Let’s break that down…
Find your two best odds
The Greek at 1.20
Pinnacle Sports at 8.00
Pick your total winnings
For this example we’ll use a winnings amount of $1000 (although this is in an arbitrary amount –
the higher the sum you pick, the larger the bets and the greater the profit).
Calculate
Divide your chosen total winnings amount by each set of odds to get each respective bet amount. Add them together to get your total outlay.
In this example:
($1000 ÷ 1.20) + ($1000 ÷ 8.00) = your total outlay
Calculated as:
$833.33 + $125.00 = $958.33
You now know exactly how much you are outlaying ($958.33) and how much to bet at each bookie
($833.33 at The Greek,
and $125.00 at Pinnacle Sports).
Calculating your profit is just as easy:
Winnings – Outlay = your total Profit
$1000 – $958.33 = $41.67
And finally, to calculate your return on investment you simply divide your profit by the initial amount invested: $41.67 ÷ $958.33 = 4.35%
Calculating Arb Percentages
All arbitrages are expressed as a percentage. Contrary to what you would usually expect,
this percentage is not the same as your return on investment.
The arbitrage percentage is calculated by dividing 1 by each set of odds and then adding them together.
1 ÷ 1.20 = 83.333%
1 ÷ 8.00 = 12.5%
83.333% + 12.5% = 95.833%
This percentage, 95.833%, indicates what portion your investment will take up of the total winnings.
In other words, if your winnings were to be $1000 as used in the example above, the two bets add up to
$958.33, 95.83% of the total winnings. This means that 4.17% of the winnings was not invested, and is therefore left over
as profit. Thus, when people refer to arbs as a ‘95.83% arb’ or a ‘4.17% arb’, they are talking about the same thing.
Notice that 4.17% is not the same as your return on investment (4.35%) because 4.17% is the percentage
of the total winnings, not the percentage of the amount invested.
Additional Reading
- Advanced Arbitrage Calculations
- Bet Types and Betting Markets – An Explanation
Resourse: http://sportsarbitrageguide.com/
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