A Beginners Guide to Arbitrage Betting
Arbitrage Betting Introduction
Arbitrage betting has been around for a long time and simply means getting sufficient odds from different places on a single event to mean you will make a profit no matter the outcome. However, before the internet betting boom these odds were normally way out mistakes and your bet would be cancelled or they dried up faster than you could call the bookie.
These days there are hundreds if not thousands of quickly accessible online bookies, it stands to reason that they are not all going to have the same odds on the outcomes of a particular event.
Bookmakers and Odds
The easiest way to work with odds for arbitrage betting is in their decimal rather than fractional format, so odds of 5/2 would be displayed as 3.5 (This includes your stake).
So if you bet £20 @ 5/2 you would win £50 + your £20 stake back = £70
If you bet £20 @ 3.5 then it’s simply £20 * 3.5 = £70, much easier
If you look at a single market at one bookmaker then if you were to add up all the probabilities of the event occurring according to their odds it would add up to over 100%. This is because they are saying the separate outcomes have a slightly higher chance of occurring than they do, so basically, you get slightly worse odds. This is generally called the bookmakers over round, although it also goes by the name of vigourish and many more.
A typical bookmakers may place odds on an event with only two outcomes of:
Outcome 1: ½ or 1.5
Outcome 2: 5/4 or 2.25
If we take the decimal odds and divide them by 1 and add them together and then times the result by 100 you get the total percentage:
(1/1.5 + 1/2.25) * 100 = 111%
So effectively the bookmaker will make 11% regardless of the result as long as he can balance the books, basically take an even exposure to money on both sides.
If he was to take £66.67 on Outcome 1 and £44.44 on Outcome 2, he has taken a total £111.11.
Regardless of the result is he will only have to pay out £100 and he is guaranteed approximately 11% profit. I guess that’s why you never see a poor bookie. Before you all go out and become bookmakers it’s not always easy for a bookmaker to balance their books and they sometimes have to lay off bets on markets that have gone wrong, very occasionally at a loss.
Making the odds work for you
The sharper people among you can probably see where this is going…. This over round happens when you are at the same bookmakers, what if you take the best price available at any bookmaker at both ends of the scale and the percentage adds up to less than 100% for the total outcome??
You guessed it!! Providing the bookmakers take your bets, then with a calculator and a clear head you can place bets on all outcomes of the event and are guaranteed to win.
You can have arbitrage bets on events with as many outcomes as you like, but to keep it simple I’ll stick to a 2 outcome event for example purposes.
You find an event where:
Bookmaker 1 has Wisepunter Travellers basketball team @ 5/4 or 2.25
Bookmaker 2 has Pirate Raiders basketball team @ Evens or 2
(1 / 2.25 + 1 / 2) * 100 = 94.4% that’s a 5.6% under round.
So let’s say you have £100 to spend.
You spend 100 / 2.25 on Wisepunter Travellers = £44.44
you spend 100 / 2 on Pirate Raiders (BOO!!!!) = £50
So you have spent a total of £94.44 and are guaranteed £100 return regardless of the result. This doesn’t sound much, but if you scaled up the stake to £1000…. you get the idea and in theory this bet is risk free.
All this calculating can be a bit tiresome after a while, so there are a few free arbitrage calculators on the net you can use our one here.
Where do I find arbitrage opportunities?
Well, the hardest, but usually most profitable way is to find the bets yourself. If no other service has published them, you should have free reign on the odds for a while until others pick them up and the odds gap closes.
The easiest and most efficient way is to use websites or software that monitors lots of bookmaker’s sites and automatically publishes any arbitrage bets that come up. The main downfall is the free sites delay the results by a set time so it makes it pretty much necessary subscribing to their premium service as the best arbitrage bets will have gone by the time they publish them.
Here’s some tips to make sure you don’t make any newcomer mistakes
- Make sure that you have enough money in all the bookmaker accounts you need to place a bet on your chosen event.
- Make sure that the amount you are going to bet is below the bookmakers limit as well as your own personal limit the bookmaker may have set you on all bookmakers involved in each bet.
- Make sure you refresh all bookmakers pages, check the odds are still as they should be then quickly place both bets or more if appropriate.
- If the odds are way out and they seem too good to be true, then they probably are and the bookmaker may claim a palpable error and cancel your bet. It is safer to place lots of bets at realistic small differences than be greedy on a potential mistake by a bookmaker.
- Don’t always place your bets to the exact amount, i.e. £62.34 round it down or up so as not to draw attention, let’s say £62 so as not to make it obvious you are doing arbitrage bets. Although a few bookmakers don’t seem to mind, most do, as overall they are losing out long term.
- If bookmakers suspect you of doing arbitrage betting they may just lower your personal betting limit to a level where it is not worth you doing these bets, so keep a check on these as they may change.
- This may seem obvious, but don’t do it when you are tired or drunk because mistakes can be very costly!
If the bookmakers are balancing the books on both sides then they make money regardless as in one of your first examples, so why do they care you are doing arbitrage bets with multiple bookmakers.
Why do bookmakers care if you arbitrage bet?
The reason is, bookmakers rely on lots of random bets on all side of events for generally small amounts of money. Most people only have one or two bookmakers and so will often take bad odds as well as when they hit good odds off the bookie, overall long term the bookmaker will get his over round.
Where as people who do arbitrage bets only target the bookmakers when their odds are particularly favourable and often for very large sums of money, these bets are very hard for the bookmaker to balance both sides. They don’t want to have their face rubbed in it with a large bet when they have offered too high odds!!
There is one bookmaker called Pinnaclesports that likes high volume and high stakes betting and actually boasts that they never ban winning players and encourage arbitrage betting. This may sound like a scam, but their model is based purely around getting as large as possible betting liquidity. This way they can always balance the books and can can offer excellent odds and not care whether you win or lose. If you would like to read more about them, then take a look at our Pinnaclesports Review.