Arbitrage Betting: Guaranteed Profits from Sports Betting
Did you know there’s a way to make GUARANTEED profits when betting on sports? It seems unlikely, doesn’t it? It’s true though. There’s a strategy you can use that ensures you’ll make a profit from your wagers, regardless of what actually happens in the events you’re betting on.
This strategy is known as arbitrage betting, and it’s one of the most appealing sports betting strategies there is. Not only can it guarantee profits, it’s also pretty straightforward. There’s no real skill involved, and you don’t even need any sports knowledge. You just need to be able to spot the right opportunities to use the strategy.
Of course, you also need to need to know how and why the arbitrage betting strategy works. We cover this below, but we should make one thing very clear first. This is NOT some easy route to untold riches.
Arbitrage betting can definitely be profitable if used correctly, so we do recommend learning how to use it. It’s not without its disadvantages though. Making good money from this strategy is EXTREMELY challenging, and you’ll need to put in a lot of time and effort if you want to be successful. You’ll need to be patient too, as there are limited opportunities where arbitrage betting is effective.
With that point made, let’s take a look at what this strategy is all about.
What is Arbitrage Betting?
Arbitrage betting is a sports betting strategy designed to take advantage of pricing discrepancies in the betting markets. It involves placing two (or more) wagers on a single sports event, so that all possible outcomes are covered. In the right situations, these wagers will return an overall profit irrespective of the result of the event.
Now, this is a perfectly accurate description of the arbitrage betting strategy. It doesn’t actually tell you much though, does it? To help you understand this strategy properly, we should start by explaining what we mean by “pricing discrepancies in the betting markets.”
If you’ve been betting on sports for a while, you’re probably already aware that the odds for sports events tend to differ from one bookmaker to the next. When betting on a tennis match, for example, the odds for each player to win will typically vary slightly between different bookmakers and betting sites. To demonstrate, here are the odds at a few different sites for an upcoming match between Del Potro and Dimitrov.
|Betting Site A|
|Betting Site B|
|Betting Site C|
These differences are why it’s so important to compare odds when placing your sports betting wagers. Although the differences are quite small, they can add up over time. Getting the best possible odds for your wagers will noticeably improve your betting results in the long run.
Small differences like the ones shown above are common, and you’ll see them all the time. They don’t constitute a true pricing discrepancy though. That requires the difference in odds to be more significant, which can happen for a couple of reasons. We explain those reasons later, but let’s look at an example first. We’ll use a tennis match again, this time between Nadal and Murray.
|Betting Site A|
|Betting Site B|
|Betting Site C|
In this example, “Betting Site A” has made Nadal and Murray equal favorites. Both players have the exact same odds to win. This is a reasonably common scenario when two players are fairly evenly matched.
“Betting Site B,” however, has made Murray a slight favorite to win. He’s at odds of 1.85, while Nadal is at higher odds of 2.08. “Betting Site C” has called the match the other way and made Nadal the slight favorite at 1.86. Murray is the outsider here at 2.09.
Although the differences in odds here are not HUGE, they’re certainly more significant than the differences in the previous example. They’re big enough to be considered a true pricing discrepancy, and this has created what’s known as an “arb.” We now have an opportunity to use the arbitrage betting strategy.
This is how simple the arbitrage betting strategy is. All we have to do here is bet on Nadal at 2.08 with “Betting Site B,” AND bet on Murray at 2.09 with “Betting Site C.” One of our two wagers is obviously going to win, and we’re going to make a profit either way.
Let’s say we staked $100 on each wager for a total outlay of $200. If Nadal wins, we’re going to get a payout of $208. That would give us a total profit of $8. If Murray wins, we’re going to get a payout of $209. That would give us a total profit of $9. We’re obviously not making big money here, but the point is we’re GUARANTEED to come out ahead.
Do you see why the arbitrage betting strategy is so popular now? We’ve just made a guaranteed return without taking any risk at all. We didn’t need to think about which player was more likely to win, as that was completely irrelevant here. We just needed to spot the opportunity and get our money down.
This was actually a pretty easy opportunity to spot. There were only two possible outcomes, and the odds for both were higher than 2.0. Anyone with even a basic understanding of odds should be able to realize that this is an obvious opportunity to take advantage of. Unfortunately, this kind of obvious opportunity almost NEVER happens. Most opportunities for using the arbitrage betting strategy are harder to spot and require doing some calculations.
We talk you through how to identify suitable opportunities for this strategy later. Before we get to that, let’s look at WHY these opportunities exist in the first place.
Why Do Arbs Exist?
We used the term “arb” earlier. Short for arbitrage, this is the term used to describe any scenario where it’s possible to make guaranteed profits from a single betting market. The tennis match between Nadal and Murray was an example of an arb, as we could bet on both players and be assured of an overall profit.
The arbitrage betting strategy can ONLY be used when there’s an arb in the betting markets. They don’t tend to happen very often, unfortunately, which is why there are limited opportunities for using this strategy.
The odds at different bookmakers and betting sites are usually quite similar, as you saw earlier. They’re rarely IDENTICAL though, apart from for certain markets, such as point spreads and totals. This is because the people who set the odds (the odds compilers) have to take a number of different factors into consideration.
Most odds compilers set the initial odds for a market based on what they think is likely to happen in the relevant event. They’ll take a view on all the possible outcomes, and assign the odds accordingly. They will, of course, build in their profit margin at this point too.
It’s unlikely that the odds compilers at a range of different bookmakers and betting sites are all going to have the EXACT same outlook for an event, so it’s natural that the odds they set are going to vary slightly. The only reason that they don’t tend to vary TOO much is because most compilers are ultimately working with the same information. They typically have fairly similar views as a result.
Odds compilers sometimes WILL have noticeably different views on the likely outcome of an event. This can easily lead to a pricing discrepancy that creates an arb.
The arb we highlighted earlier, for example, could have existed simply because the odds compilers had opposing opinions on which player was most likely to win. It’s possible that the compilers at one site thought that Murray was most likely to win, while the compilers at another site thought Nadal was most likely to win. They would have set their odds accordingly, which would have led to the arb being created.
Arbs can also be created when the odds compilers make adjustments to their initial odds. Compilers often have to make these adjustments when there’s a change in circumstances relating to the relevant event, such as a player picking up an injury. They also have to make to them based on the weight of money coming in.
The weight of money is important because bookmakers always try to create balanced books. Their aim is to create a situation where they’ll pay out roughly the same amount regardless of the outcome. So, if they take a lot of money on one particular outcome, they’ll reduce the odds for that outcome accordingly. They’ll also increase the odds for other outcomes too.
The arb in the Nadal versus Murray match could just as easily have been created due to weight of money. It’s possible that one site took a lot of wagers on Murray, and the other site took a lot of wagers on Nadal. This would have meant the odds for Nadal went up at one site, while the odds for Murray went up at the other site.
Understanding WHY arbs happen is probably the most complicated part of learning the arbitrage betting strategy. Don’t worry too much if you’ve found the above information confusing though. To be honest, it’s not really that important to understand the reasons why arbs happen. All you need to know is that they DO happen. You also need to know how to identify them, which is what we’ll look at next.
How to Identify Arbs
The best way to identify arbs is basically to just study the betting markets yourself, keeping a sharp eye out for appropriate pricing discrepancies. With practice, you should be able to instinctively spot opportunities where arbitrage betting is likely to be possible. There are then some relatively simple calculations you can do to confirm either way.
The first thing to do is to calculate the Individual Arbitrage Percentage (IAP) of all the possible outcomes of the market you’re looking at. You should find the best odds available for each outcome and then apply the following formula.
This will give you the IAP for each outcome. Let’s apply this formula to the tennis match we used in our earlier example. The best available odds for Nadal to win were 2.08, so you’d do the following calculation.
The best available odds for Murray were 2.09, so you’d also do the following calculation.
You’d now have the IAPs for the two possible outcomes. The next step is to add these together, which in this case would give you 95.93. This figure is known as the Total Arbitrage Percentage (TAP).
There are only two possible outcomes for this example, but sometimes you’ll be looking at markets with more than two. You must remember to always add the IAPS for ALL possible outcomes, or your calculations won’t give you the right information.
An arb exists whenever the TAP is less than 100. In this case, it’s 95.93, so we know that there’s an opportunity to use the arbitrage betting strategy. You can technically use the strategy ANY time the TAP is below 100, but it’s most effective when it’s below 98. Anything between 98 and 100 offers very minimal profit and is rarely worth the effort. Unless you can get large stakes on it, that is.
The only other calculation you need to do is the one that tells you how much to stake on each required wager. The idea is to make sure that you get exactly the same return (or very close) regardless of which of your wagers actually wins. In this example, you can do that by betting the same amount on each outcome, but that won’t always be the case.
To work out how much you should bet on each outcome, you must first decide how much you want to stake in total. You then apply the following formula for each possible outcome.
As you can see, the calculations used for identifying arbs are not exactly complicated. This is why we think it’s best to put the effort into trying to find arbs for yourself. Although this can be time-consuming, it’s not especially difficult, and it’s likely to yield the best returns.
There are some alternatives to finding arbs for yourself though. For example, there are many websites and forums on the Internet that are dedicated to publishing and discussing arbing opportunities as and when they appear. There is also software you can buy that will search the online betting markets for arbs, and subscription services that will automatically notify you of any arbs.
These alternatives do have some merit. The biggest is that they don’t require the same time commitment as finding arbs by yourself does. However, there are some drawbacks as well. The most notable are that some of the options we mentioned come at a cost. Although it’s possible you’ll recover any costs through your betting profits, this is NOT guaranteed.
Another drawback is that these alternatives are typically used by A LOT of other bettors. This means that any opportunities that get highlighted don’t tend to last very long. As soon as a few people get their money down, the odds are likely to change and the arb will disappear. So, unless you can move very quickly, you’re likely to miss out on most of the opportunities you find out about.
These drawbacks just confirm why we think it’s best to try to find arbs for yourself. We’ve given you all the information you need to do that, but we’re not quite finished yet. There’s one more section to go, and it’s an important one.
Disadvantages of Arbitrage Betting
By now you’re probably looking forward to using the arbitrage strategy as soon as you can. You’re excited about making guaranteed profits without any risk and regularly boosting your bankroll.
It’s fair to say that this is a distinct possibility. You CAN make good money from arbitrage betting if you’re committed enough. We know plenty of people who do, and we use the strategy ourselves too. You shouldn’t go ordering your private jet and yacht just yet though. The arbitrage betting strategy is not perfect by any means, and it has some distinct disadvantages. The three main ones are as follows:
- Arbs are hard to find
- Profit margins are small
- Bookmakers HATE this strategy
We’ve touched on the first disadvantage listed here already. It’s worth highlighting again though, as it’s very significant. There are many, many people looking for arbs, and these opportunities are not exactly plentiful. When they do exist, you have to be extremely quick to take advantage of them. They usually disappear before too long, sometimes in just a matter of minutes. This alone makes it very hard to make regular profits from arbitrage betting.
The second disadvantage might not be a major issue if you’re just looking to make a few extra bucks, but if your goal is to make SERIOUS money, it will be. Although it’s not impossible to make attractive profits with this strategy, doing so requires a sizable bankroll.
On average, you’ll make just a couple of percent return on your total stake. So, even if you’re staking $1,000 on arb, you’ll “only” make around $20 each time. You might be able to find a couple of good arbs each day if you are dedicating a lot of time, but $40 a day is not going to make you rich. If you want to make much more than that, you’re going to need a lot of money to start with.
The third disadvantage is perhaps the biggest one of all. Bookmakers and betting sites are firmly against the arbitrage betting strategy, and they do everything they can to stop people from using it. If they suspect you of “arbing,” they’re likely to limit your betting account or even shut it down completely. This makes it even harder to make money, as you have to try to disguise what you’re doing.
It’s definitely worth learning the arbitrage betting strategy in our opinion. It’s also well worth allocating a bit of time to finding suitable opportunities to use it. It’s just important to remember that such opportunities are limited and unlikely to result in huge profits.
For this reason, we don’t recommend relying on the arbitrage betting strategy as your main approach to sports betting. The chance to make guaranteed profits is, of course, always welcoming, but it’s advisable to use other strategies too. Although other sports betting strategies involve risk, most of them have better long-term potential than arbitrage betting.
If you haven’t already, you should take a look through the rest of our sports betting strategy section. Here, you’ll find details of some other good strategies to use, along with lots of useful information and advice.