If you are interested in gambling or other types of financial investments, you have probably heard of arbitrage.
But what is it really? In this article, we go through the basics and what to keep in mind when looking for arbitrage opportunities at gambling companies.
What is arbitrage betting?
Arbitrage betting is a game where you look for odds that give you the opportunity to bet money on all potential outcomes, and be guaranteed a positive result.
Arbitrage opportunities arise when the odds at different betting companies are far enough apart. The easiest way to explain arbitrage betting is with an example:
Hobart Hurricanes meets Brisbane Heat in the BBL and we look at the moneyline odds. Moneyline means that overtime and penalties are also counted. This means that we only have two possible outcomes. Either Hobart wins or Brisbane wins.
In this example, Sportsbet pays 2.05 for Hobart to win and Ladbrokes pays 2.05 for Brisbane to win. We have now found an arbitrage opportunity where we can earn 2.5% on our entire investment.
We are betting 100 USD in Hobart at Sportsbet and 100 USD in Brisbane at Ladbrokes. If Hobart wins, our balance at Sportsbet will be 205. If Brisbane wins, our balance at Ladbrokes will be 205.
We therefore invest 200 USD and regardless of the outcome, we will earn 5 bucks.
It may seem incredible, but seen over a whole day, you can find thousands of arbitrage opportunities if you keep a close eye on the gaming companies’ markets.
However, this is the difficult part. Arbitrage opportunities are often available for a relatively short time, so it is important to be able to handle large amounts of information in a short time. Fortunately, there is help available.
We will go into the various aids that are available later, but now you know the basic theory behind arbitrage betting.
The formula for calculating whether two odds constitute an arbitrage opportunity or not looks like this:
1 / Odds A = X %
1 / Odds B = y %
X + Y = Z
100 – Z = Arbitrage margin. For a game to be considered an arbitrage, Z must be less than 100.
How do you adjust the stakes
In the example above, it is very easy to adjust the bets because the odds are equally high on both sides. You should then invest the same amount on each side. However, if the odds differ, you will need to adjust the stakes to guarantee a win.
When adjusting your bets, you must first know how much you are willing to invest in each game. For the sake of simplicity, we reckon that you have 100 USD to invest in total.
Odds A = 1.20
Odds B = 9.00
First, we double-check that we have actually found a arbitrage opportunity:
1 / 1.20 = 83.333 %
1 / 9 = 11.111 %
83.333 + 11.111 = 94,444.
As you can see, we have come up with a great opportunity. Now we have a hundred dollars to invest and to list how much we should invest on each side, we use this formula.
(83,333 / 94.444)*100 = 88.24
(11.113 / 94.444)*100 = 11.76
As you can see, we will place 88.24% of our bet on Odds A and the remaining 11.76% on Odds B.
Game 1 becomes 88.2 * 1.20
Game 2 becomes 11.8 * 9
If you win game 1, our balance will be 105.84 If you win game 2, our balance will be 106.2
As you can see, we get a positive result regardless of the outcome.
How do betting companies view arbitrage betting?
To be successful with your arbitrage betting, it is important to have money available at several betting companies at the same time. The more betting companies you can choose odds from, the more opportunities you will find.
For beginners, it is recommended that you have access to about ten companies. When choosing a betting company, it is important to be a little smart.
Even if the only thing you do is bet on publicly available odds, there are several betting companies that are negative about arbitrage betting.
These betting companies have the freedom to limit your bets if they discover a pattern that indicates that you are only submitting arbitrage bets.
Because of this, it is important to be smart in your choices of betting companies. We recommend that you always have an account with these companies:
Pinnacle Sports is one of the world’s largest betting companies. They welcome all players and their policy is to never limit players. Betfair, Matchbook, Betdaq and Smarkets are so-called odds exchanges.
With these, you play directly against other users and the companies only charge a fee to facilitate the games. These welcome all sales and are positive towards you who are looking for arbitrage opportunities.
With an account with these five betting companies, you have a good foundation to stand on. Now it’s just a matter of finding a few more companies to be able to take advantage of as many arbitrage opportunities as possible.
Our recommendation is that you open an account for all companies in our list of gaming companies. By having money in many different companies, you give yourself the best conditions for success.
And by spreading your bets on many different companies, it will take longer before the companies can detect any patterns and limit you.
How much time do you have to spend?
Sorry, this question cannot be answered. When you trade with arbitrage, your return will depend entirely on the time you spend. Thus, you need to adjust your time investment depending on how you want your results to look.
Is it really risk free?
Many people want to highlight arbitrage opportunities as a risk-free way to make money. In a vacuum it is true, but there are many pitfalls that can affect your results. Some of these are individual mistakes, betting companies that limit your account and changed odds.
Ultimately, arbitrage betting is very much about avoiding these mistakes. The easiest way to minimize individual mistakes is through routine and focus.
Turn off your phone and other applications during the hours you are looking for arbitrage opportunities and focus only on the markets and the available odds.
It’s hard to tip on how to avoid being limited by a betting company. If you are a constant winner, they will not want your turnover.
However, their algorithms are very sensitive to gaming activity and if you feel that you are a stable winner, it may be worth throwing in a game of chance consisting of, for example, a multiple choice coupon or a trip to the casino.
We do not say that it always helps, but sometimes you buy yourself a couple of extra really good games.
In addition, there is always a risk that the betting companies will invalidate certain odds. If they have set obviously incorrect odds, they will usually pay back all bets and thus ruin your game.
What aids are there
The difficulty with arbitrage betting is identifying the opportunities that exist. Arbitrage opportunities are often only available for a few minutes, so it is important to act quickly.
Manually finding enough opportunities to be able to make a stable profit is basically impossible. Fortunately, there are many tools that allow you to quickly and easily identify the available arbitrage opportunities. If we look online, there are both free and paid options.
If you are completely new to arbitrage betting, we can recommend that you start with a free option. You can then get a feel for how the system works and what opportunities there are.
If you feel that arbitrage betting is something that would suit you, you need to get a payment service that will help you identify the opportunities that exist. We especially recommend Rebelbetting (They also have a free version that you can try).
Rebelbetting has a unique service and none of their competitors have been able to take up the fight for real.
Too much text?
Well at least I hope I have been helpful.