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How American Odds Convert to Implied Probability
American odds express both the potential return and the win rate required to break even at that price. Converting the price to implied probability makes different positive and negative odds easier to compare.
Positive American odds
Positive odds state the profit from a 100-unit risk. At +150, a 100-unit risk targets 150 units of profit. Decimal odds are 2.50 because the total return includes the 1.00 stake plus 1.50 profit for each unit risked.
The implied probability formula is 100 divided by odds plus 100. For +150, that is 100 divided by 250, or 40.00%. Under a constant-price, constant-risk model, 40.00% is also the price-based break-even win rate before other assumptions.
Negative American odds
Negative odds state the risk required to target 100 units of profit. At -150, a 150-unit risk targets 100 units of profit. Decimal odds are approximately 1.67 because each unit risked earns about 0.67 units of profit on a win.
The implied probability formula is the absolute odds divided by the absolute odds plus 100. For -150, that is 150 divided by 250, or 60.00%.
Implied does not automatically mean fair
A quoted market can include sportsbook margin. Two opposing prices can convert to probabilities whose sum exceeds 100%. The implied probability of one side therefore describes its quoted price, not necessarily the best estimate of the true outcome probability.
No-vig normalization requires all outcomes from the same market and moment. Spread and total prices can also involve push probability at whole numbers, which is not captured by a one-price conversion.
Example: compare +120 and -110
+120 converts to 2.20 decimal and 45.45% implied probability. -110 converts to about 1.91 decimal and 52.38% implied probability. The second price requires a higher win rate to break even because each winning unit of risk earns less profit.
This comparison does not say which selection is better. It only translates the price so the required rates and potential returns use a common scale.
Common mistakes
- Reading -150 as a 150% probability.
- Forgetting that decimal return includes the original stake.
- Calling one quoted price a no-vig probability.
- Rounding each intermediate conversion before completing a comparison.
Important limitations
- The formula reflects the entered price only.
- It does not estimate team strength or predict an event.
- Market margin requires the other outcomes from the same market.
- Push-aware spread and total analysis requires point-specific context.
Frequently asked questions
Is implied probability the same as win probability?
It is the probability embedded in the price. It is not automatically a fair forecast.
Why do two opposing implied probabilities total more than 100%?
The quoted prices can include sportsbook margin or hold.
Can I compare odds from different moments?
You can convert them, but a fair market comparison should use consistent outcomes and timing.
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