Implied probability: what the odds are really telling you

Every decimal price converts to a probability with one division: implied probability = 1 ÷ decimal odds. A team at $2.00 is priced as a 50% chance. At $1.50 it's 66.7%. At $4.00 it's 25%.

Now add up the implied probabilities of every outcome in a market. They never total 100% — they total 104%, 106%, sometimes more. That overage is the bookmaker's margin (the "vig"), and it's how the house wins regardless of the result. A two-way market at $1.90 / $1.90 implies 52.6% + 52.6% = 105.3%. That extra 5.3% is the price of playing.

The practical upshot: to profit long-term, your judgement of an outcome's true probability has to beat the market by more than the margin. Backing a $1.90 shot is only value if you genuinely believe it wins more than 52.6% of the time — not 50%.

Comparing margins across bookmakers matters more than most punters realise. A market at 103% costs you roughly half as much over a season as the same market at 106%.