Betting & odds
Implied Probability
Implied probability is the winning chance a price corresponds to, calculated as one divided by the decimal odds. Decimal odds of $5.00 imply a 20% chance and $2.00 implies 50%. Because a bookmaker's market sums to more than 100%, raw implied probabilities are inflated by the margin and have to be normalised before they can be compared with a genuine probability estimate.
In use
$4.00 implies 25%, but after removing a 20% market margin the fair figure is lower.
On FormRace
FormRace shows a model probability beside the market price so the two can be compared directly.
Related terms
OverroundThe margin built into a market, measured as the sum of implied probabilities.Fair OddsThe price a runner's true probability justifies, with no margin added.ValueA price longer than the runner's true chance justifies.Expected Value (EV)The average return a bet would produce if repeated indefinitely.