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 need to use 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. These are as follows.

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.

Arbitrage Betting FAQ