Bettors looking to make sharp plays absolutely must understand the concept of implied probability. Implied probability is the chance of the outcome in question happening, and because sportsbooks need to make a profit, you’ll never find a market on which the implied probability of both sides adds up to 100%. Let’s dive into both the definition of the term and how to calculate implied probability. Check out more of our introductory betting content here! Nevertheless, time to answer the question: what is implied probability in sports betting?
What is Implied Probability in Sports Betting?
Let’s start from the top. Betting odds are a way for sportsbooks and bookmakers to communicate the likelihood of a particular event occurring. One common format for odds in the United States is American odds, which are expressed as a positive or negative number.
Positive odds indicate the potential profit that can be made on a $100 wager, while negative odds indicate how much needs to be wagered to win $100. For example, if the odds of a particular team winning a game are +150, a bettor would win $150 in profit for a $100 wager. If the odds are -150, the bettor would need to wager $150 to win $100 in profit.
Decimal odds are another format. Unlike American odds, decimal odds show the amount a winning play would collect on a $1 wager. This includes the buy-in, or stake, placed by the bettor. For example, if the decimal odds of a particular team winning a game are 2.5, a bettor would win $150 in profit from a $100 wager.
So how do we arrive at implied probability, or the likelihood of an event occurring as implied by the odds? You can calculate it by dividing one by the decimal odds, then express it as a percentage. For example, if the odds of a team winning a game are 2.50, the implied probability of that team winning is 40% (1/2.50 = 0.40 = 40%).
Bettors should consider implied probability when placing bets because it allows them to assess whether the odds being offered are fair or not. If a bettor believes that the probability of an event occurring is higher than the probability implied by the odds, then the odds are favorable and it may be a good bet to place. Conversely, if the probability is lower than the probability implied by the odds, the odds may be unfavorable and it may be wise to avoid the bet.
Hopefully we answered your question regarding what is implied probability in sports betting. And while this might be confusing by itself, it’s not as perplexing as the history of betting in the US in general, especially on the regulation side of things. While the early stages of legalized gambling felt a bit like the wild west, as most states continue to legalize betting, regulation is become a bit harder to track; varying state-to-state.
Pre-20th Century: Sports betting was largely unregulated during this time, and betting on horse racing was a popular pastime. However, betting on other sports was often associated with corruption and was not widely accepted.
1900s-1960s: In the early 1900s, sports betting became popular on boxing matches, and by the 1920s, illegal sports betting had become a significant criminal enterprise. However, by the mid-20th century, most states had banned sports betting due to concerns about corruption and the potential for organized crime to infiltrate sports.
960s-1990s: In 1961, the federal government passed the Wire Act, which made it illegal to use wire communications to transmit information related to sports betting across state lines. This law was intended to crack down on organized crime’s involvement in sports betting. In 1992, the federal government passed the Professional and Amateur Sports Protection Act (PASPA), which prohibited sports betting in all states except for Nevada, which was grandfathered in due to its existing laws.
2000s-Present: In 2006, the Unlawful Internet Gambling Enforcement Act (UIGEA) was passed, which made it illegal for banks and financial institutions to process transactions related to online gambling. However, this law did not explicitly ban online sports betting. In 2018, the Supreme Court struck down PASPA, ruling that it violated states’ rights under the Constitution. Since then, many states have legalized sports betting and have implemented their own regulations to govern the industry.
Nonetheless, hopefully that provides some context. Also, you know, hopefully we answered your question regarding what is implied probability in sports betting. If you made it this far, and want to play on, feel free to surf our best bets tool to help you easily navigate what can otherwise be a tricky sports betting market.
