Arbitrage betting, often referred to as ‘arbing’, is a popular strategy in sports betting. It involves placing a wager on an event with a sportsbook at a higher price than betting against it (laying) at a lower price on a betting exchange, guaranteeing a profit regardless of the final result.
Stay tuned as we go deep into arbitrage betting and explain how this (potentially) lucrative betting technique works.
What is Arbitrage Betting?
According to Statista, the online betting industry is expected to jump to $114.4 billion by 2028, and with this growth, many are diving in, hoping to strike gold with different strategies. Among various betting strategies bettors use is arbitrage betting.
Arbitrage betting is a strategy that exploits the variation in odds offered by different bookmakers for the same event to guarantee a profit regardless of the outcome. This method is mathematically calculated to ensure that a profit is made irrespective of the result.
Here’s a simplified breakdown:
- Different bookmakers have different opinions, systems, and data, leading them to offer different odds on the same sporting event.
- Occasionally, these odds can vary to such an extent that placing wagers on every possible outcome with the right amounts can guarantee a profit.
- Bettors can take advantage of these discrepancies by placing bets on all possible outcomes to lock in a guaranteed profit.
Let’s take an example of a football (soccer) match between Team Blue and Team Red for simplicity.
- You have $200 to invest in the match
- Bookmaker A is offering odds of -225 on Team Blue. So, you bet $140.58.
- Bookmaker B is offering odds of +250 on team Red. So, you bet $58.42.
- Total payout in either outcome: $204.44
- Profit = $204.44-200 = $4.44
In this scenario, you’re making a profit in both cases. However, we’ve taken a hypothetical example to explain how arbitrage works. We’re making a profit because of the considerable difference between the odds of both bookmakers. The difference may not be this huge in real-world scenarios. Here are a few things you need to keep in mind while engaging in real-time betting.
- Odds change rapidly, so swift decision-making is crucial.
- Bookmakers might limit or close accounts that frequently engage in arbitrage betting.
- Transaction fees and other costs can affect the profitability of arbitrage opportunities.
How Does Arbitrage Betting Work?
Arbitrage in sports betting revolves around the discrepancies in odds provided by different bookmakers. When these odds allow a bettor to bet on all possible outcomes of an event and still secure a profit, an arbitrage opportunity arises. To fully exploit these opportunities and calculate the exact amount to stake on each outcome, bettors typically use specialized tools, such as an arbitrage calculator.
Imagine this: Two bookmakers offer different odds for a tennis match between Player A and Player B. Due to varying analyses, opinions, or even errors, these odds can sometimes be set in such a way that by strategically placing bets on both outcomes (Player A winning and Player B winning), you can ensure a profit.
To make this clearer, let’s visualize it.
Bookmaker 1’s odds
Outcome | Odds |
Player A | -110 |
Player B | +110 |
Bookmaker 2’s odds
Outcome | Odds |
Player A | +110 |
Player B | -110 |
Here, if you bet on Player A with Bookmaker 2 and Player B with Bookmaker 1, you can guarantee a profit due to the discrepancy in odds. To know precisely how much to bet on each outcome to maximize profit, you’d use an arbitrage calculator.