Arbitrage betting requires no luck, statistics or knowledge of the sport you’re betting. But despite this, thousands of people are using the arbitrage betting strategy to guarantee a profit on sports bets day in, day out.
It sounds way too good to be true! but it’s incredibly easy to get started and the opportunity is there, ready for the taking.
But it won’t be around forever…
In this article, we’ll take a look at what it is, how it works, how much can be made and most importantly; how arbitrage betting can improve things for you!
What is Arbitrage Betting?
Arbitrage betting, otherwise known as “Arbing” involves placing multiple bets on all outcomes of an event in order to guarantee a profit.
This only works when the bookmaker has listed odds higher than the current market price. By “market price” we mean; the odds that are available on the betting exchanges (or occasionally another bookmaker).
Bookmakers rely on offering odds under the market price in order to make a profit. This is called the bookmaker’s overround. If you convert all the runners of a horse race odds into percentages, you will notice that it will never add up to 100% at a bookmaker. It can vary, but on average a bookmaker overround is somewhere around 115%.
The 15%’s going straight in their basket…
Bookmakers only offer bad odds. Because of this, they’re not going to leave arbing opportunities online for very long. More often than not, bookmakers will reduce their odds a few minutes after realising it is higher than elsewhere. The exception here is betting exchanges who don’t care what the odds are as they run on a commission basis.
In the same way that supermarkets have ridiculous offers at the front of their shops (think 50% off a crate of beer), bookmakers will sometimes offer great odds in order to attract new customers. Be warned though, there are usually complicated terms and conditions attached or at the very least; a max bet of around £5 which can make it a waste of time to arbitrage bettors.
How Does Arbitrage Betting Work? (Step by Step)
Let’s use a real example, just one of the hundreds of arbing opportunities that are available every single day.
Just a quick note: This arb was found the day before the race began. Because of this, there isn’t much money available in the exchange and you are unlikely to have large bets accepted at the bookmaker. It’s just an example.
As you can see above, the horse “Tupi” is priced at odds of 8.00 at Coral. The market has only been opened recently as it’s still a day before the event. Hence the reduced liquidity. The market is a 16:25 race at Newmarket on a Saturday.
I’ve opened up the same race on Betfair Exchange and found the lay odds are available at 7.40. Crucially, this is lower than the bookmaker odds of 8.00.
This is a perfect opportunity for arbitrage betting. There’s money available in the exchange (£31 at 7.40) that we can get matched with and it’s lower than the odds at the bookies.
The Maths: Explained
By backing the horse at Coral for odds of 8.00 with £10, we expect to receive £80 (including stake) should the horse win. This would effectively be £70 win. Of course, if the horse lost, we would lose our £10 stake altogether.
That’s where the lay bet comes in….
At the exchange, we now place a £10 lay bet at odds of 7.40. Our total liability at these odds on the lay bet would be £64. This is what we have to pay if our lay bet loses.
Let’s put all of this into a spreadsheet and see what our possible outcomes are…
As you can see, we’re now in a risk-free position where we stand to make £6 profit should the bookmaker bet win and £0 if the exchange bet wins. It’s essentially a free bet.
Balancing the Profits: Guaranteed Winner
Nobody likes to put in some work and end up with £0 at the end of the day. Unfortunately, that’s entirely possible if your arbitrage bets didn’t win at the bookmakers (using the example above).
Most arbers will balance their profits by adjusting the lay stake. This means that they are guaranteed profit, whatever the result. There are plenty of free calculators online that will help you work out the perfect lay stake for your arb.
Here are the results of our example below, using the adjusted lay stake.
We’re now left with a profit of around 80p whatever happens. Although it’s not huge money, we can increase our stakes and repeat the process. The profits can soon stack up.
One of the key things to remember with arbing, is that little profits add up very quickly. 80p might not seem like a lot; however, if you were able to do that on 10 races a day that’s £8. Now multiply that by 365 and that’s £2,920 with virtually no risk!
Now you know how profitable arbing can be, let’s look at exchange commission which you will have to factor in..
For the sake of an easy learning curve, I kept exchange commission out of the above examples. Betting exchanges have to make their money somewhere so they do so by charging a commission on bets.
Betfair Exchange, for example, charges 5% on all winning bets.
Taking 5% winning bet commission into account, we would stand to make £0.37 profit if the horse wins or £0.34 if the exchange bet wins. This definitely eats away at some profits, but nothing in life is free!
Remember: you can always increase stakes and repeat the process multiple times. We’re only using a £10 stake as an example as it’s best to practise with small amounts. However, a £100 stake is possible on a relatively regular basis. Sometimes far more.
Just look at this arbitrage bet from some time ago:
Backing at 7/4 (2.75) with William Hill and laying at 2.10 – for a £275 stake. That’s a tidy result!
How Much Money Can You Make Arbing?
Unfortunately, the sky isn’t exactly the limit when it comes to arbitrage betting.
Arbing relies on bookmakers miss-pricings. You are limited by the number of times that these opportunities arise. Don’t expect to sit down and make a 10% return on every bet, with an endless list of arbs to go at.
Your other limitation is the max stake that you can get on at the bookmakers. This will vary between accounts and betting markets. There is no set rule that says how much you will be allowed to bet. In most popular markets such as UK horse racing, Premier League and so on, you should be able to get a £100 bet on quite easily. This is especially true on the day of the event.
Just think; you’re more than likely going to be rejected for a £1,000 bet on a horse the day before it races. This may look suspicious to a bookmaker as most punters wait until the moments before a race to place their bets. Plus the bookmaker will have a rating on your account. We’re all familiar with betting restrictions I’m sure.
Betting restrictions will almost certainly slow you down and eventually stop you. However, if you don’t know much about sports and want to build a bank easily; arbing is definitely a good option.
If you’ve been lucky enough to get a large bet through a bookmaker, now you have to worry about hedging your bet off at the exchange. Your success with this will ultimately depend on how much money is available at the appropriate price in the exchange.
Because of this, you should always check how much money is available in the exchange. Before you place your bet at the bookmakers.
If you’re left with a large bet at the bookmakers and nobody to match your lay bet on the exchange, you could be in for a big loss if the back bet doesn’t win.
Remember, the whole idea of arbitrage betting is to make it as risk-free as possible.
Daily Profit Example
As a rule of thumb, a decent target is to make anywhere between 5-15% profit of your back stake per bet (depending on account limitations).
Remember, this doesn’t include the lay liability.
Some days will have more opportunities than others and sometimes you’ll be too slow to react in time before they adjust the odds. You shouldn’t have too much of a problem finding 5 arbs in a day if you pay enough attention. Extremely popular markets see fewer arbitrage opportunities.
If you expect to make at least 5% per bet, then you will be making a minimum of £2.50 from each £50 stake. Doing this 5 times per day will get you £12.50 profit. Although it’s not a lot, that’s an extremely conservative example. Those with a small bank; you can increase your stakes as you make more profit over time.
If you manage to find 5, 10% profits per day with a bigger bank, the figures are much more appealing. With a back stake of £100 at 10% profit each time you’ll be looking to make £10 profit per bet. Doing that five times over each day will net you £50 per day or £350 per week. Very handy to some.
How to Find Arbitrage Bets…
Believe it or not, bookmakers are just ordinary people working a 9-5 job. The bookmakers make most of their money through huge sports events. Premier League games where millions of people are having a bet, or the Grand National maybe.
As most of their profits come through big events like these, you can safely assume that they’re going to pay more attention to the odds on these events than others.
What does this matter to arbers?
Many arbitrage bettors frequently find arbs on unpopular markets. For example the Over 1.5 Goals market on a Belgium 2nd Division match.
This is definitely a problem for keeping your account free of restriction. Bookmakers will be wary of people betting outside of the big events and focusing too much on the likes of the Belgium 2nd Division! Always be aware of this and possibly target arbs that are more likely to not get your account flagged to traders.
Arbitrage opportunities will make most of their appearances in the early stages of a market. That is when the bookmakers have just opened the market typically a day or two before the event. As more money pours into their books and the kick-off gets closer, bookmakers will typically sharpen up and there will be fewer opportunities.
There is one exception…
If you’ve seen any of my YouTube videos, you’ll know how volatile horse racing markets can be. Most of the activity generally happens 5 minutes before the race. This means that there are often plenty of arbitrage bets available in the last 5 minutes before a race as bookmakers are sometimes slow to adjust their prices in line with the rest of the market. The main danger here, of course, is that you only have a small amount of time to lay off your bet, before the race goes in play. You might also find that by the time you’ve placed your back bet, the exchange odds have changed to an unfavourable position.
What To Do When Your ‘Arb’ Isn’t An Arb Anymore?
There will always be times that your arb just doesn’t work out. Remember lots of people are arbing through Betfair, Betdaq, Matchbook, and Smarkets. So, by the time you get your bet on with the bookmakers, it may no longer be an arb on the exchange.
The correct thing to do here to take the hit and red out. Do not just leave it and hope for the best – that can lead to disaster! It might just keep on drifting. These types of situations can definitely happen; especially when you are arbing the on course prices 5 minutes before the off. Remember a small loss is fine and you can move on. A stubborn loss can blow your bank.
Is Sports Arbitrage Legal?
There is nothing illegal about arbitrage betting.
However, bookmakers have every legal right to close your account or limit your bets to stop you from taking them for a ride. They’re just businesses who are interested in keeping their profits high, and arbitrage bettors don’t help with that.
Although it’s typically more used in matched betting circles, multi-accounting is a legal grey area. This is when people bet on behalf of friends and family to maximise free bet offers or arbitrage opportunities. If you stick to using your own accounts when betting on arbs, you are playing well within the law.
As with anything, successful arbitrage betting is done best with a plan of action or strategy. A little bit of planning will go a long way when arbing and save countless hours of endless searching for arbitrage opportunities and potential panic when it all goes wrong.
Arbitrage Betting Bankroll
Before you go anywhere, you’ll need some money to actually bet with. Set aside money you are comfortable with losing and that you don’t need immediate access too. When done properly, arbitrage betting is almost risk-free but if you’re new, you might make a few mistakes to start with.
Let’s say you have £1000 to use for your arbing. You should keep this money accessible, should you need to top up a bookmaker or exchange account. If you deposit it all into one bookie account you’ll have no spare money to lay the bet off at the exchange and you risk losing all of it.
As a rule of thumb, keep 50% of your bank in the exchange and spread 30% between a handful of sites that you plan to place arbitrage bets on. This means that you have 20% to deposit into a different bookmaker or exchange, should you need to. The benefit of depositing beforehand is that you can place your bets quicker and avoid missing out on the opportunity before it changes!
Staking plans aren’t really as important for arbitrage bettors as traders, but generally, you will want to avoid tying all your money up at once. You may miss out on a great opportunity in the time you have all your money tied up for a tiny return.
Records are an essential part of any successful bettors toolkit, whether they are an arbitrage bettor or a punter. It will help you keep track of your money whereabouts and your overall profits.
You can easily put a spreadsheet together in Excel or Google Docs. It doesn’t need to be complicated but here are a few things to consider recording:
- Date/Time of event
- Event name
How to Pick Arbs:
Having an idea of where you’re going to find your arbs will save you a lot of time. I’d advise picking a couple of bookmakers to use, that are slow or offer odds early (Bet365 isn’t a bad one). Also target those weaker markets that have already been mentioned. Low level football, darts maybe or basketball. Finally, set up and be in the right place at the right time, it always helps!
If you can, try to spread out your total stake across a couple of firms. It may help you keep under the radar that bit longer.
Once you find a daily plan that suits you, it becomes easier. Arbing is a great way to build a bank when done right!
Useful Article? You may also like: The Betfair Traders Beginners School Tab