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Arbitrage Betting
Arbitrage betting is a system used by experienced sports bettors to guarantee a small profit when betting on a single sports event by backing all possible outcomes. Punters who practice arbitrage are generally referred to as ‘arbers’ and will tend to use a variety of bookmakers to avoid detection.
While this betting system is not illegal, bookmakers will generally attempt to restrict the betting ability of users who they suspect of using arbitrage. Most will place low bet limits on the account of arbers to prevent them making appreciable profits off the practice – this can be compared to the tendency for casinos to ban blackjack card counters even though this technique is legal.
How Arbitrage Works
Arbitrage essentially involves placing a back bet on all possible outcomes in a sports event. Typically the fewer the outcomes, the easier it is to calculate and place successful arbitrage bets. Arbers will look for odds differences between bookmakers on single events until they find a betting market where arbitrage can be used.
The process of arbitrage is best described using an example:
A punter is looking at tennis betting markets for the Australian Open and finds that bookmaker A is offering odds of 2.1 – 1.8 on a match between Fernando Gonzalez and John Isner. He then finds that bookmaker B is offering odds of 1.9 – 2 on the same match.
The structure of these odds means that the punter can place a bet on both players whilst still earning an overall return. He therefore bets $100 on Gonzalez at Bookmaker A and $100 on Isner at Bookmaker B for a total stake of $200.
If Gonzalez wins the match, the bet at Bookmaker A will pay out a return of $210, an overall profit of $10. If Isner wins the match the bet at Bookmaker B will pay out a return of $200, a zero net loss.
More Complex Arbitrage
In the above example we used an arbitrage example where both players could be backed at above evens. In reality these types of markets are extremely rare, and arbers will frequently have to back one player with a larger stake at low odds and a second player with a smaller stake at high odds.
The mathematics involved in calculating which betting markets offer arbitrage opportunities can become quite complex. Most arbers therefore make use of arbitrage computer programs that not only determine which markets are suitable for arbitrage, but also calculate how large the stakes should be to guarantee maximum profit.
Betting Exchanges
Betting exchanges like Betfair and WBX have opened up a whole new world of arbitrage opportunities. Odds at the exchanges not only tend to be higher, on average, than those offered by fixed odds bookmakers, but arbers are infinitely less likely to be persecuted by exchanges as the use of an arbitrage system has no effect whatsoever on the exchange’s commission-based profit margin.
Betting exchanges also offer access to additional arbitrage opportunities due to the presence of lay betting odds.
Lay betting opens up further odds deviations which can be exploited by arbers. The fact that users of the exchange set odds and have no interest in balancing the lay book with the back book for an event means that arbers can more easily locate and exploit arbitrage opportunities.
What You Should Know about Arbitrage
- The tennis arbitrage betting example used earlier illustrates a very important element of arbitrage betting – this practice requires high stakes to be bet for small profits. The profit margins are therefore quite low. However, when done carefully and accurately, arbitrage is a very low risk strategy.
- One thing potential arbers should be aware of is that taking advantage of serious pricing mistakes by bookmakers may result in bets at one bookmaker being cancelled, and the other bets standing, which in turn exposes the arber to genuine market risk.
- Furthermore for arbitrage to generate reasonable returns a punter will need to bet relatively large sums of money. Money will often need to be deposited at betting accounts at short notice, and this can be hampered by the delay built into the funds withdrawal process at most bookmakers.
Finally, arbitrage is also inadvisable for rookie punters. It’s essential to first get a solid feel of how odds comparisons work, the mechanics of betting exchanges, and to feel comfortable using the decimal rather than fractional odds format.
What You Need
If you feel confident in your knowledge of sports betting, there’s no reason not to attempt arbitrage. Here’s what you’ll need to get started.
- A big bankroll – the more bookmakers you use the easer it will be to practice arbitrage. A $100 balance at 20 bookmakers is a good way to get the ball rolling – this means a $2000 bankroll.
- An odds comparison service – you need to be able to easily access and view odds across a variety of bookmakers for each event you bet on.
- Arbitrage software – is essential if you want to avoid making mistakes. Arbcruncher provides free software that includes several tools for successful arbitrage betting.
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