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Sports Arbitrage - What is it?

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What is Sports Arbitrage?

How does the maths of arbitrage work?

Why does sports arbitrage occur?

Give me an actual example of how an arbitrage opportunity might occur

What do bookmakers think of arbers?

Do people really use sports arbitrage as a sports betting technique?

How can I find arbitrage opportunities?

How much money can I make through arbitrage?

 

What is Sports Arbitrage?

Sports arbitrage betting, is a betting technique that takes advantage of pricing differences between different bookmakers to place bets on both (all) sides of a single event, to ensure that regardless of the outcome of that event, your net return will be higher than initial net outlay.

An unrealistic, but illustrative example helps explain this. Consider a tennis game between opponents A and B.

If, before the start of the match:

Bookmaker 1 offers you 2 to 1 for A to win,

Bookmaker 2 offers you evens (ie 1 to 1) for B to win

This means that you can place £1 on A with Bookmaker 1, and £1 on B with bookmaker 2.

If A wins, you will win £2 plus your money back (a net profit of £1), and if B wins, you will win £1 plus your money back if B wins (a net profit of nothing).

This situation represents an arbitrage opportunity, because it is possible to place stakes such that your net profit is positive regardless of the outcome.

What the optimum stakes are will depend on the odds, but you can use an arb calculator to work this out.

 

How does the maths of arbitrage work?

The basic mathematics of arbitrage opportunities is that arbitrage exists when the odds of an event converted into the percentage likelihood of the event occurring, are LESS than 1.

So in the example above, the odds were 2 to 1, and evens. Ie A wins 33% (1 in 3), and B wins 50% of the time (1 in 2). If the odds offered were 1 to 2 on (ie A wins 66% of the time) and evens (B still 50% of the time), then no arbitrage exists, and the odds are in the bookmaker’s favour.

As a formula, if you are using decimal odds then the following formula is true:

Arbitrage exists when:

A + B < 1

Where:

A & B = 1/(Decimal odds)

Note – Decimal odds = Fraction odds +1 (e.g Decimal of 3.00, is 2 to 1 fractional odds)

 

Why does arbitrage occur?

As already mentioned, arbitrage occurs when the prices between different bookmakers vary, to the extent that you can bet both (or all) sides of a market at stakes that mean regardless of the outcome, you will be a net winner from the bet. The reason prices differ between bookmakers is simply that they are different, and so they can make up their own prices! In They generate their own book and prices based on the flow of bets they have received, so in reality, if one bookmaker has much better odds than the other bookmakers, the price difference will generate demand from the punters which will eventually reduce the price as the bookmaker tries to balance their books (providing that there is a sufficient flow of money being bet).

As arbitrage traders therefore, your job is to take advantage of the difference in prices (the arbitrage opportunity) before equilibrium occurs.

 

Give me an actual example of how an arbitrage opportunity might occur

A basic example of how sports arbitrage can occur is an international football game involving England may present arbitrage opportunities between English based and bookmakers versus the overseas bookmakers, as more people in England may be putting money on England to win.

 

What do bookmakers think of arbers?

Some bookmakers do not like the fact that arbitrage trading exists, as it exploits their own profit making abilities. For this reason, punters can have their accounts limited or suspended by the bookmaker. This doesn’t mean you’re in any legal trouble, it just means that you either can’t bet at all, or can only bet small amounts with the bookmaker. As an arbitrage trader, you want to try to avoid this happening. Read more in 8 pitfalls of arbitrage trading, and Top 6 ways NOT to get limited by bookmakers.

 

Do people really use sports arbitrage as a sports betting technique?

Yes! We speak from experience, and we could provide a number of case studies or anecdotes that attest to this, but this site is here to help you learn how to arb trade yourself. It’s not for everyone though, it takes patience, planning, and persistence. But otherwise, it can be quite a liberating way to either make a living or an income on the side.

 

How can I find arbitrage opportunities?

It is possible to learn to find opportunities from your own back, however there is software out there that you can subscribe to for a small enough portion of your bankroll to make it worth while to use.

Read more on all the things you need to know in Sports Arbitrage - Getting Started

Our preferred arbitrage software to use is:

  • Arbets – Tennis & Baseball bets
  • Arbitragepro – UK Football bets

You may initially think ‘I don’t know anything about baseball, why would I arb it?’ And it is right to be wary of not understanding what you are arbing – particularly Tennis, Baseball, and NHL – since rules can vary across bookmakers. Read more in Arbers guide to bookmakers and 8 Pitfalls of Arbitrage.

HOWEVER, if you are in the UK staring out arbing after work, US baseball bets can provide the perfect solution, as the games will be played in the evening/overnight, giving you the opportunity to place arbs before you go to bed each night.

 

How much money can I make through arbitrage?

It’s not going to make you instant millions. This is something you need to work at, learn the ins and outs, and approach in an organised manner. However, I does give you the opportunity to be your own boss, and be in control of your own investments.

Typically, you’ll be able to find arbitrage opportunities between 1.5% to 3%, so your return will depend on 1) the initial size of your bankroll, 2) the number and size of bets you are able to put on.

For example, if your starting bankroll is £1,000.

And you are able to place 50% of your bankroll per bet, and 5 bets per week at 2% arbitrage.

That represents £50 per week return, or £2,500 per year (annualised this represents 250% return on your initial investment!).

However this assumes that you take all your ‘winnings’ out of your bankroll. Arbitrage is most profitable when you are able to compound your winnings. For example (simplified), if you keep all of your £2,500 winnings from year 1, and now have a bankroll of £3,500 and are able to maintain 50% bets of 5 per week at 2%, then you’ve increased your weekly return to £175 (or almost £9k per year).

Note that this means you need to be betting £1,750 each arb, which is actually difficult to achieve. However, what is more achievable is to increase your number of bets to 10 or 20 per week.

Remember though, that under current tax rules, and subject to individual assessment by HMR&C, this is £9k tax free, so it’s akin to getting c£15k bonus.

If you want to be an arb professional, you’ll obviously need to make more than £9k per year, but as you’ve hopefully began to realise, if you build up your skills and bankroll, it is plausible to get to yearly returns of more than more than £30k.

For example, on a bankroll of under £10k, if you maintain an £800 average stake x 7 daily bets x 2% arbs x 300 days = £33.6k

It is not easy to maintain such a high rate, but the point with arbitrage is that, whether you just do it on the side of your normal job, or you do it full-time, you get out what you put in. It is completely meritocratic, unlike most other jobs, you can do it from the comfort of your own home, AND you are your own boss.

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