Converting a bookmaker’s odds into implied probability and comparing that percentage against your own assessment is one of the key metrics to finding the best value bets.
Calculating implied probability?
When a bookmaker creates a market, it attributes odds to each selection (or possible outcome). For instance, a La Liga football match between Real Madrid and Real Betis has the following odds:
|Real Madrid||Draw||Real Betis|
The equation for changing decimal odds into implied probability is:
1 ÷ odds x 100
Real Madrid: 1 ÷ 1.50 x 100 = 66.6%
Draw: 1 ÷ 3.00 x 100 = 33.3%
Real Betis: 1 ÷ 7.00 x 100 = 14.3%
Total implied probability: = 114.2%
For a ‘fair’ market, the probability would be 100%. The additional 14.2% is known as the over-round which is essentially the profit that the bookmaker expects to make if their market is priced correctly and attractive to all sides of the betting equation (i.e. punters are willing to bet on each possible outcome at the prices offered).
While the over-round is very important in its own right, the topic of this post is using the implied probability to seek out value bets markets.
The first option punters can do without the need for making any calculations. This is to compare the odds across a range of sportsbooks. If you’re a total beginner, then using a reputable bookmaker review website will provide a list of the best operators. Armed with three or four top bookmakers, just check the odds each one is offering for the bet you want to place. For this guide, we’ve chosen a Real Madrid win.
- Bookmaker A: 1.50 (implied probability = 66.6%)
- Bookmaker B: 1.80 (implied probability = 55.5%)
- Bookmaker C: 1.40 (implied probability = 71.4%)
- Bookmaker D: 2.00 (implied probability = 50.0%)
The higher the odds; the lower the implied probability (of being correct). As we can see, Bookmaker D believes Madrid will win on average 50 times out of 100, whereas Bookmaker A feels it 66.6 (times out of 100). This difference of 16.6% between those two prices means a punter would win an extra £0.50 for every £1.00 wagered by using Bookmaker D instead of Bookmaker A.
To make full use of the implied probability, you must also do your own research into areas such as the form of both teams, player injuries and suspensions, previous head-to-heads and so on. From this data, you will create your own odds probability of Madrid winning. If your figure is higher than the bookmaker, say 60%, then in your assessment, the prices available at Bookmakers B and D represent betting value in your opinion.
Seasoned sports bettors will tell you that there is rarely great betting value to be found in the match result market. It is the most popular as all casual punters tend to stick with it plus it’s used a lot for accumulator bettors. More often than not, the best bets are hidden away in the legions of other markets available.
One of these is the 3-way handicap market, the odds are:
|Real Madrid (-1)||Draw (-1 Madrid)||Real Betis (+1)|
Real Madrid (-1): 1 ÷ 2.7 x 100 = 37.0%
Draw (-1 RM): 1 ÷ 3.0 x 100 = 33.3%
Real Betis (+1): 1 ÷ 2.7 x 100 = 37.0%
Total implied probability: = 107.3%
In this market, the odds on Real Madrid winning have gone up to 2.70 because they have a minus one handicap. These are the possible outcomes based on the match result:
- The match ends in a draw (0-0, 1-1, 2-2, etc) = Real Betis (+1) bet wins.
- Real Betis win the match by any margin = Real Betis (+1) bet wins
- Real Madrid win by one clear goal (1-0, 2-1, 3-2, etc) = draw (-1 RM) bet wins
- Real Madrid win by two or more clear goals (2-0, 3-1, 5-2, etc) = Real Madrid (-1) bet wins
Once again, using knowledge of the teams, recent performances and so on, you can form your own probabilities for this market and the outcome scenarios, and as above, if the percentage is greater than the bookmaker’s implied odds, the bet is good value.
This system is not bullet-proof, upsets do happen in sport and the form book is thrown out of the window. However, over a season of betting if you put in the hard yards with your research, you will very likely improve your win ratio and combined with being able to work out the bookmaker’s implied probability, you can place smarter bets.