What is arbitrage betting?
Arbitrage betting relies on different oddsmakers using different odds for events. We explain how bettors use this to inform their betting strategies.
Arbitrage betting is a sports betting strategy that aims to try to leave the bettor with some profit regardless of the outcome, but this is by no means guaranteed to happen. It takes advantage of discrepancies in odds offered by different oddsmakers for the same event.
How does arbitrage betting work?
Oddsmakers set odds based on their analysis of the event and betting patterns. However, because each oddsmaker uses different methods, odds can vary. Arbitrage betting occurs when these variations create a situation where it is possible to bet on all outcomes and secure a profit.
The key to arbitrage betting is to find these odds differences, place bets on all outcomes, and balance the stakes.
How to spot arbitrage opportunities
Arbitrage opportunities are found when oddsmakers disagree on the probabilities of outcomes. For example, in a two-outcome event (like a tennis match), if one bookmaker offers odds of 1.80 on Player A and another offers 2.40 on Player B, this creates an opportunity for arbitrage.
To spot an arbitrage opportunity, a bettor needs to:
- Compare odds from different oddsmakers.
- Calculate whether placing bets on all possible outcomes can still result in some form of profit.
Calculating arbitrage bets
The formula to calculate an arbitrage opportunity is straightforward. It’s based on the implied probability of each outcome. The implied probability of an outcome is determined by dividing 1 by the decimal odds.
Worked example of arbitrage betting
Let’s walk through an example using a tennis match between Player A and Player B. We will bet on both players using different oddsmakers.
- Bookmaker A offers 1.80 odds for Player A to win.
- Bookmaker B offers 2.40 odds for Player B to win.
Let's say there’s $100 to bet. To attempt arbitrage sports betting, the bettor needs to divide this money between both players based on the odds.
1. Calculate how much to bet on each player:
- For Player A (odds of 1.80): the bettor could bet $55.56.
- For Player B (odds of 2.40): the bettor could bet $41.67.
These amounts are calculated based on trying to secure a profit regardless of outcome. Arbitrage gambling, however, will never completely mitigate losses.
2. Place the bets:
- Bet $55.56 on Player A with odds of 1.80.
- Bet $41.67 on Player B with odds of 2.40.
3. Profit calculation:
- If Player A wins, the bettor will get: $55.56 × 1.80 = $100.01.
- If Player B wins, the bettor will get: $41.67 × 2.40 = $100.01.
In both cases, the bettor bet a total of $97.23 and receives $100.01, potentially giving the bettor a small profit of about $2.78, no matter who wins.
Advantages of arbitrage betting
Some players adopt an arbitrage approach for the below reasons:
- The chance to still come away with a profit: Arbitrage betting is by no means risk free, but it presents an opportunity to use varying odds between oddsmakers to potentially come away with a profit.
- Frequent opportunities: With so many oddsmakers and sporting events, there are many arbitrage opportunities available, especially if the bettor monitors odds changes closely.
Risks and challenges of arbitrage betting
Like any form of gambling, arbitrage betting comes with potential risks:
- Odds Fluctuations: Odds can change quickly, meaning opportunities may disappear before both bets can be placed.
- Betting Limits: Some bookmakers impose low maximum bet amounts, limiting the potential profit.
Arbitrage betting: The potential for profit regardless of outcome
Arbitrage is a betting strategy that takes advantage of odds discrepancies. It can require diligence, speed, and the ability to spot opportunities, but also comes with challenges, like changing odds, and should always be navigated carefully.
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