The central idea
Implied probability is the break-even percentage encoded by an odds price. It is useful for comparing formats, not predicting an outcome.
Implied probability = 1 ÷ decimal odds
Worked example
Decimal 2.50 implies 40%. The equivalent fractional price is 3/2 and the equivalent American price is +150. Fractional 3/2 converts to decimal by calculating 3 ÷ 2 + 1.
Limits of the calculation
A market price can include margin and other pricing decisions. Its implied probability is therefore a break-even threshold, not necessarily the true chance.