In part 1 we explained for to read the odds, as an extension to that we now turn to calculating probability. This is key to assessing the potential value in a betting market.
Knowing how to convert betting odds into implied probabilities is fundamental for betting as it helps you assess the potential value on a particular market.
Once converted, if the implied probability is less than your assessment, then it represents value and you should adjust your bet accordingly in line with your bankroll management strategy.
In simple terms going back to our Golden State v Knicks example if your own assessment sees Golden State’s chances of winning at 70% and the sports books assessment is lower than that, then that represents value.
So what are the implied probabilities in our example? Let’s look at the Knicks which is easier given it is a positive number, the calculation is as follows:
100 = 47.6%
With Golden State we simply ignore the negative sign and calculate as follows:
140 = 58.33%
Did you notice anything when you add the two probabilities?
58.33 + 47.6% = 105.93%
So how can it add up to more than 100%? The answer is the VIG or the JUICE which we discuss in the sports betting secrets the sports books don’t want you to know about. Put simply this is sports books profit margin and in our example this is 5.93%, which is in line with the standard vig for this type of bet.