What are Implied Odds?

wooden figure holding blocks saying price and valueKnowing and understanding the odds and how they work is vital when you try and take your betting to the next level. You need to spot value and where bookmakers have made an error with the odds. One way in which you do this is with implied odds, and the first step to doing that is to know how to work out implied odds and then to use them in your calculations for the event or race you are looking at.

Implied odds are the chances implied by the bookmaker of a selection winning the contest.  They are different from the true odds, which is the real chances of something happening.  Taking all possible outcomes together true odds will always add up to 100% but implied odds will add up to more than 100%.  The amount above 100% is the margin built into the market by the bookmaker.  The fact that there is always a margin means that implied odds are always going to be worse than true odds for an appropriately priced market.

The thing is, not all markets are priced appropriately.  Odds also move based on what is happening and how much people stake on different outcomes.  This means if you have a very good idea of the true odds, which is difficult in itself as it is hard to be sure of true odds in things like spots, you can spot when implied odds are equal or better.  This is where value can be found in betting markets.

We all have an opinion when it comes to betting, and this is usually given as a percentage chance rather than odds.  For example, you are likely to call a game a 50/50 game, implying both teams have a 50% chance of winning, but you wouldn’t always think of it in odds terms, saying both teams should be 1/1 or evens to win the game.  If bookmakers are offering odds better than evens on one selection and you are accurate with your true odds then this is an opportunity to find value.

How to Work Out Implied Odds

bookmaker writing odds up on a board at race courseThe first step you need to take is to work out the implied odds of the selections you are interested in. By doing this, you have a percentage that you can use to see if the bet offers value or not.

To work out implied odds, you need to do the following calculation:

  • Implied Odds = 1 / decimal odds of your selection
  • Implied odds = 1 / 3.00 = 33%

We’ve used 3.00 in the example, which is the decimal odds of 2/1, and the percentage works out at 33%. This means that if you are backing something at 2/1, then the odds suggest the selection has a 33% chance of winning.

When you have this, you then need to look at the race or event as a whole and work out if that is value or not.  If this was say a horse and you thought it’s real chanced of winning from research was 20% then this is a bad value bet.  If on the other hand you think it is 40% then it could be a good value bet.

That is not to say the bet will win, even at 40% it will only win an average of 4 in 10 times.  The point is if you were to back 10 horses at 2/1 with a 40% chance of winning then in the long term you may get more back than you staked.

Using Implied Odds to Work Out Value

price and value on hand drawn scalesWhen you do this, you will either take the stance that your bet is value and the odds are worth taking, or you will go the other direction, work out the bet is bad value and leave it alone.

There is nothing wrong with leaving a bet alone if there is no value in it, this is the key to long-term gambling, and there will be plenty more opportunities in the future.

Alternatively some people will lay a bet on the exchange if they think the odds are a lot lower than they should be.

First up, let’s look at the positive

If you are looking at a football match and believe that there is a tiny chance of the home team winning the game, a fair chance of a draw and a strong chance the away team wins, then you can put together percentages on that.

Let’s say you put 10% home team, 30% draw and 60% chance away win on the three possible outcomes. This suggests that you need implied odds of 59% or less on the away team to give you a bet that is worth placing because that means you are getting value as you are rating them with a better chance than the bookmakers.

If the available odds offer are 1/1 or evens, this equates to a 50% chance of winning, so you are getting better odds than what you think they should be, and therefore the bet is value. To get value, you need your percentage chance of the selection winning to be bigger than what the bookmakers are offering. The wider the gap between the two numbers, the more value you believe there is in the selection.

Now let’s look at when you should not place a bet

Again, we will use a football match with three possible outcomes. Let’s say you believe the team has a 40% chance of winning the game because you think both teams have an equal chance (40%), and there is also the chance of a draw (20%).

The bookmakers are once again offering 1/1 or evens as the odds on the bet, which is a 50% chance of winning. This is greater than the chance that you believe they have, so in this instance, you are getting a price that is lower than what you think the team should be. In this instance, it is always best to avoid the bet, or if you want to go away and think more about it, then you can do, but don’t change your opinion just because of the odds on offer.

The alternative again is to lay this selection on an exchange in this scenario rather than backing it at poor implied odds vs true odds.

Just like the other example, the bigger the gap between your percentage and the implied odds, the greater difference there is in terms of value. If this is higher, then the greater difference means very poor value.

By being able to work out implied odds, you can put your own thoughts against what the bookmaker is offering. Look for value, finding this is the key to long-term betting success, and implied odds will help you highlight it and what to stay away from with ease.