Convert the odds
For decimal odds, implied probability is 1 divided by the odds. Prices of 2.00, 3.50 and 4.00 imply approximately 50%, 28.57% and 25%. In a three-way match-result market these sum to 103.57%.
Calculate the overround
Subtract 100% from the total implied probability. In this example the overround is 3.57 percentage points. It describes the shape of the quoted book, not a promise about the operator’s realised profit or an individual customer’s loss.
Normalising is an assumption
Dividing each implied probability by the total produces a set that sums to 100%. This proportional adjustment is useful for comparison, but assumes the margin is allocated proportionally. Real market pricing may not follow that assumption.
Compare a complete market
Use prices captured at the same time and with the same settlement conditions. Combining the best prices from different operators answers a different question from measuring one operator’s book. Commission and other deductions also need separate treatment.