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What is Arbitrage Betting? Example & How it works

Learn how to guarantee profit from Arbitrage betting

Betting Advice

Got some time on your hands? Then arbitrage betting is something that you may want to consider. It is quite a well-practised form of betting, but it is one that takes a little time to plan out and get together. It is basically using variations in odds between different bookmakers to your advantage because it is possible that way, to ensure some profit is coming back you regardless of the outcome of a sporting event.

What is Arbitrage Betting?

To some degree, this is gaming the system a bit. Basically, you place a bet on both outcomes in a sporting event at odds that guarantee a profit. So whatever the result ends up being, then you will get a profit back. It is a win-win situation and it is really a form of trading. It is a hugely popular betting system but still probably one that you may not have really seen floated around too much.

It goes by other names, like ‘surebets’ or just ‘arbs’. There is no better way to take advantage of odds that bookmakers are offering than through Arbitrage betting because again, there will be a guaranteed return of profit for you as long as you do it right. If you were doing this on something like a tennis match, the profit coming back from the underdog winning the match would be the same as if the favourite wins. That is because you are hedging your bet and creating a balanced book.

Not winning off an underdog success really is a strange concept, but that shouldn’t matter because a profit is a profit and all stakes are covered so there is absolutely no loss. You are mostly going to be doing Arbitrage betting on events where there are two outcomes like tennis, a snooker match, a darts match up or on sports where drawn matches are really uncommon to the point where it is a bit of a non-factor, like in American Football, Basketball and Rugby.

This can be done over sports with three outcomes, like a soccer match where there is a home win, draw or away win that is going to be produced. It just takes considerable extra work and extra calculations.

Calculations did we say? Yes, this is a betting system which requires playing with the numbers and finding the right odds to make it work. You have to find the right trades or else this will come crumbling down.

How does Arbitrage Betting work?

The Arbitrage betting system WILL NOT WORK at just one bookmaker. You have to take odds from different bookmakers in order to get the numbers right. There are so many online bookmakers out there now that they have to be competitive among themselves so that can create differences in odds, or it may just be a case of a bookmaker getting the odds slightly off on a market. Some bookmakers wait for others to post odds before following suit and adjust.

Either way, you need to play the different bookmakers against each other in a manner of speaking. When a market opens odds will be different to when they will be closer to the event (when punters have been backing selections), so when markets open you have a good chance of finding Arbitrage options.

Arbitrage Betting Example

Let’s say we have a tennis match between Johanna Konta and Simona Halep.

The odds for the match up at Bookmaker A are:
Halep – 4/5
Konta – Even money

Those applied odds gives Konta a 50% chance of winning and Halep a 55% percent chance of winning. But wait a minute, that tallies up to a 105% chance of an outcome when it should be 100% (a 50/50 chance that it would be either Konta or Halep). That’s correct but that extra 5% is because worked into those odds are the bookmaker’s profit margin and is how they earn their advantage. It that total percentage number which is one of the key factors of Arbitrage betting. You have to look at getting it under 100% which we’ll explain later.

Arbitrage occasions arise when bookmakers have varying odds on the outcome of that Konta v Halep match for example.

Bookmaker A = Halep at 4/5
Bookmaker B = Konta at 6/4 (instead of Bookmaker A’s even money odds)

So Bookmaker B has the chance of Konta winning at 40% instead of Bookmaker A’s 50% chance. So this creates an Arbitrage opportunity becauuse the total percentage now with the bets is 95% (Halep’s 55% and Konta’s 40%). It’s a small one, but an Arbitrage situation nonetheless.

It means that if you staked £10 at 4/5 odds on Halep at Bookmaker A and then also hedged your bet by staking £7.20 on Konta at Bookmaker B, no matter the outcome you would get an £0.80 profit.

A £10 stake at 4/5 would return £8 profit if it won, minus the losing £7.20 stake on the other bet
A £7.20 stake at 6/4 would return a profit of £10.80, minus the losing £10 stake on the other bet
You would be playing a £17.20 in total

It means that you make a £0.80 profit regardless of whichever player won the match. So it is all in perfect balance and that couldn’t happen at just one bookmaker because of the bookmaker margins that are in play. So you have to go around and look for those odds in other places to make this work.

How to Calculate Arbitrage Betting

Is there such a thing as a way to guarantee a profit from sports betting? The answer to that is surprisingly, yes, as long as you are prepared to put the time in. Arbitrage betting is a form of trading where you shop around at different bookmakers for odds on a particular event. By doing this you can create an opportunity to guarantee a profit no matter the outcome of the event.

This is all based on research and finding the right odds on the outcome of an event, say a snooker match. Basically what you are doing is looking for two bookmakers who are offering the highest possible odds on the two outcomes in the match. That’s not at the same bookmaker, you want one bookmaker offering the highest price on Player A and another bookmaker offering the highest price on Player B.

You can’t do that at one bookmaker because they will have worked their margins into the odds presented which means that Arbitrage situations can’t arise. You are looking to exploit discrepancies in the different odds on the same event presented by different bookmakers.

Just an example of an Arbitrage situation:

Bookmaker A offers
Player A – 1.36
Player B – 3.17

Bookmaker B offers
Player A – 1.189
Player B – 5.5

So just as an example here, you could back Player A with bookmaker A as the price is better there on them to win while backing Player B to win at Bookmaker B for a much better price than Bookmaker A is offering on them. These are the kinds of situations which you can look at to find an Arbitrage opportunity.

How To Spot Arbitrage Opportunities

The thing with Arbitrage betting is that it will take some work and shopping around for odds, but there is a rough guide to use to estimate whether or not and Arbitrage opportunity is waiting for you.

Odds of Outcome One Odds of Outcome Two
1/5 (greater than) 5/1
3/10 (greater than) 33/10
2/5 (greater than) 5/2
1/2 (greater than) 2/1
3/5 (greater than) 8/5
7/10 (greater than) 7/5
4/5 (greater than) 5/4
9/10 (greater than) 11/10
Even Money (greater than) Even Money

 

Calculating Total Percentages

This is an important part of it all. This is really where the fun calculations and math starts. Let’s go back to the odds above on our snooker match example and calculate the percentage that the implied odds are suggesting that each player has of winning the match.

Bookmaker A
Player A – 1.36 (73.5%)
Player B – 3.17 (31.5%)

If you add 73.5% to 31.5% that totals up to a 105% probability in this match. What is that extra five percent about, because it should be a 100%? That is the bookmaker’s margins that they work into their odds and why Arbitrage can’t work at just the one bookmaker. Bookmakers usually run at around the 5% profit margin on bets.

You have to find odds that total less than 100%

An example of a working Arbitrage scenario would be (odds taken from different bookmakers):

Player A – 1.6 (62.5%)
Player B – 3.0 (33.3%)

Add those two percentage numbers together and you have 95.8% and that means that there is an Arbitrage opportunity open to you.

Converting Percentages

If you want to know how to convert odds into percentages, it’s pretty straight forward.

Decimal Odds Conversion to Percentage

The formula is 1/(whatever the odds are) then multiply by 100
So 1/1.6 = 0.625 multiplied by 100 * = 62.5%

Fractional Odds Conversion to Percentage

Example 5/2 odds – the first number is numerator, the second number is the denominator
The formula is Denominator divided by (Denominator + Numerator) multiplied by 100

So it would be 2 / (5+2) = 0.28
0.28 * 100 = 28%

Calculating Arbitrage Profit

Getting the percentage under 100% is important because you use that to calculate how much profit you could make.

Again, here is the working Arbitrage scenario

Player A – 1.6 (62.5%)
Player B – 3.0 (33.3%)
= 95.8%

Now you need to know how much of your stake to put on each bet to make this work. You can do that by dividing the probability of each of the outcomes by the total market probability.

Player A: 62.5%/95.8% = 65.24%
Player B: 33.3%/95.8% = 34.75%

So you put 65.2% of your stake on Player A and the rest (we’ll round it up to 34.8%) on Player B and you will have the same amount of profit coming back from whichever player wins the event!

So if you have a £100 stake, then you would put £65.20 on Player A at odds of 1.6 and £34.8

If Player A wins that’s £39.12 – £34.8 losing stake on Player B = £4.3
If Player B wins that’s £69.60 profit – £65.20 losing stake on Player A = £4.4

So you can see either outcome of the match after all of that returns your roughly £4.40. The slight variants there are because of the many decimal places you could go back to be more accurate when dividing the probability of each of the outcomes by the total market probability.

In Summary

Arbitrage betting can offer the punter a lot, but it is something that takes work. There are of course Arbitrage Calculators you can use so that you don’t have to bust out the pencil and paper every time you want to figure out a bet. The above example is just to explain how the system works and how the mechanics of Arbitrage betting work in your favour. You will need accounts at different bookmakers of course to make this happen and some time on your hands. In the long run it could be worth it.


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