Question 1

What is implied probability?

Accepted Answer

Implied probability is the probability of an outcome as calculated from the bookmaker's odds. If a team is priced at decimal odds of 2.50, the implied probability is 1/2.50 = 40%. If you believe the true probability is higher than 40%, you have an "edge" and the bet has positive expected value.

Question 2

What is overround (vig)?

Accepted Answer

For a two-outcome market, if the bookmaker prices each side at 1.90 decimal odds, implied probabilities are each 1/1.90 = 52.6%. Sum = 105.2% — the extra 5.2% is the bookmaker's margin (overround or "vig"). It ensures the book profits regardless of which outcome wins. Higher overround = worse value for bettors.

Question 3

How do I convert odds to probability by hand?

Accepted Answer

Fractional X/Y: probability = Y/(X+Y). Decimal D: probability = 1/D. American positive +M: probability = 100/(M+100). American negative −M: probability = M/(M+100). To convert probability p back: fractional = (1−p)/p to 1; decimal = 1/p; American positive = 100×p/(1−p) if p<0.5, American negative = −100×(1−p)/p if p≥0.5.

Question 4

What is fair value odds?

Accepted Answer

Fair value odds represent a 0% margin price based purely on estimated true probability. Fair decimal odds = 1/p. For example, if you estimate a 45% probability, fair decimal odds = 1/0.45 ≈ 2.22. Any bookmaker price above 2.22 represents positive expected value for the bettor.

Question 5

How are odds used outside of betting?

Accepted Answer

In statistics and medicine, odds appear in odds ratios (case-control studies), logistic regression coefficients, and Bayesian inference. In science, the Bayes factor is a ratio of likelihoods used to compare hypotheses. Odds are also used in genetics (Hardy-Weinberg equilibrium) and game theory.

Question 6

What is the Kelly Criterion?

Accepted Answer

Kelly Criterion determines the optimal bet size given your edge: f* = (bp − q) / b, where b = decimal odds − 1, p = your estimated probability of winning, q = 1 − p. If bookmaker offers 2.50 decimal but you estimate 45% probability: f* = (1.50 × 0.45 − 0.55) / 1.50 = (0.675 − 0.55)/1.50 ≈ 8.3% of bankroll per bet.

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