Probability is one of the most straightforward concepts in betting. And yet, it’s also a concept that many sports bettors overlook. If you can understand probability, you’ve got a better chance of improving the accuracy of your predictions – and thus your hit rate (win rate).
In this quick guide, we take a look at understanding probability in sports betting.
What Is Probability?
Probability is the way we measure how likely or unlikely something is to happen. For example, if something is unlikely to happen, we may represent it as 0. If something is highly likely to happen, we may represent it as 1.0.
If something is possibly going to happen, we can represent it as 0.7.
We can also express it as a percentage, such as 70%.
The problem with calculating probabilities in betting is that there are so many variables involved which influence the outcome of any event. While flipping a coin gives you a 50% probability of it landing on tails, you simply can’t do this when weighing up betting odds.
So what’s the best we can do?
Understanding Implied Probabilities
When you calculate the implied probability of a bet, your chance of winning immeasurably improves because you’ll be able to more accurately identify value betting odds.
What does this mean?
When bookies set their betting odds, it’s worth bearing in mind that these are not 100% accurate determinations of what will happen. Instead, they are based on implied probability. Factored into them are what the bookies think might happen, as well as what the market thinks might happen (ergo, where the money is going).
A bookie will obviously peg the odds so that they are always in their favor. They have to do this so that they always make a profit whatever happens. It’s up to you to assess the odds more closely, determine the implied probability – and find value.
For instance, let’s imagine the Lakers are playing tonight. Using American odds, they are 2.50 to win. This gives their odds an implied probability of 40%, which suggests that if you stake $50, you will win $50 40% of the time you place this bet.
So, where’s the value?
To gauge the value of this bet, we can use the following formula:
Expected value = (probability of winning x winnings per bet) – (probability of losing x stake)
Using this formula, and assuming we place a $50 wager each time at 2.50 odds, and assuming the implied probability is somewhat correct, we can break even in the long term. Yes, this bet will lose now and then, but because of its expected value, we will eventually break even – and we might also build up a nice little profit for ourselves over the next few months.
As mentioned, however, odds are always pegged in favor of the bookies, and this is something you need to be aware of. So if the Lakers are 2.50 to win tonight, the real chances of them winning are probably slightly less than the implied probability of 40%.
Here’s an example using fractional odds. Let’s say we’re watching a soccer match, and the score is 1-1 after 70 minutes. The odds on under 4.5 goals at this point are 1/10. This means if we place a £250 stake on under 4.5 goals, we stand to win £25 plus our stake.
That doesn’t sound like a lot, right? But because of the implied probability, we can assume that this type of bet will win so often that we will eventually break even and make a profit (even if we will, of course, lose now and then).
When weighing up odds and placing bets, always look for the positive expected value. To find that, calculate the implied probability – and then make your decision.