The Math Behind American Odds to Implied Probability

For the bets we post on AI Betting Edge, American odds by far the most common representation we encounter for telling us how much we can win or need to bet to win 100. In this short article we're going to cover the basic math between how we go from American odds to implied probability. <!-- /wp:paragraph --> <!-- wp:paragraph --> There are two types of American odds: positive (+) and negative (-). <!-- /wp:paragraph --> <!-- wp:list {"ordered":true} --> <ol><!-- wp:list-item --> <li>Positive American Odds (+):<!-- wp:list --> <ul><!-- wp:list-item --> <li>Let's say you see a prop for Giannis 14+ rebounds with +200 odds.</li> <!-- /wp:list-item --> <!-- wp:list-item --> <li>To understand the "implied" behind implied probability, you can think of it like this: If you bet100 and win, you get your 100 back plus an extra200 in profit. So you’re risking 100 and if you win you get back 300 total (including your original 100)

  • To calculate the implied probability, just plug the numbers straight into this formula: Plus Odds Implied Probability = 100 / (Positive American Odds + 100).
  • In our example, Implied Probability = 100 / (200 + 100) = 100 / 300 = 1/3 ≈ 33.33%.
  • So if our model predicts that Giannis will get 14+ rebounds with 50% probability, we assess that as a 17% edge on the market and a good bet to place.

    • To summarize, with +200 American odds, the implied probability is roughly 33.33%. This means the sportsbook thinks there’s about a 33.33% chance that the player will score as many rebounds as the line suggests.

    1. Negative American Odds (-):
      • Now, let’s consider a different prop bet where the odds are -150.
      • In this case, you need to bet 150 to win100 in profit.
      • To find the implied probability, use a slightly different formula: Implied Probability = Absolute Value of Negative American Odds/ (Absolute Value of Negative American Odds + 100).
      • In our example, Implied Probability = 150/ (150 + 100) = 150/ 250 = 3/5 = 60%.

    So, with -150 American odds, the implied probability is 60%. This means the sportsbook believes there’s about a 60% chance that the player will achieve what the prop bet suggests. If our model predicts a guy to go over (or under) with say 72% probability, then we usually post that bet because we believe we have an edge on the market.

    Anytime you see American odds, you can use these formulas to estimate the implied probability or just plug in the numbers to our Implied Probability Calculator is the calculators tab of the betting dashboard. A higher positive American odds indicate a lower implied probability, while a lower negative American odds indicate a higher implied probability. Understanding implied probability is a necessary prerequisite for making informed decisions in the world of sports betting.

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