How does Sports Arbitrage betting work?
June 12, 2008
HOW DOES SPORTS ARBITRAGE BETTING WORK?
An arbitrage situation occurs in sports betting when bookmakers’ prices differ by a sufficient margin that they allow punters to back all the outcomes of an event and still make a profit. Imagine that old adversaries Roger Federer and Rafael Nadal are priced up in a tennis final as follows:
Ladbrokes offer 6/5 Federer and 8/11 Nadal
Bet 365 offer 10/11 Federer and 10/11 Nadal
Backing each player for a return of £1000, at the best price available, requires £454.55 on Federer at 6/5 and £523.81 on Nadal at 10/11 with Bet 365, a total stake of £978.11.
If Federer wins, £454.55 @ 6/5 returns £1000.01, less the total stake of £978.11 = £21.90 profit
If Nadal wins, £523.81 @ 10/11 returns £1000.00, less the total stake of £978.11 = £21.90 profit
Whichever player wins, a profit of £21.90 is assured. This is the principle of Sports Arbitrage Betting.
To further reinforce the idea, consider a rugby international between New Zealand and England:
Blue Square has odds of 1/10 on New Zealand and 7/1 on England (draw, no bet).
William Hill has odds of 1/5 on New Zealand and 4/1 on England (draw, no bet).
Using the same idea as in the previous example, i.e. backing both sides for a return of £1000, requires £833.33 on New Zealand @ 1/5 with William Hill, and £125 on England @ 7/1 with Blue Square, making a total stake of £958.33.
If New Zealand win, £833.33 @ 1/5 returns £1000.00, less the total stake of £958.33 = £41.67 profit
If England win, £125 @ 7/1 returns £1000.00, less the total stake of £958.33 = £41.67 profit
Again, a profit is guaranteed, regardless of which side wins.
Sports Arbitrage Applications
Knowledge of sports arbitrage betting can be used in several ways. The majority of arbitrage punters use it to achieve small percentage profits. However, finding such opportunities for yourself can be extremely time-consuming, and, given the small margins, may not be worthwhile. The process of finding sports betting arbitrage opportunities can be aided greatly by the use of “odds comparison” sites, such as http://searchum.bestbetting.com/, which list all the leading bookmakers’ prices on an event on a single page. There are also companies which offer to find arbs, alert you to their location, their profit percentage, and how much to bet on them. These services are subject to paying a subscription.
Most sportsbooks offer sign-up bonuses for new players. These bonuses will usually involve a condition which states that the bonus money must be bet a number of times before it can be withdrawn. Arbitrage can be used to preserve these bonuses without the worry of losing it before being able to withdraw it.
Arbitrage can also be used when you simply want to bet on a game without risking losing your money. Assuming you can find an arb on your event, instead of simply placing a bet on your team, place the arb with one side backed for the maximum and the other side only covering the bet. In the rugby example above, the £41 guaranteed profit could be used to back one side for more. For instance, if confident of New Zealand winning, bet them for £875 and England for £125. Should England win, the extra gamble only means you don’t win anything. However, if correct, £875 @ 1/5 returns £1050, £8.33 more than the standard arbitrage trade.
Risk Factors
Arbitrage opportunities are generally limited to just a few per cent profit, hence stakes are likely to be large. The first difficulty arises, however, if a bookmaker imposes limits on the maximum size of a stake. Since an arbitrage bettor’s stakes are likely to be larger than most, this problem may occur quite frequently.
A second problem is the ongoing problem concerns the effects of deposit and withdrawal costs, and in some cases currency transaction costs as well. For certain types of deposit, and with a number of internationally based online bookmakers, these additional costs can be anything up to 5%. Given the small profit margin, these costs can annihilate any profit. The best way to avoid this is to try to minimise your deposits and withdrawals.
A third problem is that some bookmakers only allow bets in a particular currency. These are mainly the small bookmakers. The best way to avoid this scenario, and the problem of “getting on” with larger stakes is to maintain a number of accounts with the larger bookmakers such as Stan James, Paddy Power, 888sport, skybet, Boylesports etc.
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Free Horse Racing Tips
Well explained. Job well done.
Those interested in Sports Arbitrage betting would do well to look at the Euro 2008 final between Spain & Germany. With Betfair and Betdaq offering Spain at 0.69/1 and Boylesports pricing Germany at 6/4 to lift the trophy, the overround is 99.2%.
£145 on Spain @ 0.69/1 returns £245.05.
£100 on Germany @ 6/4 returns £250.
Granted in this instance, the profit is minimal, but serves to highlight the principle of arbitrage betting in a real-life situation.
With regard to the above, the betting exchange commission of 5% kills off any betting opportunity, but (if ignoring said commission) this example serves as an illustration of the potential opportunities available.