Implied Probability
Implied probability is the probability suggested by a market price or betting odds. In prediction markets, a contract price often approximates the market’s implied chance of the outcome.
Definition
Implied probability is the probability inferred from a price or odds. It represents what the market is “saying” about the chance of a binary event.
In prediction markets
In many yes/no markets, the price of the YES contract in dollars (or cents) is commonly interpreted as a probability. For example, a YES price of 0.63 is often read as about a 63% implied probability.
In sportsbooks
Sportsbook odds can be converted into implied probability, but the number typically includes the bookmaker margin. If you want a clean comparison, you may need to remove the vig.
Why it matters
Implied probability is the baseline for comparing your forecast to the market. It is also used as a benchmark in skill scoring, for example when computing Brier skill score versus market consensus.
Related
See market consensus for how to aggregate prices into a single reference probability.