fair estimate. So the book genuinely rates the home side around a 43% chance, not the 45.5% the raw price suggests. If your own read of the form has the home team closer to 50%, the $2.20 (fair price ~$2.31 once de-margined) looks like value. If you have them at 40%, you're better off passing.
Turning implied probability into value
Value exists when your estimated probability is higher than the market's implied probability for the same outcome. The check is simple:
- Your probability × decimal odds > 1 = potential value
- Below 1 = no value on that price
Example: you rate an NRL side a 55% chance (0.55) and the bookmaker offers $2.00. 0.55 × 2.00 = 1.10, comfortably above 1 — that's a value bet on your numbers. Same side at $1.70? 0.55 × 1.70 = 0.935, below 1, so the price is too short for your assessment.
This is the whole discipline: you're not trying to pick winners, you're trying to back outcomes priced longer than they should be. Your probability estimate does the work; implied probability just tells you what you're being asked to beat. Compare live prices on our betting odds Australia pages before you commit.
Comparing implied probability across bookmakers
The same match will carry different implied probabilities at different bookmakers because margins and price shading differ. Backing the outcome with the lowest implied probability (the longest price) means you're paying the smallest margin on that leg.
In sampled Australian pricing, best-price share — how often a bookmaker offered the top available number — varied widely: Unibet topped around 56% of sampled markets and Ladbrokes around 55%, while several books landed the best price far less often. No single bookmaker is longest on everything, which is exactly why line-shopping matters. A $3.30 away side at one book might be $3.50 at another; that's 30.3% implied versus 28.6% — the same bet, less margin against you.
Use the compare tools and our market movers to see where a fixture is priced sharpest before you back it.
- Multiply out your multi legs individually: a two-leg multi at $1.90 and $2.10 implies 52.6% × 47.6% = ~25% combined chance, priced at $3.99.
- Margins stack in multis, so line-shopping each leg matters more, not less.
Quick reference table
Common decimal prices and their implied probability (before margin adjustment):
- $1.20 → 83.3%
- $1.50 → 66.7%
- $1.80 → 55.6%
- $2.00 → 50.0%
- $2.50 → 40.0%
- $3.00 → 33.3%
- $4.00 → 25.0%
- $5.00 → 20.0%
- $6.00 → 16.7%
- $10.00 → 10.0%
- $21.00 → 4.8%
Keep the rule in your head: 1 divided by the price, times 100. Everything else — margin, value, de-margining — builds off that.
FAQ
How do I calculate implied probability from decimal odds?
Divide 1 by the decimal price, then multiply by 100. A price of $2.50 gives 1 ÷ 2.50 = 0.40, or 40%. A price of $1.60 gives 1 ÷ 1.60 = 0.625, or 62.5%.
Why do the implied probabilities add up to more than 100%?
The extra above 100% is the bookmaker's margin (overround). It's built into every market so the book returns a profit over time. A total of 105% means a 5% margin on that market. To find the market's fair view, divide each outcome's implied probability by the total.
What is a good bookmaker margin?
Lower is better for you, because it means the implied probabilities sit closer to the true chance. In sampled Australian pricing, margins ranged from under 5% at the sharpest end to over 7% at the wider end on the same events. Line-shopping across bookmakers is the practical way to pay the smallest margin.
How do I know if a bet has value using implied probability?
Estimate your own probability for the outcome, then check: your probability × the decimal odds. Above 1 means the price is longer than your assessment (potential value); below 1 means it's too short. Value comes from your estimate being higher than the market's implied probability, not from the odds alone.
Does implied probability work the same for multis?
Yes, but you multiply the individual implied probabilities together. Two legs at 52.6% and 47.6% combine to about 25%, priced around $3.99. Because each leg carries its own margin, line-shopping every leg matters even more on multis.