Quick answer
Implied probability is the win probability an odds quote assumes, expressed as a percentage. The formula: for negative American odds, |odds| ÷ (|odds| + 100); for positive odds, 100 ÷ (odds + 100); for decimal odds, 1 ÷ odds. So −110 implies 52.38%. On a prediction market you skip the conversion entirely: a contract priced at 52¢ is a 52% implied probability.
104.76%
what both sides of a standard −110 sportsbook line add up to. The 4.76 points above 100% are the vig.
2.1 pts
average gap between Polymarket prices and actual outcome frequencies across 28,407 resolved markets, 2024–2026
$42B+
Kalshi + Polymarket volume in June 2026, roughly triple the ~$14B monthly handle of US sportsbooks
Every price in every betting market is a probability wearing a costume. American odds, decimal odds, fractional odds: all of them are the same fact dressed three different ways, and implied probability is what you get when you undress it. Traders convert everything to implied probability because it is the only format you can compare, add, and argue with.
What is implied probability?
Implied probability is the break-even win rate built into a price. A −110 line says: to win $100 you must risk $110, so the bet has to win 110 ÷ 210 = 52.38% of the time just to break even. That 52.38% is the implied probability. It is not a claim about the true chance of the outcome. It is what the price assumes, which is exactly why it matters: your entire job as a trader is deciding whether the price's assumption is wrong.
Prediction markets made this concrete. A contract that pays $1 if an event happens, trading at 62¢, is a 62% implied probability with no conversion step. That transparency is most of the reason the format is eating sports betting, and we cover how the underlying markets work in the guide linked above.
Calculator
Convert odds to implied probability
One thing the calculator does that most implied probability calculators skip: enter both sides of the market and it removes the vig, showing the fair probability each side implies once the bookmaker's margin is stripped out. More on why that matters below.
How do you calculate implied probability?
The logic behind every version is identical: stake divided by total payout. At −110 you put up $110 for a $210 total return. At decimal 2.50 you put up $1 for a $2.50 return, and 1 ÷ 2.50 = 40%. A prediction market contract makes the structure visible: you put up 40¢ for a $1 payout, and 40 ÷ 100 is the probability, no formula required.
Implied probability chart: common odds, converted
| American | Decimal | Fractional | Implied probability | Market price |
|---|---|---|---|---|
| −300 | 1.33 | 1/3 | 75.00% | 75¢ |
| −200 | 1.50 | 1/2 | 66.67% | 66.7¢ |
| −150 | 1.67 | 2/3 | 60.00% | 60¢ |
| −110 | 1.91 | 10/11 | 52.38% | 52.4¢ |
| +100 | 2.00 | 1/1 | 50.00% | 50¢ |
| +150 | 2.50 | 3/2 | 40.00% | 40¢ |
| +200 | 3.00 | 2/1 | 33.33% | 33.3¢ |
| +300 | 4.00 | 3/1 | 25.00% | 25¢ |
| +500 | 6.00 | 5/1 | 16.67% | 16.7¢ |
Why do implied probabilities add up to more than 100%?
Convert both sides of a standard spread and you get 52.38% + 52.38% = 104.76%. Real probabilities of complementary outcomes sum to exactly 100%, so the extra 4.76 points are not probability at all. They are the bookmaker's margin, the vig, baked directly into the price. The percentage above 100 is called the overround; the share of total money wagered the book keeps, 4.76 ÷ 104.76 ≈ 4.5% here, is the hold. People use the terms interchangeably and they are not the same number.
That is the polite, textbook version of the vig. The realized version is worse. Per Sportsbook Review's revenue tracker, US sportsbooks kept 10.1% of the $165 billion wagered in 2025, up from 9.2% the year before. The gap between 4.5% and 10.1% is mostly parlays: state gaming reports compiled by Casino Reports show parlay hold near 19.9% against 6.0% on straight bets, with parlays making up roughly a third of handle and over 60% of operator revenue. Every leg of a parlay stacks its overround on top of the last one.
This is why serious bettors devig everything before comparing prices. The standard multiplicative method: divide each side's implied probability by the total. A −110 / −110 line devigs to 52.38 ÷ 104.76 = exactly 50% per side, which is what the book actually thinks. Sharp bettors treat the devigged closing line as the best available estimate of truth, and grade themselves against it. As one r/sportsbook regular put it: "Most sharp bettors I know are just chasing closing line value. They bet 49ers at +4.0 hoping it will move to 3.5 or 3.0, and their bet becomes +EV."
How do prediction markets quote implied probability?
A prediction market removes the costume entirely. Binary contracts on Kalshi and Polymarket trade between 1¢ and 99¢ and pay $1 if the event happens, so the price is the implied probability, to the cent. There is no line to devig because there is no bookmaker on the other side: you trade against other people on an order book, and YES + NO on the same market sums to roughly 100¢ rather than a vigged 104.76.
The cost did not vanish; it moved somewhere visible. It lives in the bid-ask spread, typically a cent or two wide on liquid markets and 10¢+ on dead ones, and in explicit trading fees. Both major venues now charge takers a fee proportional to price × (1 − price), which is the variance of the contract: Kalshi charges 0.07 × price × (1 − price) per contract, maxing out at 1.75¢ on a 50¢ contract, and Polymarket US charges the same shape with a 0.06 coefficient, maxing at 1.5¢. Resting orders are the other side of that trade: Kalshi makers pay a quarter of the taker rate, and Polymarket US makers are paid a rebate.
| Venue | Taker fee formula | Max fee (at 50¢) | Maker side |
|---|---|---|---|
| Kalshi | 0.07 × contracts × P × (1−P) | 1.75¢ per contract | 25% of the taker fee |
| Polymarket US | 0.06 × contracts × P × (1−P) | 1.50¢ per contract | Rebate: paid ~0.31¢ per contract |
| Polymarket (intl) | 0.04–0.07 by category; geopolitics fee-free | 1.75¢ (crypto) | Never charged; rebate programs |
The honest caveat: cheap is not free, and it is not uniformly cheap. Practitioners who compute effective holds on individual Kalshi markets find some, especially lopsided ones, carrying 3.8–4.4% once fees are baked into the posted odds, which rivals a sportsbook's standard line. And an illiquid market with a 10¢ spread is more expensive than any −110 quote, whatever the fee schedule says. The number that decides what you actually pay is the all-in price of the side you take, which is why comparing the same event across venues matters; the Kalshi vs Polymarket comparison walks through how the two books differ in practice.
Implied probability vs true probability
Implied probability is what the price assumes. True probability is what the world will actually do. The entire discipline of trading these markets lives in the gap between the two, and only in the gap: a heavy favorite can be a great buy and a longshot can be wildly overpriced, because the only question is whether your estimate beats the market's. A professional handicapper put it flatly on r/sportsbook: "Sports betting is a simple numbers game and trying to find value between implied probabilities. If your model has a fight at −450 and the book has them at −375. You bet them. It doesn't matter if they are a favorite."
So how close do market prices actually get to true probabilities? Close enough to be uncomfortable. An independent analysis of 28,407 resolved Polymarket markets from 2024–2026 found events priced at 40¢ resolved YES 41% of the time and events priced at 70¢ resolved 72% of the time, with a mean calibration error of 2.1 points, versus 6.4 for sportsbook lines and 8.9 for polling averages in the same study. This is the modern version of a result economists have documented since the Iowa Electronic Markets beat 964 presidential polls three times out of four: prices aggregate dispersed information better than almost anything else we have.
Almost. The known failure mode is at the extremes. The classic evidence is from horse racing, where a study of 6.4 million US race starts found betting 100/1 longshots lost 61% of stake while betting favorites lost only 5.5%: people systematically overpay for small probabilities. Prediction markets inherit a milder version, and a 2026 study of 292 million trades across Kalshi and Polymarket adds a twist: political markets stay chronically compressed toward 50%, while sports markets are nearly perfectly calibrated at short horizons. A price is a good probability. It is not a guaranteed one, and how good depends on what is being priced.
The trap
The cheapest-looking contracts are the most mispriced ones. A 3¢ contract reads as free money on both sides: longshot buyers overpay for the lottery ticket, and NO-sellers collect pennies against catastrophic risk. Longshot bias means the 3¢ is often worth less than 3%, and fee structures charge you least exactly where your probability estimate is most likely to be wrong. Respect the extremes.
In practice, three moves cover most of what traders do with implied probability:
- Comparing your estimate to a sportsbook line: devig first, then compare. Your model saying 55% against a posted 52.38% side is not an edge; the devigged line already says 50%, so your edge is 5 points, not 2.6.
- Comparing the same event across venues: when one book implies 54% and another implies 58%, the gap itself is tradeable. That is prediction market arbitrage, and it exists because implied probabilities for the same event have no obligation to agree.
- Deciding how much to stake on an edge: the gap between implied and true probability is the input to sizing math like Kelly, which we cover separately in position sizing for prediction markets.
Why implied probability suddenly matters to more people
Prediction markets stopped being a curiosity in the last twelve months. Pew Research tracked combined Kalshi and Polymarket volume growing from under $5 billion a month in September 2025 to roughly $24 billion by April 2026, and the World Cup pushed June past $42 billion, several times the monthly handle of every legal US sportsbook combined. Kalshi operates as a CFTC-designated exchange, which is why its markets are legal for US residents, and Polymarket re-entered the US under CFTC regulation in December 2025.
Which means millions of people are now staring at prices that are probabilities, many of them arriving from sportsbooks where the probability was always hidden inside a −110. Learning to read implied probability, devig a line, and respect the extremes is the whole entry fee.
Where Kairos fits
Everything above assumes you can see the prices. In practice the same event trades on Kalshi, Polymarket, and Predict.fun at implied probabilities that disagree by whole points, and the disagreement is invisible unless you have all three books open. Kairos is a trading terminal that aggregates those order books into one view: the global best bid and ask for every cross-listed event, sub-second data, and execution routed to whichever venue prices your side best.
The math in this article is the easy part. Seeing every implied probability for the event you care about, at the same instant, is the part that needs infrastructure. And if you would rather test your read of the odds against other traders, the Kairos Cup is a tournament built for exactly that.