Implied probability explained: how to turn odds into a percentage, strip out the vig and compare it with a prediction market price

Guide · Updated October 20, 2026 · 18+ · Not legal, tax or financial advice · By BetG8 Editorial · Sports

What implied probability is

A price on any outcome is a statement about how likely the seller thinks it is, or at least about how much the seller wants you to pay for it. Implied probability is that statement translated into a percentage. If a bet returns 2.50 times the stake when it wins, the stake is worth exactly its expected return when the outcome happens 40 percent of the time, because 0.40 times 2.50 equals 1. That is the whole idea. Every odds format is a different way of writing the same payout, so every format has a conversion to the same percentage.

Two cautions before the formulas. First, implied probability is a property of the price, not of the world; a book can post 60 percent on a team that wins 50 percent of the time, and the number tells you what you are being charged, not what will happen. Second, on sportsbook odds the implied figure is deliberately too high, because it includes the bookmaker's margin. On an exchange where yes and no prices sum to a dollar, it is not, which is why the two markets need to be read differently.

Converting each odds format

Decimal odds are the easiest, because they state total return per unit staked, including the stake. Implied probability is 1 divided by the decimal odds. American odds state profit relative to $100 and come in two forms: a negative number is the stake needed to win $100, and a positive number is the profit on a $100 stake. Fractional odds state profit relative to stake, so 2/1 is $2 profit for every $1 staked and converts to decimal 3.00.

The conversions between formats follow from the same definitions. Positive American odds divided by 100, plus 1, give decimal odds; 100 divided by the absolute value of negative American odds, plus 1, gives decimal odds. Decimal odds minus 1 give the fractional value. Going the other way, decimal odds of 2.00 or more convert to American by subtracting 1 and multiplying by 100; decimal odds below 2.00 convert by dividing -100 by the decimal odds minus 1. Our odds converter does all of these at once and adds the two-way vig calculation described next.

Why the numbers add up to more than 100 percent

Take the most common line in American sports betting, -110 on each side of a point spread. Each side implies 52.38 percent. Two outcomes that between them must happen cannot both be 52.38 percent likely, so the extra 4.76 points are not probability at all. They are the bookmaker's margin, known as the overround when expressed this way, and as the vig, juice or hold when expressed as a share of money wagered. The book collects it by paying winners less than fair odds, and if it attracts balanced money on both sides it keeps roughly that share regardless of the result.

Removing the margin is called de-vigging, and the standard method is multiplicative: divide each side's implied probability by the sum of all sides. For a two-way market at -110 and -110 that gives 50 percent each. For a three-way market, such as a soccer match with a draw, the same division applies across three figures. The method assumes the book spreads its margin in proportion to each outcome's probability. That is not always how books behave; studies of bookmaker pricing find that more of the margin tends to sit on longshots, which is why alternative methods exist. The penaltyblog documentation, used by sports analysts, lists multiplicative, additive, power, Shin and odds-ratio methods and gives an example in which decimal odds of 2.7, 2.3 and 4.4 de-vig to 35.87, 42.11 and 22.01 percent with a margin of 3.24 percent under the multiplicative method. For most purposes the multiplicative version is close enough and easy to do by hand.

A worked example: one game, a sportsbook and an exchange

Suppose a sportsbook posts a favourite at -150 and an underdog at +130. The favourite implies 150 divided by 250, or 60.00 percent. The underdog implies 100 divided by 230, or 43.48 percent. The sum is 103.48 percent, so the overround is 3.48 percent, a slightly cheaper market than the standard -110 line. Divide each figure by 1.0348 and the de-vigged probabilities are 57.98 percent for the favourite and 42.02 percent for the underdog. Those are the book's best estimates of the true chances once its margin is stripped out, under the multiplicative assumption.

Now suppose a prediction market lists the same favourite at 58 cents for yes and 42 cents for no. There is nothing to de-vig: the two sides sum to $1, each contract pays $1 if it is right, and the price is the implied probability. The 58-cent price sits almost exactly on the sportsbook's de-vigged 57.98 percent, which is what you would expect if both venues are drawing on the same information. What the exchange adds instead is a fee, charged on the trade rather than hidden in the price. Under Kalshi's published schedule, a taker pays 0.07 times the number of contracts times the price times one minus the price, rounded up. At 58 cents that is 0.07 times 0.58 times 0.42, about 1.7 cents per contract, or $1.70 on 100 contracts. The buyer therefore pays $59.70 for a position that returns $100 when it wins, so the price at which the trade breaks even is not 58 percent but 59.7 percent. On Polymarket US, whose sports rate is 5 percent of the same price-times-one-minus-price term, the fee is about 1.2 cents per contract and the break-even is about 59.2 percent. A maker who rests an order at 58 cents and waits to be filled pays nothing on either venue, and keeps the raw 58 percent.

The comparison that matters is between the sportsbook's raw 60 percent and the exchange's fee-adjusted 59.7 or 59.2 percent, because those are the hurdles each venue sets for the same outcome. On this line the exchange is a little cheaper for a taker and clearly cheaper for a maker, but the gap is small, and on a market where the exchange's spread is wide or its order book thin the sportsbook can be the better price. Fee formulas and the spread are the two things to check before assuming an exchange is cheaper; our fee comparison and spread articles below go through both.

Reading implied probability in practice

Three habits make the number useful rather than decorative. First, always de-vig before comparing a sportsbook line with anything else, including another sportsbook; a 60 percent price at a book with a 3.5 percent margin and a 60 percent price at a book with a 6 percent margin are not the same estimate. Second, treat the exchange price as the probability and the fee as a separate cost, since that is how the venue itself accounts for it; adding the fee back into the price gives the hurdle, and the maker-taker distinction decides whether the hurdle exists. Third, remember what the figure does not say. A de-vigged 58 percent tells you the market's estimate on the day. Whether the market is right is a different question, and the closing price, not the opening one, is the better test of it.

Implied probability is also the unit in which prediction market prices and sportsbook lines can be set against each other, which is why the exchange contracts show it directly and why most of the tools on this site output it. It is a translation, not a forecast.

What this guide does not cover

This guide covers the conversion of two-way and three-way prices to probabilities and the simplest method of removing a bookmaker's margin. It does not cover the more elaborate de-vigging methods in detail, the pricing of parlays and combos, where margins compound across legs, or the question of whether any market's probabilities are well calibrated. Fee figures are from Kalshi's fee schedule last updated July 7, 2026 and the Polymarket US rates described in our fee comparison; both schedules change, and some Kalshi series carry non-standard multipliers, including zero-fee series and a doubled maker multiplier on combos. The sportsbook example is hypothetical. Nothing here is legal, tax, financial or betting advice, and nothing here recommends placing any bet or trade.

Frequently asked questions

What is implied probability?

Implied probability is the chance of an outcome that a price assumes. For decimal odds it is 1 divided by the odds, so 2.50 implies 40 percent. For negative American odds it is the absolute odds divided by the absolute odds plus 100, so -150 implies 60 percent; for positive American odds it is 100 divided by the odds plus 100, so +130 implies 43.5 percent. On a prediction market the contract price in cents is the implied probability directly: 58 cents means 58 percent.

Why do implied probabilities add up to more than 100 percent?

Because the sportsbook builds its margin into the odds. Both sides of a standard -110 line imply 52.38 percent, which sums to 104.76 percent; the 4.76 points above 100 are the overround, commonly called the vig or juice. The book keeps roughly that share of money wagered over time if it balances its book.

How do you remove the vig from odds?

The simplest method divides each side's implied probability by the total. For -150 and +130 the raw figures are 60 percent and 43.48 percent, which sum to 103.48 percent; divided by 1.0348 they become 57.98 and 42.02 percent. This multiplicative method assumes the margin is spread in proportion to each side's probability. Other methods, such as Shin or the power method, assume more of the margin sits on the longshot.

Is a prediction market price the same as implied probability?

Almost. A yes contract at 58 cents pays $1 if yes happens, so the price is the market's probability with no overround, because yes and no prices sum to $1. The adjustment that remains is the fee: on Kalshi a taker pays about 1.7 cents per contract at 58 cents, so a buyer needs the event to happen about 59.7 percent of the time to break even, not 58.

Related

• Odds converter: American, decimal, fractional and implied probability
• Sportsbook vs exchange price comparison tool
• Sportsbook vs prediction market: how the two models price the same game
• Kalshi vs Polymarket fees compared: what a trade actually costs
• Is Kalshi legal in your state? The 50-state tracker

Sources

• Kalshi, Fee schedule, last updated and effective July 7, 2026, for the taker formula, rounding rule, maker multiplier and non-standard series.
• Kalshi Help Center, How are prices calculated?, for the yes and no prices summing to $1 and the price tracking the market's perceived probability.
• Covers, Odds converter, for the format-to-format conversion formulas and the +200 and -200 examples.
• penaltyblog documentation, Implied odds probabilities, for the multiplicative, additive, power, Shin and odds-ratio methods and the worked margin example.
• BetG8, Kalshi vs Polymarket fees, for the Polymarket US sports rate used in the worked example.

18+ only. Betting and prediction market contracts carry real financial risk and you can lose what you stake. This page explains arithmetic; it is not legal, tax, financial or betting advice. If gambling stops being fun, help is available at 1-800-GAMBLER.