What Is Sports Betting Arbitrage?
Sports betting arbitrage (sometimes known as “arbing”) is a way for gamblers to ensure a betting profit regardless of the outcome of a specific event. For example, they may place bets on both a win and a loss, at odds that ensure they make an overall profit across both bets – regardless of the result.
To make this work, arbitrage betters often take advantage of different odds across different bookmakers and betting sites. To be successful in arbitrage betting, gamblers must work quickly to identify such variations. They sometimes use automation and arbitrage sports betting software to help.
At the same time, bookmakers work hard to close such gaps in odds, in an attempt to thwart the gamblers’ schemes.
Websites that promote arbitrage sports betting opportunities often claim that gamblers can expect profits of anything from 5% to 15%. However, more reputable sites suggest average returns of around 1.2%.
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How Does Sports Betting Arbitrage Work?
Here’s a simple, step-by-step arbitrage sports betting example:
- There’s a boxing match between two boxers, named John and Paul.
- One bookmaker is offering odds of 2/1 for John to win the match. Meanwhile, another bookmaker is offering odds of 2.5/1 on Paul winning.
- The gambler does a calculation on the odds to determine how much they need to place on each bet to guarantee an overall profit regardless of the outcome.
- In the above example, the gambler could bet $100 on John winning, and $80.89 on Paul winning – a total stake of $180.89.
- If John wins the boxing match, the gambler cashes in $200. That’s a $19.11 profit.
- If Paul wins the boxing match, the gambler cashes in $202.22: a $2.22 profit.
As you can see, the gambler ends up in profit regardless of which boxer wins the match, with the total return amounting to more than the total stake.
Often, arbitrage betters will place large bets to guarantee a worthwhile profit, as the average percentage profit tends to be quite low.
When Does Sports Betting Arbitrage Occur?
Arbitrage betting occurs whenever a gambler places multiple bets to guarantee profit regardless of which bet wins, and which loses.
Arbitrage sports betting occurs frequently, with enthusiast sites suggesting that “opportunities are very common and crop up hundreds of times every day”. As many major sports events take place at weekends, the majority of arbitrage sports betting takes place on Saturdays and Sundays, with related sites suggesting that 80% of bets are placed on these days.
Similarly, spikes in arbitrage betting occur around major sporting events. Sites catering to arbitrage betters specifically highlight opportunities in sports that have clear win or lose (or “goal” and “no goal”) outcomes. This includes sports such as football, tennis, and basketball.
How Do Sports Betters Calculate Arbitrage?
Sports betters calculate arbitrage so that they can be sure to make an overall profit. To do so, they need to ascertain whether they have found betting odds that allow a guaranteed profit to be made.
This is done as follows:
- They first divide 1 by the decimal odds to determine the implied probability of each outcome (implied probability is the likelihood of experiencing a betting outcome based on the listed odds. When expressed as an equation, it is simply: implied probability = 1 / decimal odds). Using the example above about boxers John and Paul, the decimal odds of John winning are 0.5 or 50% (i.e. an implied probability of 1/2). The decimal odds of Paul winning are 0.4 or 40% – that’s 1/2.5.
- They then calculate the total implied probability (i.e. the full implied probability when all betting outcomes have been calculated). In this case, it is 0.9 or 90%. This represents an arbitrage opportunity.
These steps enable a gambler to assess where arbitrage sports betting opportunities exist. In most cases, bookmakers ensure that the total implied probability for conflicting bets adds up to more than 100%. This is to ensure that they themselves make a guaranteed profit, which is why arbitrage betters usually use a different bookmaker for each side of the bet – so they can make use of variations.
Once a gambler knows they have an opportunity (with a total implied probability below 100%), they can calculate what bets they need to place to ensure a profit regardless of the outcome:
- They choose their desired amount to walk away with.
- They divide that amount by each of the odds to find out how much to place on each outcome.
- Returning to the example above, let’s say they want to ensure a win of $50.
- For John to win: 50/2 = $25.
- For Paul to win: 50/2.5 = $20.
- This adds up to a total stake of $45, across both bets. If John wins the boxing match, the gambler cashes out $50 ($25 multiplied by 2). If Paul wins, the gambler also cashes out $50 ($20 multiplied by 2.5). In both cases, a profit of $5 is guaranteed.
This is a very simple example. Arbitrage betters often have to take into account bookmaker commissions and other factors. However, many arbitrage calculators exist online. It’s also very straightforward to build spreadsheets to do the calculations.
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What Are the Consequences of Sports Betting Arbitrage?
The main consequence of arbitrage sports betting is a financial loss for bookmakers and betting sites. There’s also an administrative overhead for processing bets that aren’t placed in the spirit of legitimate gambling.
For the gamblers themselves, the most likely consequence is bookmakers imposing bans and betting limits on them.
Arbitrage sports betting can also potentially impact legitimate gamblers. Security steps taken to thwart the efforts of arbitrage gamblers could cause unnecessary friction. For example, “false positives” from automated safeguards could inadvertently impose bans and limits on those who are placing genuine bets.
While arbitrage sports betting is most often described as “frowned upon”, it’s not actually illegal. However, this type of betting has been around for decades, and bookmakers work hard to restrict (or ban) gamblers they suspect of engaging in it.
In addition, by charging commissions, bookmakers do their best to reduce the potential for profits.
How to Detect Arbitrage in Sports Betting?
There are various ways to detect arbitrage in sports betting, including behavioral analysis, bot detection, rate limiting, and device fingerprinting.
Because identifying arbitrage opportunities and placing the bets requires extensive research and fast placing of bets, arbitrage betters often use online software both to calculate opportunities and to place the bets. The use of such software creates an opportunity to identify where people aren’t using their expected IP address or location.
Artificial intelligence (AI) such as machine learning can also help gambling businesses identify betting patterns that would otherwise be missed. Habits such as betting high amounts on relatively “niche” fixtures, and also staking close to the allowed limit, can ring alarm bells.
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