Arbitrage in Sports Betting: Does it Really Work?
Arbitrage betting involves placing bets on all possible outcomes of an event at different bookmakers to ensure that the winnings from one bet cover any losses from the others. This strategy can be profitable as long as the odds vary across bookmakers. This article explores the world of arbitrage betting, including its benefits, drawbacks, and practical implementation, making it a useful guide for both experienced and new bettors seeking to profit from this method.
How does arbitrage betting function in the context of gambling?
Betting odds represent the likelihood of an event happening and determine the potential payout for a successful bet. They can be presented in various formats, including decimal, fractional, or moneyline odds. For instance, decimal odds of 2.0 suggest that a $1 bet would yield a $2 return if the bettor wins.
Bookmakers utilize statistical analysis and other variables to establish odds for various events, considering factors like recent form, head-to-head records of teams or competitors, weather conditions, venue, and more. However, distinct bookmakers may hold divergent opinions on the likelihood of an event happening, causing disparities in the odds they offer. To demonstrate how arbitrage betting operates in practice, let us take a simple example. Let’s say there is a soccer match between Team A and Team B, and two bookmakers offer the following odds:
|Team A||Team B|
A bettor can place a bet on Team A to win at Bookmaker 1, wagering $100, and place a bet against Team A at Bookmaker 2, wagering $100. If Team A wins the match, the bettor will receive a return of $200 from Bookmaker 1 but will lose $220 at Bookmaker 2, resulting in a net loss of $20. However, if Team B wins the match, the bettor will receive $300 from Bookmaker 1 and win $250 at Bookmaker 2, for a net profit of $50. The bettor is guaranteed a profit of $30 regardless of which team wins as the winnings from one bet will offset the losses from the other.
When betting, a “back” bet is placed when a bettor backs a team to win, while a “lay” bet is placed when a bettor lays a team not to win. A lay bet is equivalent to betting against a team. When making a back bet, the bettor agrees to the odds offered by the bookmaker at the time of the best. If the odds change before the event starts, the bettor will receive the new odds if they are higher, but not the original odds if they are lower. To determine the guaranteed profit from an arbitrage betting opportunity, the bettor simply subtracts the total amount wagered from the total return, which is calculated based on the odds offered by the bookmakers. In the example above, the bettor wagered $100 at Bookmaker 1 and $100 at Bookmaker 2, for a total of $200. The total return would be $300 in the case of a win by Team B, and $180 in the case of a win by Team A, for a guaranteed profit of $30 in either case.
Bonus sport arbitrage
Bookmakers often offer new users a signup bonus of $10 to $200 for depositing an initial amount. However, to withdraw the bonus, the user must wager the deposited amount a certain number of times. Bonus sport arbitraging, also known as matched betting, is a type of sports arbitrage where the bettor hedges or backs their bets in the usual way, but because they received a bonus, they can allow for a small loss on each wager (2-5%), which reduces their profit. This strategy allows the bookmaker’s wagering requirement to be met, and the initial deposit and signup bonus can be withdrawn with little loss.
Bonus sport arbitraging, also known as matched betting, offers an advantage over usual betting arbitrage as it is easier to find bets with an acceptable loss, rather than an actual profit. With most bookmakers offering sign-up bonuses, it is possible to exploit these bonuses to harvest the free bets by signing up to various bookmakers. This can be turned into cash fairly quickly, either by making a small arbitrage or a small loss on each bet or trade. However, finding close matched bets or arbitrages can be time-consuming, and that’s where a middleman service can help. Matching money from different bookmakers against each other can help avoid most of the turnover requirements, enabling the player to play with the losing bookmaker’s money and transfer it to the winning bookmaker. As a result, the player can usually expect a 70-80% return on investment.
In addition to the time spent matching odds between different betting sites and exchanges, there is another drawback to bonus bagging and arbitrage trading: many free bets are “non-stake returned,” which means the odds are effectively reduced by 1 in decimal format. To minimize potential losses on the free bet, it is necessary to place a bet with high odds, so that the percentage difference in the decreased odds is as small as possible.
Arbitrage is often promoted as a “risk-free” strategy, but this is only the case if the arbitrage is executed flawlessly. There are several possible risks involved, including:
- Rapid changes in odds: Arbitrages in online sports markets typically last only around 15 minutes before the odds change and the opportunity vanishes. If the bettor fails to place all the necessary bets before this happens, the arbitrage becomes a conventional bet with its associated risks. It is essential to closely monitor the odds and be prepared to act quickly to take advantage of the opportunity.
- Hackers: Arbitrage traders face a significant risk of cyber fraud due to the need to create and manage multiple accounts with personal details. While deposits are often quick and easy, withdrawals require proof of identity and can lead to identity theft risks. High odds (5-30%) comparison sites are attractive to traders but can also lure hackers who may steal large sums of money, including entire savings, and sell personal data to criminals. As a result, traders should exercise caution and use reputable websites to minimize their risk of cyber fraud.
- Limitations on betting amounts: Bookmakers often impose betting limits to discourage arbers and use shared security servers to detect suspicious activity related to arbitrage betting. Additionally, they may limit stakes or close accounts without honoring bets, making it challenging for arbers to profit. As a result, bettors must consider these limitations when calculating their stakes and odds to ensure profitability. To avoid detection, some people use specialized arbing VPN and VPS services.
- Risk of account restrictions or closure by bookmakers: Bookmakers may confiscate the bettor’s stake and prohibit them from future betting with the bookmaker if they suspect the bettor is participating in arbitrage betting, which is frequently deemed a violation of the bookmaker’s terms and conditions.
- Bet cancellation: If a bettor engages in arbitrage and a bookmaker cancels a bet, the bettor could be left exposed to risks associated with conventional betting. The bettor may attempt to repeat the bet to minimize risk, but may not get the same odds, potentially resulting in a loss. In cases where bookmakers offer very high payouts due to unintentional errors in quoting odds, bookmakers are typically allowed to cancel such bets in many jurisdictions. However, whether a mistake has occurred is often left to the discretion of the bookmaker.
How to implement Arbitrage Betting in practice
Finding odds differences among bookmakers: To start arbitrage betting, one needs to identify the differences in odds offered by various bookmakers. This involves comparing the odds of a particular event among different bookmakers and recognizing any inconsistencies. These inconsistencies can arise due to a variety of factors, including variations in bookmakers’ views on the outcome of an event or the bookmaker’s efforts to balance their books by altering the odds. To identify these differences, bettors can use a range of tools, such as odds comparison sites, betting calculators, and odds monitoring software.
Placing bets on all outcomes: After identifying the odds discrepancies, the next step in arbitrage betting is to place bets on all possible outcomes. This entails betting on each outcome with the bookmaker offering the highest odds, thereby covering all possible outcomes of the event. By betting on all outcomes, bettors can ensure a profit, irrespective of the event’s outcome.
Calculating and managing bankroll effectively: Effective bankroll management is essential for arbitrage bettors. This includes setting a budget for their betting, calculating potential profits and losses, and keeping a record of all bets and outcomes. With proper management, bettors can ensure they have sufficient funds to cover their bets and capitalize on opportunities to profit.
Arbitrage betting offers numerous benefits such as guaranteed profits and low-risk betting, but also has drawbacks such as the risk of rapid odds changes and limitations on betting amounts. Nevertheless, when implemented with knowledge, skill, and discipline, it can be a lucrative and low-risk way for bettors to make money from their betting activities. By following a structured approach and understanding the basic principles, bettors can increase their chances of making a profit and take advantage of the benefits of arbitrage betting.