A Quick Guide to Arbitrage Betting
Finding a betting system that works is a goal for most bettors. Most betting systems rely on mathematical formulae to beat the bookmaker and give themselves the best chance of a profit, but coming up with a system is not easy, despite the claims of hundreds of websites.
But you can make a profit from sports gambling, either by developing your own systems to provide a long-term yield – this requires analysis, research and an expert knowledge of the sport – or by following a tried and tested system which may require a subscription. As our website shows, some systems fail, some will help you break even and some will actually make you a profit. But good systems are few and far between.
In theory, the arbitrage betting system works. But like any system, it has drawbacks. The system relies on identifying discrepancies in bookmakers’ prices. This can be difficult as it involves some complex mathematics and also requires the bettor to act quickly before the opportunity is lost.
The term derives from the world of stock market trading and there was even a film dedicated to the subject.
How does arbitrage betting work?
In simple terms, arbitrage betting involves betting on both outcomes in an event. This is best applied to sports matches where a draw is not possible such as a singles tennis match.
In these events, there can be enough variation in bookmakers odds to create a situation where betting on both outcomes can guarantee a small profit.
This can happen because the bookmakers do not agree on who will win, or one bookmaker will adjust the odds to attract more money to that side of the book. Remember, top bookies are always trying to balance their books to create a profit for themselves, but they do not always get their predictions right as the EU referendum in the UK showed. And freak results can sometimes catch everybody out such as Leicester City winning the Premier League in 2016 after being priced at 5000/1.
How to spot an arbitrage opportunity
If you think there is a discrepancy between bookmakers’ odds, you can apply the following formula to establish if there is a profit opportunity:
• (100/decimal odds of bet 1) + (100/decimal odds of bet 2) = X
If the result is less than 100 then there is an arbitrage opportunity. You would then split your bet into two stakes based on the same formula:
• Stake 1 would be (100/decimal odds of bet 1)
• Stake 2 would be (100/decimal odds of bet 2)
Example of an arbitrage bet:
You notice Marcos Baghdatis (Player 1) is priced at 1.40 with Betway (Bookmaker A) in the US Open match against Mikhail Youzhny (Player 2) while his opponent is priced at 3.00, but another bookie (Bookmaker B) has Youzhny priced at 4.00:
• Bookmaker A: Player 1 is 1.4 and Player 2 is 3.0
• Bookmaker B: Player 1 is 1.3 and Player 2 is 4.0
If you backed both outcomes with Bookmaker A you would lose money. If you backed both outcomes with Bookmaker B you would lose money.
But if you backed Player 1 with Bookmaker A and Player 2 with Bookmaker B, you could guarantee a profit.
If we put those odds into the equation, they look like this:
• (100/1.4) + (100/4) = 96.43
As the result is less than 100, there is an opportunity to guarantee a profit. To achieve this, you would use the same equation to calculate your stake:
• Stake 1 (100/1.4) = £71.43 on Player 1
• Stake 2 (100/4) = £25 on Player 2
Based on a total stake of £96.43, the results would look like this:
• Player 1 wins: Total return = £100; total profit = £3.57
• Player 2 wins: Total return = £100; total profit = £3.57
By identifying this discrepancy in the bookmakers’ prices, a profit is guaranteed, whatever the outcome.
The downside of arbitrage betting
The first thing you may notice is that the profit is very small compared to the stake. This is a typical characteristic of arbitrage bets. It also means that you may face a heavy loss if you make a mistake of miscalculation. Arbitrage betting requires quick thinking and accuracy to be successful.
You also have to find the betting opportunities in the first place, which can take a lot of time. With such small profits at stake, the time involved in finding bets may not seem worth it. However, eagle-eyed punters will find it easier to spot discrepancies over time. If you do spot an opportunity, you also have to act quick as the bookies’ odds might change at any moment.
Using a system like this is not illegal. However, bookmakers may suspend your account or limit your activity if they suspect you are using a system to beat them.
Due to the small profits, the time involved and the risk of account suspension, arbitrage betting is an unattractive system for most bettors.
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