Implied Probability Explained

The formula: decimal odds to implied probability

Implied probability = 1 ÷ decimal odds, then multiply by 100 for a percentage.

• $1.20 → 1 ÷ 1.20 = 0.833 → 83.3%
• $1.50 → 1 ÷ 1.50 = 0.667 → 66.7%
• $2.00 → 1 ÷ 2.00 = 0.500 → 50.0%
• $3.50 → 1 ÷ 3.50 = 0.286 → 28.6%
• $6.00 → 1 ÷ 6.00 = 0.167 → 16.7%
• $11.00 → 1 ÷ 11.00 = 0.091 → 9.1%

Shorter odds carry higher implied probability; longer odds carry lower. The price is the market's collective estimate of how likely the outcome is — plus a margin the bookmaker adds on top.

Why the market adds up to more than 100%

In a fair, two-way market where both outcomes are genuine coin-flips, each would be priced at $2.00, and the implied probabilities would sum to 50% + 50% = 100%. Real bookmaker markets never sum to exactly 100%.

Take a tennis head-to-head priced at $1.83 and $1.95:

• $1.83 → 1 ÷ 1.83 = 54.6%
• $1.95 → 1 ÷ 1.95 = 51.3%
• Total = 105.9%

That 5.9% over 100% is the overround, or bookmaker margin. It is the built-in edge that stops the two prices from representing a fair 100% split. The higher the total, the more the price is stacked against you before the event even starts.

Removing the margin: true implied probability

To find the market's genuine estimate — the true probability the bookmaker actually assigns — divide each raw implied probability by the market total.

Using the tennis example above (total 105.9%):

• Player A: 54.6% ÷ 105.9% = 51.6% true probability
• Player B: 51.3% ÷ 105.9% = 48.4% true probability
• These now sum to 100%

The difference between the raw 54.6% and the margin-adjusted 51.6% is the operator's take on that runner. This matters because your value comparison should be against the raw implied probability — that is the actual price you'd be paid at — while the margin-adjusted figure tells you what the market really thinks is going to happen.

A worked value example on the AFL

Suppose you rate an AFL side a genuine 60% chance to win. You check the head-to-head line and find $1.80.

• Implied probability of $1.80 = 1 ÷ 1.80 = 55.6%
• Your estimate = 60%
• Your edge = 60% − 55.6% = 4.4 percentage points

Because your probability exceeds the implied probability, the bet has positive expected value. Expressed as EV per $1 staked: (0.60 × 0.80) − (0.40 × 1) = 0.48 − 0.40 = +$0.08, or +8% expected return.

Now flip it. If the same side is priced at $1.55, implied probability is 64.5% — above your 60% estimate. The edge is negative, and the EV works out to (0.60 × 0.55) − (0.40 × 1) = 0.33 − 0.40 = −$0.07 per $1. Same team, same opinion, different price — one is a value bet, one is not. The implied probability is what turns a hunch into a decision.

The fair-odds check: converting probability back to a price

Reverse the formula to find the price you'd need for a bet to be break-even at your estimate: fair odds = 1 ÷ your probability.

At a 60% estimate, fair odds = 1 ÷ 0.60 = $1.67. Any price above $1.67 is value; anything below is not. This is the fastest way to scan a board — set your fair line once, then only take prices that beat it. On our /en-au/odds/ pages you can line up the same runner across operators and check which prices clear your threshold.

How margin varies across Australian bookmakers

Margin directly inflates implied probability, so the same true chance costs you more at a high-margin book. Across the markets we sample, average margins sit in a tight but meaningful band:

• Sportsbet — 4.91% average margin (44 markets sampled)
• PointsBet — 5.64% (51 sampled)
• Ladbrokes — 5.82% (258 sampled)
• Unibet — 5.84% (243 sampled)
• Neds — 5.89% (59 sampled)
• PlayUp — 5.93% (44 sampled)
• TAB — 6.05% (59 sampled)
• betr — 6.19% (56 sampled)
• bet365 — 7.44% (30 sampled)

A lower margin means the raw implied probability sits closer to the market's true estimate, leaving more of the value on your side. On a two-way market, the difference between a 4.9% and a 7.4% overround is roughly 2.5 percentage points of implied probability shifted against you.

Best-price share tells a related story: how often each operator posts the top available price on a sampled runner. Unibet leads at 56.0% and Ladbrokes at 54.7%, meaning on more than half of sampled markets they hold or share the best line. bet365 (23.3%) and Sportsbet (15.9%) top the best line less often despite Sportsbet's low average margin — a reminder that margin and best-price frequency measure different things.

Turning implied probability into shopping behaviour

Two bettors backing the same AFL, NRL or Premier League outcome can face different implied probabilities depending on where they bet. Because implied probability rises with margin, the practical routine is:

• Convert your own read on the game into a fair price (1 ÷ probability).
• Check the raw implied probability of the best available price on that runner.
• Take the bet only when the price clears your fair line.

Operators with lower margins and higher best-price share — Ladbrokes and Unibet in our sample — will, on average, present implied probabilities closer to fair more often. Use /en-au/compare/ and /en-au/market-movers/ to see where the line has drifted and which book currently holds the top price. Note that these figures are sampled market snapshots, not a guarantee for any individual market you look at.