Next, in this guide, we want to discuss arbitrage betting. The principle behind it is actually quite simple. The main idea is to make a wager on each and every possible result of an event by placing a series of bets and using a variety of stakes and odds to guarantee your success. This form of betting does yield positive results and is a strategy you could use to improve your chances of winning.
However, you need to understand that nothing is too easy or too simple as it seems. If you believe that all you have to do is make those bets, you are wrong. Like everything else, arbitrage sports betting requires hard work and the right mindset. Hence, our goal is to explain what it is about, show you how to make the right calculations to become successful when using this strategy and weigh down the pros and cons so that at the end you will know whether it is worth using or not. Let’s get started.
The Main Principle behind Arbitrage
In the above paragraph, we told you that arbitrage gambling involves betting on every possible result of a game to ensure you win a profit in the end. Now, here is an example to get a better idea of how it works. When it comes to a soccer match, there can be three possible outcomes: for team A to win the match, for team B to win the match, and for the game to end with a draw. Hence, you will need to place a total of three bets. When it comes to a tennis match, two bets would be placed, one for each player to win.
Of course, taking advantage of arbitrage gambling with a single sportsbook is not the best idea. We already said it a few times in the previous sections of this guide that sportsbooks set the odds in their favour, which means that such a strategy will eventually lead to a loss rather than a profit. For instance, if a bookmaker were to think that there were equal chances of each player winning a tennis match, then they might set odds of 1.91 for player A and odds of 1.91 for player B.
What does this mean for you? If you bet £100 on each player, you would make a profit of about £191 for the winning bet, including the stake of £100. However, you would have wagered £200, which means that even if you won some money, it did not surpass the amount that you staked. On top of that, it turns out you lost £9.
As you can see, arbitrage gambling is not just about placing bets on every possible result of a game. There is more to it than you know. There would not be any sportsbooks in operation these days if this strategy worked so flawlessly and effortlessly.
So, if you want to make it work, you need to look for opportunities at different places. This means checking out odds with a variety of bookmakers. Many times these opportunities are addressed as arbs. Imagine another sportsbook set the odds for the tennis match from above. However, they thought that player A was more likely to win than player B. Let’s say they set odds of 1.70 for player A to win and odds of 2.20 for player B to win. In that case, you could take advantage of this opportunity. You could easily bet on player A to win with the first bookmaker we talked about and also bet on player B to win with the second bookmaker.
We will dig into the calculations behind this later on. For now, you simply have to take our word for it. You can read all about it in the next sections of our post. At the end of it, you can also find out answers to some frequently asked questions, such as: “Is arbitrage illegal?”
So, all we can say is that to be successful, you should place a bet worth £107 on player A at odds of 1.91, plus another bet worth of £93 on player B at odds of 2.20. Now, if player A won, you would get a total of £204.37, and if player B won, you would receive £204.60.
So, no matter which player you were to choose, you would have made a profit in both cases. We tried to illustrate how this system works so that you get a better idea of the arbitrage system and its aspects.
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And in the next sections, we are going to show you more examples, explain a few additional things, as well as answer the question: “Is arbitrage legal?”
How to Spot Arbs
The truth about arbs is that they are not very easy to find. The worst thing is, they do not last very long. So, aside from being good at spotting arbs, you should also be very quick and take the opportunity before it has gone. The main problem is that other people are looking for arbs as well.
Now, let’s take a look at some sources of arbitrage betting opportunities online:
- Your research – This option takes the most time and work but is sure to return more profits than the rest. Doing your own research can be very effective, but it also is time-consuming. You need to be strong and patient. The biggest advantage of spotting arbs yourself is that you get the chance to use them before anyone else finds them. You also get the opportunity to pick between more valuable and less valuable arbs. This does come with its disadvantages.
- The main problem is that you need to do the calculations on your own, which may lead to a mistake. Another downside is that it just takes time and not all of us are ready to devote to such a cause. However, when it comes to arbitrage betting, it is best to rely on yourself.
- Alert and software services – You can subscribe to alert services, which will notify you when there is a potential arb to take advantage of. You can also purchase tracking software that will locate arbs for you. This is the simplest way to go, as it does not require much effort or work on your behalf. However, since other people use this technology too, you may face the same problem of these arbs disappearing in the blink of an eye. Besides, you have to pay for such a service.
- Forums and websites – If you do not think you can find arbitrage opportunities on your own, you may be tempted to check out forums and websites where other bettors identify arbs and post information about them. Again, you can face the same problem of these opportunities lasting a little while due to other people using the same websites and forums. Not to mention, you will not come across the best arbs because bettors like to keep them to themselves when they spot them.
Keep reading. We will answer some questions at the end of this post, including “Is arbitrage illegal?”
Why is Arbitrage Possible?
The main reason why arbitrage is possible is that the odds for a given event may be different with different bookmakers, creating a great opportunity for you to make a profit out of this strategy. However, it must be noted that the difference has to be significant in order for this to hold true. It may be as a result of sportsbooks having different opinions about the possible outcome of a sports event. Or it might be that sportsbooks are trying to balance their platform by adjusting the odds.
The initial odds normally depend on what bookmakers believe will be the outcome of an event. It is normal for the odds to differ a little, but if the difference is notable, an opportunity for arbitrage sports betting may arise. Be it as it may, after the initial odds are displayed, an operator may change them depending on the wagers placed by bettors. They do this in order to reduce the risk of losing massive amounts of money. For this purpose, they may increase the odds on an outcome if they receive plenty of wagers for it and decrease the odds for the other outcome.
How to Do Your Calculations
Here you can find everything you have to know about your calculations. Overall, there are three main calculations to make.
The first one is to determine if there is an opportunity or not. For the purpose, you should check out all of the odds available for both outcomes and feature the best. After that, use this calculation to determine the individual arbitrage percentage (IAP). Apply the calculation to all the odds. The result is expressed as a percentage. Here goes the formula to use:
(1 / Odds) x 100 = IAP
Remember the examples we used in the beginning of this arbitrage betting article? Let’s apply them to this calculation.
- (1 / 1.91) x 100 = 52.36% (IAP for Player A)
- (1 / 2.20) x 100 = 45.45% (IAP for Player B)
45.45% + 52.36% = 97.81%
Look at the result. We have got 97.81%, which is less than 100%. This sentence means that there is an arbitrage opportunity. No arbitrage opportunity exists if the result is 100% of greater.
If there is arbitrage, then the figure you get is called a TAP – total arbitrage percentage. The closer the figure is to one hundred, the smaller the potential profit, and vice versa.
Now, the second calculation to do is to determine the size of your bet. Take a look at this formula:
(IAP x Investment*) / TAP = Stake you need to make
*Investment equals the maximum amount of money you want to stake.
We will now use the examples from above to show you how it is expressed in numbers. Let’s assume your investment is £200. The calculation is as follows:
(52.36% + £200) / 97.81% = £107.06 Stake to make for Player A
(45.45% x £200) / 97.81% = £92.94 Stake to make for Player B
And the last calculation to do is to determine how much you are likely to win from your arbitrage strategy. Here is the calculation:
(Investment / TAP) – Investment = Expected Profit
Using the above example, we get: (£200 / 97.81%) – £200 = £4.48
If you go back to the first section, we demonstrated that if you wager a total of £200 on player A and player 2 (£93 for one of the players and £107 for the other player), you will get £204.37 if player A wins and £204.60 if player B wins. When you do the math, it will turn out that your profit will vary between £4.37 and £4.60. Hence, the expected profit calculation is correct. There can be a slight difference of a few cents, but what matters is that you can calculate the potential profit almost accurately.
As long as you have a calculator and the right numbers, it will be a breeze to do your calculations and get your arbitrage betting right. You need to practice this for some time before you get used to it. At first, you may struggle, but don’t stop trying. No one knows everything about everything. This is an ability that must be acquired.
A few Tips on Using Arbitrage
Here’s a list of advice that will help you to be more successful when it comes to this form of betting:
- Spread your bankroll to multiple betting accounts. If you want to take advantage of this strategy, you need to make sure you have accounts with multiple bookmakers and that they are properly funded. Once you find an arb, you need to act quickly, which means you cannot afford to waste time making deposits.
- Check carefully your calculations. Take a moment to see if your calculations are right before you place your bets.
- Keep it simple; go with sports that offer only two possible outcomes. This will make it easy to get your calculations right. We are not saying that you should always limit yourself to such events because there may be other opportunities out there. However, the longer you stick with these, the easier it will be for you to make a profit.
- Go for betting exchange whenever you can. This will give you a plethora of opportunities when it comes to arbitrage betting. Just keep in mind that it makes the process a bit more complicated.
- Look for arbs yourself. Devote some time to identify your own arbs whenever possible. It is much reliable than using arbitrage forums and websites, tracking software or alert services that are also used by a number of other people.
- Be a part of a team. Looking for arbitrage opportunities on your own can be quite time-consuming. If you form a team, your chances of finding arbs get bigger. Respectively, the time you spend on it is minimised. The more members in your team, the more betting accounts. This will help you maximise your prospective profits.
Pros and Cons of Arbitrage Betting
One of the benefits of this strategy is that it is not difficult to understand and implement. Another benefit is that regardless of the result of a sporting event, you can guarantee a profit by using arbitrage betting. No risk is involved because you are betting on every possible outcome. That said, there also are plenty of disadvantages.
What are the Disadvantages
First off, it requires lots of money since you are going to place a bet on a few outcomes at a time. If you want to make a profit, you need to have a big bankroll. Of the total amount of money you stake, arbs will probably offer a 1%-3% return. For example, if you happen to find good arbitrage betting opportunities that offer a two-percent return, you need to bet around £5,000 on each opportunity to get £100 in return. Let’s say you have two arbs. This means that you have to have a total of £10,000 to make this work.
However, this is not the only opportunity you will come across; hence, you want to fund your account with at least £20,000. This is a jaw-dropping amount of money. And to be honest, you may need a lot more than that to keep it up.
Another downside is difficulty finding arbs. You may spend hours and days looking for arbs and still get unsuccessful because other people are looking for such opportunities too. So, even if you spot an arb, it may be impossible to take advantage of it unless you act fast.
The third big disadvantage is that you need to operate multiple betting accounts. This takes time and money. You need to spend quite a lot of time on this.
Last but not Least
Arbitrage betting involves some risks. Here is what can go wrong:
- The sportsbook may cancel the bets. In that case, you will be awarded back your stake. However, if you have started arbitrage betting, one of your outcomes will remain uncovered. This means that you are exposed to the risk of losing. Of course, you can try to place that bet with a different bookmaker, but the odds may not be the same.
- Your account may be limited or closed. If a sportsbook finds out you tend to arb, they may limit your account of even close it. This will prevent you from fulfilling your arb mission.
- You may get your calculations wrong. No one is immune from making mistakes. It is possible to commit an error when researching the possible opportunities and doing your calculations.
- The odds may change. Sometimes after making your first bet, there might be a change in odds. If this happens, your arb may prove to be ineffective or non-existent. In that case, you either have to place the other bets you planned and accept the fact that you will lose or place no more bets after the first one and see whether you win or not.
Frequently Asked Questions:
There probably are plenty of questions popping into your head right now. Is arbitrage illegal? Is it a good strategy? How much money do I need? We sorted out the most common questions, and we answered them for you. Take a look.
Q: Is it worth it? How much cash can you make using this strategy?
A: There is no way to get an accurate answer to this question because a great deal of factors are involved. In the first place, you need to take into consideration how much money you are ready to stake, i.e. the size of your bankroll. If you do not use a lot of money, you cannot make a big profit. Another factor is the amount of arbs you are capable of finding, as well as their sports betting arbitrage percentage. If you are devoted to this, and you manage to find arbs each and every month, you can expect to get returns of about 15% to 25% of the supply of money you have.
Q: How much money should I set aside to get started?
A: As it is with the above question, there is no accurate answer here. You can use arbitrage betting with just a few pounds. You are not required to use a fixed amount of money. The bigger your bankroll, the bigger the profits. However, there is always a chance that you make a mistake. So, our advice is to use an amount of money you can part with without going broke. Even though this strategy works most of the time, there is no guarantee that you will win money.
Q: Why don’t sportsbooks fancy arbers?
A: The main reason why sportsbooks are not fond of arbers is that the latter make a good profit in the long run, even though they also lose a great deal of bets in the meantime. This is not acceptable for bookmakers because their main goal is to gain more profits than customers do. Long-term winners are not welcome. If a bookmaker finds out that someone wins a lot, especially through arbing, they will probably try to minimise their gambling activity by limiting their account. What is more, they may even shut down an account if they suspect someone is an arber.
Q: Is arbitrage illegal?
A: No, it is not. Although sportsbooks do their best to prevent it, it is completely legal. Of course, we are talking about those parts of the world where sports betting is legal. If your country does not allow online gambling, you will be breaking the law by arbitrage betting.
Q: Is arbitrage sports betting possible in the States?
A: Yes, it is. However, it is not so easy to use this strategy if you live in the US because there are not many bookmakers to choose from. Due to the complicated gambling situation in the country, bettors have access to a limited amount of gambling portals. As a result of that, there is not a lot of diversity in odds. This means you will have a hard time finding good arbs. However, it does not mean you cannot do it. It takes patience and commitment, and maybe a little bit of luck.
Q: What sports can I use arbitrage betting on?
A: You are at liberty to use arbitrage on any sport you can think of. Ideally, though, you will choose sports that allow for two possible outcomes. Not only does it make betting on all the outcomes easier, but it also means you will not have to spend a tonne of money by betting on multiple outcomes. Soccer and tennis seem to be the two sports where this system will be the most favourable. However, this is only our two cents. Other people will probably think differently.
If you want to learn the other types of betting, just click on the links below.
Types of Betting
- How Hedging Bets Work
- Kelly Criterion Betting Strategy
- Moneyline Betting in Sports
- Parlay Betting Explained
- All about Point Spread Betting
- Meaning of Over Under Betting
- Understanding Outright Bets
- What Prop Bets are About
- Explaining a Bet Accumulator
- Making Betting Permutations
- What is Exchange Betting