Arbitrage betting is particularly popular among bettors because of the potential to make big wins. An ‘Arb’ is when a sports bettor places multiple bets on a sports event via multiple betting companies and makes a profit regardless of the outcome. If you have the right tools then sports arbing or arbitrage betting a simple procedural and straightforward betting type with highly lucrative potential.
Expert bettors know that arbitrage opportunity is real and how to find one. OddsMax has created this complete arbitrage betting guide that will entail what is arbitrage and what are the pros and cons of sports arbing.
What is Arbitrage-The Basics
Simply put, in the investment market, Arbitrage is buying and selling of commodities in different markets in order to make profits from the differing prices of the same asset.
In the context of sports arbitrage betting the commodity here is the outcome that you bet for and simultaneously be against. The prices of the commodity are the sports odds. You have to remember that arbitrage betting is about making the use of the difference in these odds and there is no scope of making predictions in here. This is the reason why arb bets are also known as ‘sure bets’, ‘safe bets’ and ‘sure wins.’
How can you arb bookmakers?
We know that we have got you all interested in arbitrage bets but we still haven’t provided you with the knowledge that is necessary to arb a bookmaker.
In the simplest form, the sports arbitrage betting opportunity exists when the betting exchange lay odds available are less than those offered by the bookmaker. For instance, in horse racing, if the lay odds are at 9.0 and the odds offered by the bookmaker has 10.0 then you have an arb opportunity. In this scenario, by implementing the “Back High, Lay Low” trading philosophy, a bettor has the opportunity to make guaranteed profits.
But how does it make for guaranteed profit?
We know it can be difficult to understand how arbitrage sports betting can be a guaranteed profit but to understand that you need to be familiar with the concept of Betfair betting exchange.
Don’t worry it is nothing sophisticated. All you need to do for arbing a bet is to ‘Cancel Out’ the back bet you made at a bookmaker by laying on Betfair. Laying a bet means you are betting against the outcome that you have backed with the bookmaker. This essentially makes arbitrage betting a risk-free move.
The difference between the odds at the bookmaker and the Betfair means that you are not just breaking even but getting a guaranteed profit when the game settles.
This the Bookmaker/Betfair arbitrage betting strategy in the most basic form. Whether you win at the Bookmaker or the Betfair, it will make no difference to your guaranteed wins.
Potentially how much can you win with arbitrage betting?
There is not a definite answer, as your wins depend on a number of factors, that we will address later in this post, but for now, let’s focus on the biggest single factor.
This most important factor is detection, it is difficult for you to make a profit if you got detected by a bookmaker when making an arbitrage bet. If found out, a bookmaker can limit your account or even ban it. In sports betting industry this is known as gubbing.
The total profits you will be able to make depends on how much you are able to earn before you are limited or banned. So, if you are able to place a large volume of bets then your profits will be proportionally high. A few bets will make a small profit. It is as simple as that.
Arbitrage betting seems to be great, but how often do they happen?
In the sports betting industry, arbs are an everyday occurrence because of the volatile nature of the betting markets. Bookmakers are swift is keeping track of all the other available odds and quickly prevent bettors from taking advantage of the odds difference. But still, it keeps happening and you always have the opportunity for arb betting in every sport across all nations.
How can you find sports arbitrage bets?
Given the complicated nature of the sports betting industry, it will be impossible for you to manually find arbs. To be able to find arbitrage betting opportunities, you will need an arb finder. Odds comparison sites like OddsMax allow you to easily keep track of the odds from dozens of sportsbooks for every event that makes it easier for you to find an arbing opportunity. But there is dedicated software as well that provide you with a consistent flow of arbs as soon as an opportunity arises. Such automated tools make arbitraging bets incredibly easy and straightforward.
Matched betting and how it is related to sports arbitrage betting
Matched betting is same as the arbitrage betting except that it:
Doesn’t require bookmaker’s odds to be better than that of Betfair. Lower or even similar odds are sufficient.
Requires free bets. This is why arbing is also known as “matched bets without any free bets.”
If you do not have any experience with arbitrage trading, we recommend you to start with matched betting and then move on to arbitrage sports betting.
The theory is clear by now, but let’s understand the basics of arbitrage betting with an example and the math involved.
Suppose you are working up a $10 wager at the bookmaker. To keep things, we will assume that you are paying 0% commission on the exchange but usually, you have to pay a commission of 5%.
Here is what the possible outcomes will look like:
When Bookmaker wins:
Bookmaker: ($10 x 10.0) – £10 = +$90 profit
Exchange: -($10 x 9.0) +£10 = -$80 loss
The net profit earned =+$10
When the Exchange wins:
Bookie: -$10 loss
Exchange: $10 win
It is clear that this setup earns an impressive outcome for the bettors. Either they end up with a $10 profit or break event at $0.
But as we mentioned before, arbing is a guaranteed profit, here it doesn’t seem to be the same. This is because the above approach still does not guarantee a profit, however, the solution exists that we will look into now.
How to get guaranteed profit with arbitrage betting?
In order to guarantee a profit from an arb, you must be able to spread the risk over the outcomes of the sports event. You can achieve this by appropriately adjust the lay stake which is based on a simultaneous equation. You can do the same using any online arbitrage betting calculator.
Now here comes the geeky math part that you must understand. You can also put this equation in a spreadsheet in order to easily work out the lay stake.
Arbitrage betting has only two outcomes:
If the bookmaker wins, the exchange loses
If the bookmaker loses, the exchange wins
There is no third scenario. Now to guarantee your success, all you need is a formula that can combine the above two scenarios and find the “value lay stake” that will yield the same result in both the scenarios.
Let’s name our unknown variable as LayStake.
Here’s what the formula comes out to be:
(BookieBetWins BookiePNL) – ((ExchangeOdds-1) x LayStake) = (ExchangeBetWins BookiePNL) + (LayStake)
If we consider the above example, values for variables are:
BookieBetWins BookiePNL = $90
ExchangeOdds = 9.0
ExchangeBetWins BookiePNL = -$10
In the formula we have used “ExchangeOdds-1” to remove the need of subtracting the LayStake separately as done previously, this simplifies the formula.
Now let’s substitute the values into the formula.
($90) – 8.0(LayStake) = (-$10) + (LayStake)
Solving the equation, we get:
$90 – 8(LayStake) = -$10 + LayStake
$100 = 9(LayStake)
LayStake = 100/9 = $11.11
Now the risk is spread across both the outcomes. And now the bettor has a lay stake value that creates a positive and equal result possible for any outcome.
Let’s see how.
If the bookmaker wins:
At the bookmaker: ($10 x 10.0) – $10 = +$90 profit
At the exchange: -($11.11 x 9.0) +$11.11 = -$88.88 loss
Net profit = +$1.12
If the exchange wins:
At bookie: -$10 loss
At exchange: $11.11 win
Net profit= +$1.11
Does arbitrage betting bothers bookmakers?
The main objective of bookmakers is to ensure that they remain profitable on every event regardless of the volumes of bets being made. If their books are not hugely unbalanced it is not a problem. Also, there is a small per cent of bettors arbing bets.
The real issue is that the arbitrage betting opportunities represent a shift in the exchange odds leaving bookmakers behind. Now to cope with this odds difference and prevent the outflow of bettors, bookmakers offer odds that are above the market. It is good for bettors but it keeps bookmakers in a loss which is not their business model and they try to reduce this from happening by adjusting the odds.
Another reason why arbing is uncomfortable for bookmakers is that they do not want to encourage bettors who show a capitalist mindset, it is bad for their business. By identifying the arbitrage bettors, bookmakers also try to reduce the likelihood of events likes value betting and bonus abuse. Therefore, they limit or remove the accounts of such bettors as early as possible.
Is sports arbitrage betting difficult?
We mentioned earlier, the philosophy behind arbing is simple-Back High Odds and Lay Low Odds. You wager on all outcomes to ensure that you never lose.
Arbitrage betting would be extremely easy if the odds stayed still but as we know, in reality, odds keep changing this throws in several logistical complications:
- Bigger Bankroll
For making profits with arbs you will need a bigger bankroll than usual as you will need sufficient funds to back your bets as well as pay for the exchange liabilities. This is why for some bettors arbing is simply not an option.
- Speed & Efficiency
We already mentioned that arbing is a challenge for sportsbooks and they try to close the opportunity as soon as possible. This is why bettors have to be on their toes to identity an arbitrage opportunity as soon as it occurs. It is important that you have all the tools with you to speed up the entire process. For a risk-free profit, you need to capture the opportunity as soon as it occurs. Log into your bookmaker as well as exchange accounts and be ready to go. The exchange will get significantly busy at the time of the arb because all the bettors will be there for the same reason. This is why at times a bettor might not the odds as originally available.
- No fun
It is a required virtue of all bettors, but arbitrage betting requires it more as it is not for those who cannot resist a punt. Here you have little reason to be excited about the outcome a sporting event as the profit is guaranteed, this is why if you seek thrill and excitement arbing is not suitable for you.
- Account limit and closures
Arbing is going to guarantee profits but it is not without risk of getting your account banned. Most certainly, if you start arbitrage betting in large volume your account will be closed, some bettors get their accounts closed in as little as one bet.
You have little hope of recovering your account after that. Arbers are winners and bookmakers cannot have winning accounts if they have to be profitable, so they do what they do best, close such accounts.
- Terms & Conditions
Most bookmakers have terms and conditions in place to close any account at their discretion if they suspect any form of advantage play by the bettors. Almost, every bookmaker explicitly states that use of any arbitrage betting programs used on their website is against terms and conditions.
While you don’t get into legal disputes for arbitrage betting but it leaves you open for several nuisances such as stringent verification requirements, payout disputes and account locks.
How you can avoid arbitrage betting detection?
We stated the problems with arbing, there are ways to prevent the tell-tale alerts that notify the bookmaker of your activity:
- Larger deposits and stakes
When a bettor signs up and deposits a large sum it is a ringing bell for bookmakers. Furthermore, when you try to put the maximum stake on a selection then it raises suspicion. It is not a practice of someone just starting with a new account to put a big stake. This sets apart bettors from average punters and indicates that someone knows what they are doing. Hence, bookmaker easily points out an arbing account.
- Peculiar Stake Amounts
There are several measures in place by the bookmakers to avoid customers from exploiting the system and it includes stake restrictions and automated risk parameters. This forces arbers to put unusual stakes while an average bettor is putting a flat and round stake. When your unusual stakes are non-rounded and frequent, it suggests that you are using a betting strategy or automated program.
- Recurring Betting Patterns
It includes betting at unusual hours of the day or at usually high odds. If you try to place bets at antisocial hours it puts you on the radar of bookmakers who are monitoring for arbing or value betting.
- IP Address
Bookmakers have the database that includes IP address of value bettors and bettors that work as a group of syndicates to ‘game the system’. IP address not only helps identify the location but also multi-accounting helping bookmakers to avoid arbing.
You can use a reliable VPN service to hide your IP address. It is the easiest way to keep your identity and location secure and untraceable.
- Fraud Prevention Tools
There are companies offering fraud prevention tools to online betting sites to prevent arbitrage betting activity. Such tools put bookmakers at an advantage as no matter whatever steps bettors take, they still can be recognized. No matter whatever your betting account history may be like, you will still be marked as an arber.
This is why it is particularly difficult to make a long term career in sports arbitrage betting.
The easiest way to beat the detection and account closures is to keep learning about arb detection and stay afloat in the game.
Is arbitrage sports betting legal?
Arbing is nothing illegal but involved picking off good value odds.
Arbitrage betting is discouraged by the bookmakers as it leaves them in a vulnerable position. But it does not make arbitrage illegal. Even betting exchanges like Betfair encourage arbitrage betting as it provides more liquidity for the betting markets.
There is serious value is arbitrage betting as bettors get to earn easy and risk-free income. From the profitability point of view, yes arbing is totally worth it.
However, there are some drawbacks too.
If you have favorite bookmakers you bet at, you will be risking permanent closure of your account if found arbing. Also, you need bankroll, time and dedication to make arbitrage work for you. Additionally, the fun of uncertainty is not there here but the profit is guaranteed.