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OT: Estimating real winning probablilities from decimal odds

Posted By: leobueno
Date: Friday, 7 September 2012, at 9:16 p.m.

I am trying to figure out whether my calculation of actual winning chances from published odds makes sense.

Below are the decimal odds of 4 events, A, B, C, D.

The second colum shows the calculated implied odds from the decimal odds (i.e., 1/odds), which if you add, exceed 100% (hey, the book has to have an edge).

In the third colum, I try to normalize the implied odds by dividing them by their sum (109.1%), so that the total winning probabilities will be 100%.

The question is: are the derived "Actual" winning probabilities the real ones? In other words, is this a good way to remove the book's vigorish and approximate the "true" odds?

Outcome|Odds|Implied|Actual

A|1.40|71.4%|65.4%

B|2.84|35.2%|32.3%

C|71.00|1.4%|1.3%

D|91.00|1.1%|1.0%

Sum|----|109.1%|100.0%

By the way, the events are the winning party in the 2012 USA elections (Democratic, Republican, Any Other, Independent).

The odds are the median odds published by OddsChecker.com.

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