You have probably heard about this type of betting where you are guaranteed to win. Maybe your friend or a friend of a friend have this betting system that allows him to place wagers on a game and no matter what the outcome is he will be able to walk away a winner. Sounds too good to be true? Then you have the right mindset and are also right. While arbitrage betting does have zero risk when it comes to the outcome of the specific games you are betting, there are other types of risks associated with this type of betting. It is a fine way to make some extra money in our opinion, but there are far better ways to get an edge on the sportsbooks.
In this article we will explain how arbitrage betting works, how you can get started doing it yourself and also some things you need to wary of. We will also touch on some similar types of wages that can be used sometimes like hedges and middles. At last we want to share our alternative way of beating the bookies besides utilizing risk-free arbitrages.
Arbitrage Betting – What is it?
Arbitrage stems from the finance world where the participant (or abitrageur) taking advantage of converging prices in order to receive a risk-free profit. This were mostly done back in the day when different markets had different prices on the various stocks and bonds. By buying a stock at one stock exchange and then selling it another one at a higher price one could earn essentially risk-free money.
The same principle has since been copied and applied to the world of sports betting where you can find the odds on the same event at many different bookmakers. By comparing them with others you could often find discrepancies what were wide enough to be able to place a bet on both sides of an event and no matter the outcome you would receive a profit (or at least not lose any money).
An example of an arbitrage bet
We have found an example of such a bet by checking the NFL betting odds at both Bet365 and Pinnacle Sports. In the match between the New York Giants and the Dallas Cowboys we notice that the discrepancy between the odds at these two bookmakers are a bit on the high side. This might signal a potential arbitrage bet. Let us take a closer look at it.
A quick way to find out if there is arbitrage value between two wagers is to take each of the odds, divide 1 by each of the odds and sum the answers. If the value you receive is smaller than 1 you have a good bet!
Betting Odds: New York Giants: 3.300 Dallas Cowboys: 1.471 Calculations: 1 / 3.300 + 1 / 1.471 = 0.30303 + 0.67981 = 0.98284 0.98284 We have a bet!
So we can see that we have found a good bet and should place a wager on each of these sides in order to take advantage of the value presented to us. But should we just place an equal amount on each of these? No – you need to do some more simple calculations to determine how much to wager on each bet so that you are guaranteed a win.
You need to calculate what you stand to win on each bet, how much you net if the Giants win and how much you net if Cowboys win. Then you can use goal seek target in excel or just some trial and error to get both of the nets to equal each other. Let us assume that we have a bankroll of $1000 available:
|Teams||Odds||Bet amount||Win 1||Win 2|
|New York Giants||3.300||$308||$709||-$308|
So here you have the amounts you should wager on these events to ensure a guaranteed profit of $17.46. Not a bad return for doing some simple math
What are the downsides to arbitrage betting?
As you might have gleaned from the article this is not a sure way to riches. Although the risk in any one of your bets are zero, there are other types of risks that you are exposed to that can help wipe out weeks of work and make your project quite frustrating. Here are a couple of the ones that you should be aware of:
Mistakes – Probably the most common one and the one that accounts for the most trouble is mistakes when placing the bets. You might have typed in the wrong betting amount at one of the sides leaving you exposed, forgetting to click confirm at one site, betting on the same side at both bookmakers, not getting both bets down in time and so on. There are plenty of things that can go wrong in this seemingly simple process. The reason for this is that the odds are not gonna stay like they are forever. When there is an arbitrage to be found you can bet your ass that people are gonna flock to it and move the odds enough to make it go away.
Limits – Another problem you will find after doing this successfully for a short time is that you are going to run into limits on the bets you can make. Most of the times these will come in the form of limits to your account where you can only be placing $100 or lower bets. Then arbing becomes quite hopeless. This happens because the bookies does not like winning players and will limit those that are beating them.
You will also find that even if you are allowed to continue betting arbitrages you are still going to run into limits eventually as your bankroll grows. There are limits in place for each type of bet as to how you are allowed to wager on it and when you amass bigger bank you will run into trouble getting all in play on smaller events.
Difficult – Betting an arb is easy enough, but finding them is another story. There are so many bets put up at any given sportsbook these days that sifting through them is becoming increasingly difficult. There are also fewer bets to be found than ever before, and it does not look like there is gonna be any change to that any time soon with all the technology and programs that the bookies have in place.
Rogue Bookmakers – Another facet that needs to be in place to be doing this is a plethora of bookies to choose from. You cannot simply have two bookmakers and arb between them all day. At a minimum I would say you need 10 bookmakers with funds to be able to find enough decent arbs to make wagers with, and probably over 20 to have a good rotation going. But the problem with having such a portfolio of sites is that you are eventually going to run into a rogue casino that will steal your money eventually. You cannot simply rely on the ones with top reputation as you need more outs. This is another risk that is very real and hard to avoid. Note that you also can be banned from legit operations just for abusing their bad odds.
There are other problems you can run into, like bankroll limitations, movement of funds, rules differing and other things. Still I think that if you really want to give this a go I will not stop you. I find it fun as a mental challenge and like to tinker with numbers and accounting in excel. But do not expect to get rich from this scheme in todays betting markets. Just be sure to always take advantage of bonuses and such to get an even bigger edge.
Hedging is the act of securing either a win or a loss before the sporting event has concluded. This works in much of the same way as arbitrage betting, but also includes the possibility of incurring a loss. There isn’t all that often you would want to hedge, and you should have a good reason to do just that. Just putting up a hedge to secure a solid halftime lead by the team you have backed is not good enough a reason. Why did you back them in the first place if you were gonna chicken out once they took the lead?
Putting up a bet on the opposite side of one you already have should only be reserved for those situations where there suddenly have appeared value as there were none before. If the lines have moved in favor of (or against) you enough that you feel the other side suddenly have positive expected value then you should bet that. The fact that you already have a bet on this event should not dissuade you from making another. As long as there is value in betting something else right now then you should do so.
These hedges can be placed at any time after you have placed the original wager. You might place it 10 minutes after, 5 minutes before kickoff, on the in-play betting options and so on. Note that there can be other considerations you make that could make hedging the right play. If it increases your expected growth it is also a bet that should be made, even if it is negative expected value. More on this in our advanced betting series that is upcoming.
A middle is a bet you place that is not only an arbitrage, but also have at least half a point covered by both sides of a bet so that you have the potential to win both bets. Also known as hitting a middle. These are extremely rare, and hitting one is often even rarer, but they produce amazing returns when they finally do hit.
An example of a middle can be from the NFL betting odds presented this week in the game between New Orleans Saints and Baltimore Ravens. The Saints have -5.5 and odds of 2.02 at Pinnacle Sports while the Ravens have odds of +6.5 and 2.00 at Bet365. If you place a $1000 bet on both sides of these you have an arb where you win $20 if Saints cover the spread and break even if the Ravens hold them back. However, if Saints should win by exactly 6 points you will win both your bets and net a cool $2020 which could translate to weeks, if not even months of arbitrage betting to get the same results.
You also have another type of middle which is called the polish middle. These work the same like the middles, but are not arbitrages in that you are guaranteed a profit. An example could be the odds between the New England Patriots and Buffalo Bills. Here you see that the Patriots have the spread at -7 and 1.91 odds while the Bills sit at +7.5 and 1.95. Here you do not have an arbitrage, but you could still bet it and have a chance of winning one of the bets and get the other money back if the Patriots win by exactly 7 points. This is a more risky play, but given the probability of a match being decided by exactly 7 points is quite high you might still have a good play.
Alternatives to Arbitrage Betting
By now most you might be asking how these opportunities actually arise. Why do the bookmakers put out their odds such that there is money to be made betting on both sides, and where does the value come from? The answer to the last one is that obviously at least one of the odds are wrong, or offers value to the bettor. And in probably 99+% of the times there is only one of the sides that offers value. This means that by doing betting on both sides of a bet we are essentially gaining one great bet, but then giving away most of that value in exchange for a safe return.
If you want to increase your potential return you can start only betting the side that has the positive expected return. This would increase your winnings by many orders of magnitude, but so would also your risk. Taking on this risk should prove to be the most profitable in the long run, but not everyone has the stomach for it and that is fine. Arbitrage betting is a fine way to make some decent extra cash.
So you have a final question as to how you can determine which side is the one with positive expected value? Just look for which of the two sides of an arbitrage bet that is prevalent at most bookmakers – the side that is not to be found at other sites is the one that is obviously wrong and should be bet.