Foundation
Implied probability and the margin
Every posted price is a probability with a margin attached. Removing that margin is the first analytical step in any market read.
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How this lesson runs
- 01
From price to probability
- 02
Why the sum exceeds 100%
- 03
Normalising
Want this applied to a specific price? The Sports.co Analyst walks through the arithmetic. It explains method only — never picks.
Video walkthrough: Implied probability and the margin
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From price to probability
Convert each side of a market to implied probability. For American odds, negative prices use |p| / (|p| + 100) and positive prices use 100 / (p + 100).
Why the sum exceeds 100%
The excess over 100% is the margin, commonly called the vig or hold. A market pricing both sides at -110 sums to about 104.8%, so the hold is roughly 4.8%. That figure is arithmetic from the two prices you supply, not a claim about any operator.
Normalising
Divide each implied probability by the total to get a fair-value estimate. This normalised number is what you would compare against an exchange quote or your own model.
Sources
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Method explained in our own words. This lesson asserts no market price, result, or statistic.
Continue
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