How odds actually work

American, decimal and fractional odds, and what each one really tells you.

An odds price is two things at once: a payout instruction and a probability statement. American odds show what you win on a $100 stake (+150 wins $150) or what you must stake to win $100 (-150 risks $150 to win $100).

Convert any American price to implied probability. For a positive price: 100 / (price + 100). For a negative price: -price / (-price + 100). So -150 implies 60%, and +150 implies 40%.

Decimal odds are the same information in a friendlier shape: 2.50 means your stake returns 2.5x including the stake, and 1 / 2.50 = 40% implied probability.

Implied probability is what the market thinks, plus the operator's margin. It is not a forecast and it is not the true chance of anything. Treat it as a price you either agree with or you don't.

Key points

-150 implies 60%; +150 implies 40%.
Decimal implied probability is simply 1 divided by the decimal price.
The implied number always contains the operator's margin.

Quiz

Score 70% or better to pass this lesson.

1. What implied probability does -200 represent?

2. Decimal odds of 4.00 imply what probability?

3. Implied probability is best described as…