A Guide to Arbitrage Betting

The basic principle of arbitrage betting is a simple one. The
idea is to place a series of bets on all the possible outcomes
of an event, using a combination of odds and stakes that ensures
you are guaranteed to make a profit regardless of what the
actual outcome is.

You might think this is too good to be true, but arbitrage
betting is a real strategy that does work. In the right
circumstances it is entirely possible to make guaranteed returns
from your bets. It’s not quite as simple as it sounds though.
Many bettors have made the mistake of thinking that this betting
strategy is an easy route to untold riches, but the reality is
that it takes a lot of hard work and patience.

In this article we’ll explore arbitrage betting in more
detail. We’ll explain how it works and why it’s possible, and
also teach you all the calculations you will need to know when using this
strategy. We’ll also look at its advantages and disadvantages,
provide some tips and advice for using this strategy, and answer
some frequently asked questions about arbitrage betting.

How Arbitrage Betting Works

As we’ve already explained, arbitrage betting involves
placing bets on all the possible outcomes of an event in order
to guarantee a profit. In a tennis match, for example, you would
place two bets – one on each player to win. In a soccer match
you would place three bets – one on each team to win plus one on
the draw.

You’re probably already aware that placing such bets with a
single bookmaker would actually guarantee a loss, not a profit.
This is because of the way that bookmakers set the odds to give
themselves a built in profit margin. For a simple example, let’s
imagine there was an upcoming tennis match where a bookmaker
thought both players had an equal chance of winning. They might
set the odds as follows.

A winning $100 bet at odds of 1.91 would return a total of
$191.00, including the initial $100 stake. So if you bet $100 on
each of the two players, you’d be wagering a total of $200 to
get a return of $191.00 regardless of who won. This would
represent a loss of $9.

Arbitrage betting is therefore not as simple as just betting
on all the possible outcomes of an event. If it was that easy,
everyone would be doing it and there wouldn’t be any bookmakers
in business. What you have to do is find opportunities where the
odds with different bookmakers make guaranteed profits a
possibility. Such opportunities are often referred to as arbs.

Using the same hypothetical tennis match as above, it’s
possible that another bookmaker would take a different view on
the likely outcome. They might make Murray the favorite to win,
and set their odds as follows.

This has created an arbitrage opportunity. We’ll show you
some calculations you can use to highlight when an arb exists
later, but please just take our word for it at this stage. You
could make a guaranteed profit by betting on Murray with
“Bookmaker A” and Federer with “Bookmaker B”.

It’s important to note at this stage that you have to work
out the optimal stakes when arbitrage betting. We’ll shortly
show you the necessary calculations for this too, but we’ll keep
it relatively simple for now and use some round figures. The two
bets you would want to make here are $107 on Murray at 1.91 and
$93 on Federer at 2.20, again for a total of $200 of wagered.

As you can see, you would make a profit here regardless of
which player wins. Although this is only a hypothetical example,
it should help you to understand just how arbitrage betting
works. We’ve already mentioned that similar opportunities do
occur for real, and we’ll now explain why.

Why Arbitrage Betting Is Possible

Arbitrage betting is only possible when the right
circumstances present themselves. The odds available on sporting
events regularly vary from one bookmaker to another, but there
needs to be a sufficient difference for an arb to exist. Such a
difference will typically occur for one of the following two
reasons.

• Bookmakers taking differing views on the likely outcome of an
  event.
• Bookmakers adjusting their odds to create a balanced book.

The first reason is the one we referred to in our example
above. Bookmakers tend to set their initial odds based on their
views of what they think will happen in an event, so it is
perfectly possible that two bookmakers will set different odds
if they have different opinions about how an event is likely to
turn out. If their opinions are different enough that there is a
significant disparity in the odds that they offer, then an
arbitrage opportunity may well exist.

Although a bookmaker’s initial odds may reflect their views
about an event, they will subsequently adjust those odds based
on the wagers that they take. If they take a lot of wagers on
one particular outcome, they will almost certainly reduce the
odds on that outcome. At the same time they will increase the
odds on the other outcome (or outcomes). This helps them to
reduce their exposure to risk, and it can also lead to a notable
difference between the odds available at different bookmakers.

There are some other reasons why arbs occur, but the two
mentioned here are easily the most common.

How To Find Arbs

One of the biggest challenges you will face when using an
arbitrage betting strategy is actually finding the right
opportunities. Although they do occur reasonably frequently,
they don’t usually last very long. There are lots of bettors
looking for them so they generally get spotted very quickly. As
soon as a few bets have been placed to take advantage of an arb,
the chances are that the odds will have changed enough for the
opportunity to no longer exist.

You have three primary options when it comes to finding arbs.

Calculations Required for Arbitrage Betting

There are two calculations you need to do when arbitrage
betting. The first calculation is simply for determining whether
an opportunity exists, while the second calculation is for
determining the size of the bets you should place. There is also
a third calculation you can use to work out what your overall
profit should be.

Determining Whether an Arb Exists

Please note that this calculation is based on using decimal
odds. If you are working with odds in a different format you can
use our conversion tool to convert them into decimal format. To determine whether an arb exists or not you must first find
the best odds available on each of the possible outcomes of an
event. You must then apply the following calculation to each set
of odds, with the result expressed as a percentage figure. This
result for each set of odds is known as the individual arbitrage
percentage, or IAP.

Using the odds for the hypothetical tennis match we mentioned
earlier, the calculations would therefore be as follows.

You must then add those two IAPs together. Continuing with
the same example, the calculation would be as follows.

If the result is less than 100% then an arbitrage opportunity
exists. In this case we can see that an opportunity does exist,
as the result is 97.81%. This is referred to as the total
arbitrage percentage, or TAP.

The lower the percentage, the greater the potential profit.
Ideally you want to look for 98% or less, to make the profits
worthwhile, but technically anything below 100% is workable. Any
result of 100% or greater means that there is no arbitrage
opportunity.

Calculating Bet Sizes

As we demonstrated in our earlier example, you have to get
the bet sizes right to make a profit when arbitrage betting. In
order to do this you have to use the following calculation,
where investment is the total sum that you are looking to stake
on the arb.

For our hypothetical match between Murray and Federer,
assuming an investment of $200, the calculations would look like
this.

Placing the two bets using these stakes should guarantee the
same profit, regardless of the outcome. Let’s see if that’s the
case.

There’s a very minor difference of a single cent, but this is
just due to issues with rounding numbers to two decimal places
during the calculations. The important thing to note here is
that you are guaranteed to make a profit of at least $4.47 on
the match.

Calculating Profit

If you want to calculate your expected profit before placing
your wagers, you can use the following calculation.

If we use the same figures as above, the calculation would be
as follows.

As you can see, this is the profit figure we demonstrated
above.

The arbitrage betting strategy clearly relies quite heavily
on math, but you don’t need to be a genius with numbers to make
it work. The calculations required are not particularly complex
and can easily be done on a calculator. It’s just a case of
learning them and knowing when and how to use them.

Advantages & Disadvantages of Arbitrage Betting

There are two main advantages of the arbitrage betting
strategy. The first is simply the very fact that it is possible
to create situations where you are guaranteed to make a profit
on a sporting event regardless of the outcome. It could be
argued that this is not even gambling, as there is no risk
involved once you have created such a situation.

The second advantage is that it’s not really a difficult
strategy to implement. Once you understand the basic principle
of how it works, and the calculations involved, it is relatively
easy to take advantage of any arbs that you manage to find.

However, this strategy is not without its disadvantages. It
might be relatively easy to take advantage of arbs once you find
them, but finding them is not actually that easy at all. There
are lots of bettors out there looking for them, and they don’t
last forever. You need to be quick to spot them, and quick to
act. To make consistent and meaningful profits from arbitrage
betting you will almost certainly need to invest a lot of time
just constantly searching through the betting markets.

You also need to invest a lot of money too. Most arbs offer a
potential return of between 1% and 3% of the total amount
staked, and this means you need a large bankroll to make any
real money.

Let’s assume you were able to find two good arbs a day on
average, each with a return of 2%. You’d probably need to be
betting full time to achieve this, and you’d need to bet a total
of $5,000 on an arb to make $100 from it. That’s $10,000 across
the two opportunities, and you’d want a bankroll of at least
twice that amount. You’d be making $200 a day, but you’d
need a minimum bankroll of $20,000.

That’s a sizable sum of money, and realistically you’d need
even more than that. Another downside of arbitrage betting is
that you need to have accounts with a lot of different
bookmakers, and you need those accounts funded so that you can
place a bet quickly when a particular bookmaker has the right
odds that you need.

It’s also important to note that there are some risks
involved in arbitrage betting. There is no risk once you have
placed the required bets, assuming you’ve done things properly,
but that doesn’t mean the strategy itself is entirely without
risk. There are several things that can go wrong, including the
following.

Arbitrage Betting – Our View

There is no doubt at all that arbitrage betting can be a
profitable sports betting strategy. It is not, however, one that
we can wholeheartedly recommend to everyone. The bankroll
requirements are high and so are the time requirements, and you
will be competing against a lot of well-organized betting
syndicates looking for the same opportunities as you.

We absolutely wouldn’t talk you out of using this strategy,
and if you happen to come across an arbitrage opportunity then
you should always try to take advantage of it. For most bettors,
though, we would suggest that it’s not worth spending too much
time actively looking for arbs. The same time could be better
spent on learning and developing other strategies that may be
more profitable in the long run.

Tips & Advice for Arbitrage Betting

If you do decide to use the arbitrage betting strategy then
the following tips and advice will help you to maximize your
returns.

Stick to events with two possible outcomes

Arbitrage betting gets a lot more complicated when you use
the strategy on events that have more than two possible
outcomes. You’ll miss out on some opportunities if you only look
at events that have just two possible outcomes, but you’ll make
things a lot easier for yourself.

Find your own arbs

Finding arbs can be significantly less time consuming if you
use alert services, tracking software or arbitrage websites and
forums. There is always going to be lots of other people using
them too though, and this means that the arbs that they do
identify are going to disappear very quickly. If you have the
time to spend identifying your own opportunities then you will
probably make more money in the long run.

Always check your calculations

Getting your calculations wrong is the easiest way to lose
money when arbitrage betting. Although you need to move quickly
when you have spotted an arb, taking an extra moment or two to
check your calculations will definitely prove to be time well
spent.

Use a betting exchange were possible

Using betting exchanges can open up a lot more opportunities
for arbitrage betting, due to the fact that you can lay outcomes
as well as back them. Laying and backing makes the strategy a
little more complicated, but can be very profitable.

Keep your betting accounts funded

You’ll need accounts with several bookmakers if you want to
make money out of arbitrage betting, and it’s a very good idea
to keep all your accounts funded. This way you’ll be able to
place any bets required as soon as you highlight an arb, without
having to spend time making deposits.

Form an arbing team

There are a number of advantages to arbing as part of a team.
Collectively you will have more time to spend looking for arbs,
and also more money to maximize your potential profits. You will
benefit from having more betting accounts with bookmakers too,
as each member of the team can open accounts in their name. This
should help you to make accounts last longer before they are
limited or closed.

Arbitrage Betting FAQ