From Odds to Probability
Every betting odd has an implied probability - the chance the bookmaker believes the event will occur. Understanding this connection is crucial for finding value bets.
For decimal odds, the formula is simple: Implied Probability = (1 / Decimal Odds) × 100. So odds of 2.00 imply a 50% chance (1/2.00 = 0.5 = 50%).
Let's practice: Odds of 4.00 imply 25% probability. Odds of 1.50 imply 66.7% probability. The relationship is inverse - as odds increase, probability decreases.
Understanding the Relationship
Think of it this way: if an event has a 50% chance of happening, fair odds would be 2.00 (you double your money half the time). A 25% chance equals 4.00 odds (you quadruple your money one quarter of the time).
This relationship works both ways. If you believe a team has a 40% chance of winning but the bookmaker offers odds implying only 30%, you've found potential value.
To convert probability back to decimal odds: Decimal Odds = 100 / Probability. A 40% chance becomes 2.50 odds (100/40 = 2.50).
The Bookmaker's Edge
In a fair market, the implied probabilities of all outcomes would sum to exactly 100%. But bookmakers build in a margin (called overround or vig), so the total is always over 100%.
For example, in a tennis match, both players might be priced at 1.90 odds. Each implies 52.6% probability, totaling 105.2%. That extra 5.2% is the bookmaker's edge. Understanding this helps you evaluate which bookmakers offer better value.