Guide
Implied probability explained
Implied probability is the price translated into a percentage. It is the number you compare your model against, but only after the bookmaker's margin has been removed.
The conversion
Divide one by the decimal price. A price of 1.80 implies 55.6%; a price of 4.00 implies 25%.
implied_probability = 1 / decimal_odds
Why the book adds up to more than 100%
Take a 1X2 market priced 2.10 / 3.40 / 3.60. The implied probabilities are 47.6%, 29.4% and 27.8% — a total of 104.8%. That 4.8% excess is the overround, the bookmaker's margin.
Comparing a model directly against raw implied probability therefore understates your edge on every selection, because the margin is baked into all three prices.
Removing the margin (no-vig)
The simplest correction divides each implied probability by the book total. In the example above the home win becomes 47.6 / 104.8 = 45.4%. That fair probability is the honest benchmark for a model estimate.
fair_probability = implied_probability / sum_of_all_implied_probabilities