Arbitrage in sports betting: how sure bets work and how to find them

Arbitrage, also known as sure bets or arbitrage odds, is a rare sports betting event where a risk-free bet can be placed. This occurs when different bookmakers give out opposite odds for some future event. To give an example, let’s assume that there are 3 bookmakers offering the following odds for the next tennis match between Novak Djokovic and his rival, Andy Murray:

• Bookmaker 1: Djokovic 1.80

Arbitrage betting is a form of betting where you take advantage of differences in prices offered by different bookmakers in order to guarantee a profit whatever the outcome of an event. This guide to Arbitrage in sports betting: how sure bets work and how to find them will cover in detail the mathematical principles behind arbitrage betting. Whether you are a complete beginner to the world of sports betting or an experienced gambler looking to expand your knowledge and skills, this guide to arbitrage betting will cover everything you need to know in full detail.

A simple explanation of sports betting arbitrage

Arbitrage betting or arbing is where you cover every market of an event on every bookmaker and always guarantee a profit. For an arb to occur, the combined implied probability of all markets must be less than 100%. Around 98% of arb opportunities typically work out to be under a 1.2% profit margin. Yes, the margins look ridiculously small, but when you are placing many bets this small margin can add up to a substantial profit.

How this strategy works in practice

Bookmakers adjust the lines in order to manage the risk they are exposed to, and this adjustment happens rapidly. Therefore, the arbitrage window is short, and any discrepancy will be corrected immediately. In order to benefit from an arbitrage opportunity, you have to have accounts with different bookmakers, to notice the arbitrage opportunity and to place the right bets with the right stakes for each selection. Arbitrage opportunities in this case are created due to the difference in opinions of the bookmakers as to the probabilities of the occurrences of the different events and due to the slow adjustment of the margins, when the event is taking place. In most cases, the arbitrage opportunities exist for a short period, a few seconds.

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Calculating arbitrage bets

An arb can be found by converting the decimal odds to implied probability (IP) which is calculated as 1 / decimal odds. If the IPs add up to less than 100%, then an arb has been found. The formula for the equalisation of the payout for each selection is:

Stake on outcome = total stake * (1/odds) / arb percentage

Although working out an arb by hand is quite straightforward, it can be very time-consuming. This is one of the main reasons why the bookies and the majority of the serious sportsbookers and online igaming shops use arb calculators in order to find out the exact stake percentages for each option, immediately after the arb is identified.

Example of a sure bet using two sportsbooks

There are only 2 possible outcomes in a tennis match: Player 1 wins or Player 2 wins. The arbitrage was found on the following bookmakers:

• Bookmaker A: Player 1: 2.0
• Bookmaker B: Player 2: 2.5

The arb percentage is therefore: (1/2.0) + (1/2.5) = 0.50 + 0.40 = 0.90 or 90%.
Arbitrage exists when the arb percentage is less than 100%.

You can potentially back Player 1 with $100 at 2.0 odds to win $200 from a $100 stake, and Player 2 with $80 at 2.5 odds to win $200 from an $80 stake. The stakes are such that you will always win more than you lose, whatever the outcome. Being the favourites, the built-in margin in the odds means that you can’t lose. Real world margins are generally in the 1-2% range.

Step-by-Step guide to placing arbitrage bets

1. Discover the difference: The Sports Book Insider Software will help you discover an edge in the market by comparing various sportsbooks’ point spreads and identifying an opportunity where the sum of the implied probabilities equals less than 100%.
2. Calculate stakes: Calculate your stakes using the mathematical arbitrage formula. This will tell you exactly how much you should bet in order to have the same payoff for every possible market outcome.
3. Verify limits: You should check to see if the sportsbooks that you plan to take advantage of in your arbitrage have reasonable limits in order to accommodate the full bets that must be made.
4. Execute instantly: The 4th Rule of the Market Maker is: Execute instantly. Once the decision to back up or lay off is made, all bets must be executed immediately. There is no middle ground here. If there were even a second or two between the time the order is given and the time the order is filled, it could easily be that the market had moved in a way that turns a sure thing into a gamble.

How to find arbitrage bets

Manual scanning is no longer possible because odds change in fractions of a second. Today, almost all sports arbitrage traders are using arbitrage software and scanners to assist them in their work. They are able to compare thousands of real-time odds of dozens of bookmakers and are notified as soon as the arbitrage opportunity is detected. The arbitrage platforms that use global data are giving the best results for the traders, because they are able to use the mistakes in the prices as soon as they are published online.

Sports where arbitrage opportunities appear more often

Arbs appear frequently in fast-paced sports and for that reason, basketball and tennis are the most popular sports for making arbitrage. The systems have to consider the high frequency of action on the court, so there will be a small lag time between the event happening and the site(s) adjusting the odds. This little window of time is exactly what the arbitrageur uses to make their profit, though it may feel like a second in that it can change at any moment. Due to the nature of the slow pace of markets such as American football or MLB, some initial lines can be the only ones that are off the market standard and are later adjusted by the rest of the market. This creates a small time frame for the arbitrageur to make their profit before the market corrects itself.

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Benefits of using this betting approach

Arbitrage is a mathematical proof of profit. Taking risk and uncertainty out of the equation, it guarantees profit as long as the process is executed correctly. And that’s why arbitrage turns betting into a pure financial equation and therefore eliminates risk. This strategy can be seen as a perfect hedging method for the volatility of sports betting. Arbitrage is commonly used by stat-heavy people, as arbitrage betting does not require a deep understanding of the sport itself to obtain the necessary information.

Limitations and risks to be aware of

Arbitrage is not risk-free from a mathematical perspective. Most of the time when arbitraging, you will encounter limited maximum bet amounts, banned accounts, and restricted access to accounts. Also, the odds can change while you still have an open position, which may cause you trouble. Without proper capital and risk management and a good understanding of the terms and conditions of the bookmakers, you will struggle to keep up with the odds and be competitive as an arber.

Arbitrage vs value betting: two different strategies

Arbitrage and value betting both capitalise on market opportunities, but they exploit those opportunities in very distinct ways. Arbitrage profits from short-term, mathematical certainties that cover all possible market outcomes. A value bet, on the other hand, is a riskier, longer-term play on a sportsbook’s pricing of individual market outcomes with a positive expected value.

Odds requirement vs implied probability: There is a clear link between the two terms. If the sum of the implied probabilities exceeds 100%, then the odds requirement is not fully met. Alternatively, if the implied probabilities sum to 100% or less, then the odds requirement is fully met.

Practical tips for beginners

Before we start, we have to do some paper betting and get a feel for the speed of the maths. We also need to make sure we understand the terms and conditions of every market with the bookmaker in relation to claiming a price and what constitutes a palpable error. Obviously ideally we would have different bankrolls in different accounts to be able to react to a trading alert. Ideally we would also be limiting our bets to round number amounts. $80.89 and four-figure amounts are not relevant to the recreational gambler and should be avoided. As with all profitable trading systems, discipline and patience are key.

FAQs

What tools help find arbitrage bets?

Most modern arbers these days use specialised arbitrage bots and tools such as OddsJam and dedicated European scanners. These tools browse through the internet and the various international bookmakers in order to find any discrepancies that the human eye would not be able to detect.

What sports are best for arbitrage betting?

Betting on tennis and basketball are among the most popular wagers in the sportsbook and there are good reasons for that. The scoring of the games and the way the live odds for those wagers react is a major reason. The back-and-forth nature of the scoring and the corresponding fluctuation in the odds creates an extremely fast-paced environment. It creates a situation where the odds can move quickly and in unusual ways, presenting infrequent opportunities to profit from discrepancies between sportsbooks.

How do professional bettors find arbitrage opportunities?

Match-fixers don’t spend too much time searching for matches manually any more – they are buying a database of matches by buying an arbitrage scanner, which finds them a match they can place a bet on. They use some skills to cheat the cheating detection systems put by the bookies to avoid being banned from the sites, as well as to pass the limits enforced on betting exchanges, which they manage to bypass by using methods such as multi-accounting, using VPNs and more.

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