Sports Betting Arbitrage

What is Sports Betting Arbitrage?

An arbitrage situation is when bookmakers' prices differ enough that they allow bettors to back all outcomes and still make a profit. An arbitrage is often referred to as an "arb".

Shouldn't the Bookmakers Know About This and Make It Illegal?

Yes they do know. However, bookmakers don't create sports betting arbitrage situations with their own prices. If this ever does happen, it's because of a mistake. You can't just go to a single bookmaker and bet on all outcomes without losing money.

From a business perspective sportsbooks/bookmakers are only interested in making money. There is a misconception concerning a bookmaker's need to balance their book. It is believed that with a balanced book, the bookmaker can make a risk-free profit.

This is absolutely true, but even if the book isn't balanced, they are still exposed to possible losses. However, the sportsbook will still make money in the long-run because of the overall diversification of their bets on various games.

But even taking this into consideration, some bookmakers may be opposed to clients making money from dealing with them without incurring risk (sports betting arbitrage). Therefore, as an arbitrageur you may have to take measures to disguise your activities at books where this is frowned upon or just find another sportsbook.

How Do You Make Sports Betting Arbitrage Work?

You must use at least two different bookmakers. Betting on all outcomes at the same bookmaker won't work. You have to find at least two bookmakers whose prices differ and are high enough so that an arb can be created. This used to be quite a challenge but with the number of bookmakers on the Internet now, there are many more choices of odds to choose from.

Why Do Sports Betting Arbitrage Opportunities Occur?

There are tons of sportsbooks around the world with some specializing in particular sports and being more familiar with competitors from their own local area. To compete for global business they must offer a wide range of sports from all around the world including outside their areas of expertise.

As a result, many bookmakers overstretch themselves when offering odds – they try and cover each and every market to get as many customers as possible. In doing so, they will sometimes offer odds on events that they have little or no expert knowledge in.

For example, a bookmaker in Costa Rica may know very little about English Division 2 football games yet offer odds on them. In contrast, an English bookmaker will be much more “in the know” as to the likely outcomes from the same games. Even though it's the same game, the two bookmakers may offer vastly different odds resulting in a sports betting arbitrage opportunity.

Prices may also be based on the anticipated flow of bets rather than the probabilities of the outcomes. For example, when England plays soccer, most bets with UK bookmakers will be supporting England so other bookmakers may offer the opposition at an inflated price to create a balanced book.

Do Sports Betting Arbitrage Opportunities Really Exist?

They do exist, although the frequency with which sports betting arbitrage opportunities arise is relatively low since each bookmaker is careful not to ride against the general tide of opinion regarding the pricing of a sporting event. Although advantages of a few percent are not uncommon, maybe only 1 book in a 100 or fewer is capable of yielding an arbitrage opportunity.

Nevertheless, given the enormous number of sporting events available for fixed odds betting today, there are still a good number of sure bets to be found each and every week. When this happens, a sizable sports betting arbitrage opportunity may become available, perhaps offering a 1-10% return.

However, such opportunities are relatively rare. When they come along, and a bettor already has existing accounts with the relevant bookmakers, they present a good opening to make money. With that being said though, only the most dedicated arb-watcher will realistically be able to benefit repeatedly from arbitrage betting with a view to securing a regular income.

With All the Hype, Can You Really Make Money on Them?

Although the prices may guarantee a certain profit in theory, there are a few factors that could prevent the actual implementation of the arb.

Arbitrage might seem like betting's equivalent of the Holy Grail, but no form of gambling is entirely risk-free, not even sports betting arbitrage. The fact that it's frequently and wrongly acclaimed as being so is perhaps partly due to the use of the term "sure win". There are numerous difficulties associated with sports betting arbitrage that can and do eat into the profits, sometimes with potentially disastrous consequences.

The first issue to consider with arbitrage betting is stake size. The majority of arbitrage opportunities are limited to only a few percent at best. In itself, this should not present a problem, provided the bettor has at his disposal enough cash to place the bets he wants. However, the bookmaker may impose limits on the maximum size of a stake, which would be an issue.

A second problem is the ongoing concerns of deposit and withdrawal costs, and in some cases, currency transaction costs as well. For certain types of deposits, and with a number of internationally based online bookmakers, these additional costs can be anywhere from 1 to 5%. Given the small profit margin, these costs can wipe out your projected profit. The best way to avoid this is to try and minimize your deposits and withdrawals.

A third problem is that some bookmakers only allow bets in a certain currency. These are mainly the small bookmakers. The best way to avoid this is to only use the big ones. This is a good idea in general as you want your money to be safe.

A fourth problem is the issue of postponed sporting events. This will affect you in different ways against different sportsbooks. Some books will let the bet stand, but some will cancel it. So you may end up having only 1 side of the bet. You must have a plan to deal with this.

A fifth problem is price changes. Prices on the exchanges can change very quickly so you must make sure that you place any exchange bets first while the price lasts.

A sixth problem is bad sportsbooks. There are tons of sportsbooks that are in bad shape and will probably disappear so put in the time to find quality and reputable bookmakers.

How Much Capital Would I Need to Make it Worthwhile?

In general, the more money you have the better. In order to make some decent money you need to have at least a few thousand dollars online. But in order to take advantage of the most opportunities, it would be best to have $1,000 or so at 20 different sportsbooks in order to have all the odds covered.

If you only have a few thousand dollars to deal with and your plan is to deposit it at a specific sportsbook when a sports betting arbitrage opportunity arises then you will run into the problem of transaction costs that we mentioned before.

So Why Doesn't Everybody Use Arbitrage?

Sports betting arbitrage is much more accessible because of the internet, but there are still barriers which stop people from being successful. It takes capital, time, organization, and energy to make consistent profits. It is important to develop processes that enable you to act upon opportunities immediately.

Sports betting arbitrage is risk-free, not effort-free. Your success depends upon your own level of commitment and hard work. Individual arbitrage prices do not last for long and there is a steep learning curve for all newbies to climb.

How Do I Find Arbitrages?

Find by yourself - Look at betting sites and odds comparison sites to find your own opportunities. The trick is to look for early prices that have not yet been adjusted.

From messageboards - There are a number of messageboards where arb hunters notify each other of available arbitrage opportunities.

From odds comparison sites - Many odds comparison sites now have special arb sections that present opportunities. Most of these are done through an automatic screening process so you should double check the prices and get to know the bookmaker too.

Sign up for an Arb Alert service - I believe this is the best option for most people because of the time commitment. My favorite service and the only one I recommend is Arb Hunters.

What is an Example?

Ladbrokes offers - 2.20 for Borg and 1.72 for McEnroeIntertops offers - 2.39 for Borg and 1.91 for McEnroe

You could back both players for a guaranteed profit by backing Borg with Ladbrokes and McEnroe with Intertops. Let us assume you want to wager $500 total. The amount to wager on each is $232.36 on Borg and $267.64 on McEnroe.

Divide the price's numerator by its denominator, and add 1. For example, the decimal version of 5/4 is 2.25 (5 divided by 4, then add 1). 5/2 is 3.5, 11/4 is 3.75, 3/1 is 4.0 etc.

What is Trading?

Trading is betting on the actual movement of a selection's price. If you think that a selection's price will fall, you would back it now and lay it later at the lower price. As long as the price moves in the direction that you have anticipated, you will be able to lock in an immediate profit.

This trading process can be repeated several times within one event. You can either wait until the price moves before closing out for a profit, or you can submit an order at an exit price of your choice and wait until it is matched. You can adjust both the price and the stake of your submitted order at any time.

If you are trading on the same exchange, as is usually the case, you do not have to provide funds to cover your closing bet. This is because the exchange automatically treats the potential winnings from your first bet as the stake for your closing bet. Betting exchange traders also benefit from a reduced commission liability, as the commission is only payable on your overall market profit, as opposed to the (larger) profit from the winning selection.

What is An Example?

You have already backed a horse called Hotshot on Intertops at 4.00 for $200.00 in anticipation of a price fall. The lay price of the horse then shortens on the exchange to 3.50, and you want to know how much you should lay it for at that price. The example assumes that your Intertops commission rate is 4%. You lay the horse for $228.57 at the entered price of 3.50. This stakes locks in a trading profit of $27.43.

Sports betting arbitrage requires the concurrent availability of all prices. For example, backing a horse with a bookmaker in the belief that its price will fall on the exchanges is an example of trading. However, backing a horse with a bookmaker when it is also currently available to be laid at a lower price on an exchange is an arbitrage. In other words, an arbitrageur exploits existing price discrepancies, while a trader anticipates price movements.

I hope this gives you a better understanding of sports betting arbitrage as well as trading. As always, best of luck in all your sports betting endeavors.

Have A Question or Want to Add Your Own Thoughts ?

Have A Question or Want to Add Your Own Thoughts? Well let's hear it so we can all help each other become better handicappers.

Return to the Top of the Sports Betting Arbitrage Page

Back to the Sports Betting Research Page