Arbitrage Betting Guide

Betting is essentially a numbers game, in which probability is used to narrow down the outcome of a gambling event. When you’re betting on sports matches, there is no way to ensure a definite win with your bet. But what if there was a way to exploit the mathematical differences between the odds available for a match? This is where Arbitrage Betting comes in.

With arbitrage betting, punters are able to regain their stakes, irrespective of the bet outcome. Even though arbitrage betting is not supported by most online betting sites, many punters still use this betting strategy to ascertain their wins.

In this article, we’ll delve into the topic of arbitrage betting, as we explain how you can make an arbitrage bet (with an example). We’ll also look into the risks involved in arbitrage betting. Without further ado, let’s dive in.

What is Arbitrage Betting?

Arbitrage betting is a betting technique used by punters to get guaranteed winnings. In this wagering strategy, punters simply bet on all the possible outcomes of an event. This is also the reason why it is often called a sure bet or miracle bet.

Arbitrage betting is usually employed in sports that only have two potential outcomes. For instance, in a football or basketball match, there are only two possible results from the game. What arbitrage betting does is that it covers all the possible results of a match, which guarantees a profit to the punter irrespective of the match outcome.

With arbitrage betting, you are basically taking advantage of the different odds offered by various betting sites. If you place multiple bets on both the outcomes of a sporting event, you will always get a profit, as long as the betting odds guarantee a profit.

The biggest benefit of arbitrage betting is that you do not need any prior knowledge or even interest in the sport to bet on it. However, you would have to make large bets on the sporting events to gain profits.

How to make an arbitrage bet

There are basically two types of arbitrage bets you can make on betting sites – odds arbitrage and bonus arbitrage (or matched betting). Let’s take a look at how each of these works.

Odds arbitrage

The price of a fair market is determined with an implied probability that adds up to 100 per cent. Most sports betting sites offers odds that come with an inbuilt margin. This helps in balancing the sportsbook by keeping the price of the market over 100 per cent.

With arbitrage, this process is effectively reversed, making it easier for you to exploit the price differences of different bookmakers. This is usually done so that the implied probability of the offered odds remains less than 100 per cent, which favours the bettor.

The simplest type of arbing is when the betting exchange’s odds are lesser than the bookmaker’s back odds. The simple philosophy of back high and lay low will make it easier for you to benefit from arbitrage. Essentially, you want to cover all the possible outcomes offered by betting exchanges and bookmakers to lock in your profit.

Let’s understand this with the help of an example. There is a darts match between Michael Smith and Dave Chisnall. The odds offered on both players on a bookmaker’s site are listed as follows –

·      Michael Smith to win – 2.4 (41.67%)

·      Dave Chisnall to win – 1.55 (64.52%)

·      Market Margin – 106%

Now, you have the option to lay your stake on Smith (with odds of 2.1) on a betting exchange, betting that he wouldn’t win. While on the bookmaker’s site, you lay your stake on Smith to win (with odds of 2.4). This is a perfect example of an arbing opportunity since the implied probability of the combined bets is 89.29%.

Smith to win at bookmaker – 2.4 (41.67%)

Smith not to win at betting exchange – 2.1 (47.62%)

Combined market margin – 89.29%

If you’re wondering how you’ll calculate your lay stake for the bookmaker, here is how it will be done –

(back price x back stake) / (current lay odds - exchange commission)

For our example that's: (2.4 * 100) / (2.1 - 0.02) = £115.38, which will be your lay stake at the bookmaker’s site. If your bet at the bookmaker’s site wins, your profit will be calculated in the following way –

Profit = (back odds – 1) x back stake – (lay odds -1) x lay stake

This means that the profit would be = (2.4 - 1) * 100 - (2.1 -1) * 115.38 = £13.08

Now let’s take a look at what happens if the bet is won at the betting exchange. Here is how your profit will be calculated –

Profit = (lay stake * (1 - commission)) - bookmaker stake

The profit would then be = (115.38* (1-0.02)) -100 = £13.07

So, no matter the outcome of the game, your profit will always be £13.07 or £13.08.

Bonus arbitrage (or matched betting)

In this, bettors can use the bonuses, incentives, and free bets which are on offer with bookmakers by using the betting exchange to make profits (low-risk). This strategy is pretty simple. All you have to do is place a bet with a sportsbook that’s offering an incentive. Then you can lay your stake on the same outcome on the betting exchange.

In this way, all your possible outcomes will get covered. You will have successfully eliminated your risk and locked in profits.

Arbitrage betting risks

Understanding how arbitrage betting works is fairly simple, however, there are some risks involved in this betting too –

·      Bankroll: The fact is that arbitrage betting requires you to have a large bankroll, on both the bookmakers’ sites and on the betting exchange. This is important to cover all the liability requirements.

·      Liquidity: The amount of money in a particular market determines your stake amount. Insufficient liquidity can be a problem for arbitrage betting.

·      Speed: Arbing opportunities are usually not available for long. To take advantage of opportunities, punters have to lay their stakes quickly, which can result in mistakes too.

·      Small returns: The profits generated from arbitrage betting are usually small. Usually, arbs tend to give you 2-5% returns on your original stake.

·      Limitations: Bookmakers usually don’t want their users to make arbitrage bets, so they will limit or close your stake if they see you as one.

Arbitrage betting example

If you are still not clear on how arbitrage betting works, let’s take a simple example. Let’s say that you are betting on a tennis match between players 1 and 2. The odds offered by two bookmakers (A and B) on both these players are as follows –

·      Player 1 – 1.3 (odds by bookmaker A); 1.42 (odds by bookmaker B); Stake: £26.54

·      Player 2 – 3.930 (odds by bookmaker A); 2.9 (odds by bookmaker B); Stake: £73.46

The margin for Bookmaker A odds is 102.4%, while the same for Bookmaker B odds is 104.9%. If we cross-match the odds of Player 1 from Bookmaker B (1.420) with those of Player 2 from Bookmaker A (3.930), the margin will be in your favour. You can get a guaranteed return of £4.3 with a profit margin of 4.1%, no matter who wins the game.

Arbitrage bets using Betting exchanges

Instead of doing arbitrage betting with two conventional bookmakers, you can also do arbing with one bookmaker and one betting exchange. Basically, you would have to lay your stake for the same outcome on the betting exchange and the bookmaker. This is a great way to make risk-free profits.

Let’s say that you found a bet which offers odds of 2.06 on an online betting site, while a betting exchange offers the odds of 2.0 to bet again the team. If you were betting £100 on the bookmaker's site, you can lay £104.04 on the betting exchange with odds of 2.0. You will be able to make a guaranteed profit of £1.96.

If the bookmakers bet wins, you’ll lose £104.04 and win around £106 at the bookmakers. If you lose the bookmakers bet, you’ll win £101.96 (£104.04 – 2%commission) and lose around £100.

In this case, we’ve assumed that the betting exchange takes a 2% commission on bets. However, you can find many deals that take 0% commission. This will allow you to make greater profits.

Arbitrage betting FAQs

a. Do bookmakers allow arbitrage betting?

Most bookmakers prohibit the use of arbitrage betting on their platforms, and it is within their mandate. However, there is no gaming law that prevents punters from using arbitrage betting. This means that arbing is technically legal until a legislation comes into effect prohibiting players from using this technique.

b. Does arbitrage betting work?

Yes. The math behind arbitrage betting is absolutely sound, however, the profits will be small. Most arbing opportunities come with a profit range of 2 to 5%. The overall profit is dependent on the number of stakes you make.

c. Can I get banned or suspended by using Arbs?

Yes. If an account is suspected of using arbitrage betting, it can get suspended. This is why punters should approach this strategy carefully even if it promises a guaranteed return.