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For example, if one player takes team A and the other takes team B and each wager $110 to win $100, it doesn't matter what team wins; the casino makes money. They take $100 of the $110 from the losing bet and pay the winner, keeping the extra $10 for themselves. This is the house edge.
In a 3-horse race, for example, the true probabilities of each of the horses winning based on their relative abilities may be 50%, 40% and 10%. The total of these three percentages is 100%, thus representing a fair 'book'. The true odds against winning for each of the three horses are 1–1, 3–2 and 9–1, respectively.
The art of estimating win probability involves choosing which pieces of context matter. Baseball win probability estimates often include whether a team is home or away, inning, number of outs, which bases are occupied, and the score difference. Because baseball proceeds batter by batter, each new batter introduces a discrete state.