What Is Arbitrage Betting? Learn It Here With Details And Examples


Table of content:

Arbitrage definition: what do you mean by arbitrage?

Betting arbitrage arises on betting markets as a result of either bookmakers' differing judgments on event outcomes or errors. When the circumstances allow, a bettor can earn regardless of the outcome by making one bet on each event with separate betting companies.

Betting arbitrage happens when the implied probability of a set of odds indicates all mutually exclusive outcomes that span all state space possibilities i.e. all outcomes of an event add up to less than one. Betting arbitrage is commonly referred to as an arb in bettors' slang, and people who take advantage of these betting arbitrage possibilities are known as arbors.

Given that 98 percent of betting arbitrage possibilities return less than 1.2 percent, arbitrage betting entails rather large quantities of money to bettors. The practice of betting arbitrage is usually identified quickly by bookmakers, who often have a negative attitude toward it. In the future, it may result in the bettor's account being closed or half of an arbitrage bet being canceled.

Although arbitrage betting has been around since the dawn of bookmaking, the Internet, odds-comparison websites, and betting arbitrage exchanges have made it more accessible. On the other hand, because arbitrage bettors are essentially market makers, these developments made it easier for bookmakers to keep their odds in line with the market.

In the United Kingdom, a betting arbitrage system has emerged in which highly experienced ‘key men’ hire people to place bets on their behalf in order to evade discovery, expand accessibility to retail bookmakers, and allow financiers or key arbitrageurs to stay at a computer to monitor market activity. Betting arbitrage is a fast-paced process that necessitates a lot of time, experience, devotion, and discipline, as well as a lot of liquidity.

How to find arbitrage bets?

Here are some simple steps you can take to find the best arbitrage bets:

  1. Find an arbitrage bet manually: Yes, we know, it's not popular, but arbitrage betting opportunities can still be found manually, without the use of the software. Sure, your winnings will be reduced, but we strongly advise you to test it out before investing in any software because it will offer you a better understanding of how all of the bookmaker sites work without the pressure of putting bets rapidly before an arb expires. We decided to try our hand at manually locating some arbs to see whether it was doable. In less than 10 minutes, we were able to find a suitable arbitrage bet.
  2. Use free software to find arbitrage bets: Once you've gotten comfortable with manually looking for arbs, it's time to move on to using software to detect and alert you to the presence of betting arbitrage chances. To begin, we recommend trying out a few different free software to see which one you like most before committing to a paid subscription. The majority of software essentially allows you to compare the odds for a wide range of sporting events across a number of different bookmakers (and betting exchanges). When the software discovers a potential arbitrage opportunity, it will notify you. The number of arbs displayed varies depending on the software vendor. They usually have either a maximum profit limit (e.g. 1%) or a time delay for each arb (you will be seeing the arbs 15 minutes late, by which time they may have disappeared). Both limit kinds are used in some software applications.
  3. Use paid software to find arbitrage bets: The commercial tools work in essentially the same way as the free ones but without limitations. The truth is that these limitations render free software virtually useless. Because the vast majority of arbitrage possibilities vanish within 15-20 minutes of being discovered by the software, a delay like this in the odds broadcast from the software means that the vast majority of arbs you observe will have already vanished. You'll also have access to arbs with high-profit margins (>1%), as well as middles and cross-market arbs. Extra features such as built-in arbitrage betting calculators and email alerts are available with some premium solutions.

Examples of arbitrage betting

Here are some examples of arbitrage betting that can help you better understand what arbitrage means.

  1. When different prices are offered by two books at the same time in a game, you bet both to ensure a profit or at the very least break even.
  2. You go shopping and come see two books with different prices on the same prop.
  3. You notice that a line is moving in your favor and decide to take the assured profit.

For those unfamiliar with betting odds, odds of 2.00 mean that if your bet wins, you will get 2.00 times the amount you originally staked. If you bet (staked) $100 on the outcome and won, you will receive $200 (your $100 stake + $100 in winnings).

When there are only two possible outcomes (win or lose), odds of 2.00 on each of the outcomes indicate that both outcomes are equally likely (50 percent).

In actuality, a bookmaker needs an edge to generate money (they are, after all, a business!) Even if they thought both possibilities had an equal possibility, they would set the chances to 1.90 for both.

Arbitrage chances are not feasible by betting on all outcomes with a single bookmaker since the bookmaker will always have a profit margin built into their odds. Between multiple bookmakers, there is an arbitrage opportunity.

Tennis matches are a good example of arbitrage betting because there are only two possible outcomes (Player 1 wins or Player 2 wins). There is no way a match can result in a draw.

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What is the most common arbitrage bet?

The most typical arbitrage bet is made by taking positions in a market with a bookmaker and a betting exchange, backing one outcome at the bookmaker and laying the same outcome on the betting exchange.

What is the arbitrage betting formula for calculating arbitrage between two bookmakers?

To have an arb between bookies, you must first determine which two bookmakers are supplying the best odds on each occurrence. The table below might assist you in rapidly determining whether or not there is a potential arb across many bookies. If you find chances that are similar to those found in outcome 1, odds that are larger than those found in outcome 2 present an arbitrage opportunity.

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