Question

It's illegal to bet on political races in the United States, but overseas betting on American elections is common. As of this writing, Hillary Clinton is the favorite to win the presidency in 2016, with odds listed as 8/11. Explain what that means, including relating it to probability.

Answer 1

57.89%

Explanation:

Implied probability = (1 / (odds + 1)) x 100%

Using the odds of 8/11 for Hillary Clinton:

Implied probability = (1 / (8/11 + 1)) x 100% = 57.89%

There is a 57.89% chance that Hillary Clinton will win the presidency.

Answer 2

Odds are a measure of the likelihood of an event occurring. In the case of betting on an event, odds represent the ratio of the payout for a winning bet to the amount of the bet. So, in this case, odds of 8/11 mean that if you were to bet $11 on Hillary Clinton winning the presidency and she did win, you would get a payout of $8, plus your original $11 bet.

To relate this to probability, you would calculate the implied probability of the odds. This is a simple calculation:

Implied probability = (1 / (odds + 1)) x 100%

Using the odds of 8/11 for Hillary Clinton, the implied probability would be:

(1 / (8/11 + 1)) x 100% = 57.89%

So, according to these odds, there is a 57.89% chance that Hillary Clinton will win the presidency.