Arbitrage betting (or ‘arbing) is a method where gamblers place bets on the outcome of an event in order to guarantee a profit. You’ve likely heard of several ‘risk-free’ betting strategies that aren’t very profitable and you want to know if this is one. Arbing can guarantee a profit if you have the right conditions.
A profit guarantee requires that there be a difference between the odds offered by a bookmaker or a betting exchange like Betfair. Arbing on events with only two outcomes is the easiest and most popular. If the odds permit, arbing is possible by betting on an outcome at the bookie or against it at exchange. This guarantees a profit regardless the outcome.
What is the secret to it?
Here is where things get confusing. Arbing is a mathematical process that relies on calculations to determine if there is an opportunity for a player to arb. This happens most often when the odds of a particular outcome being offered by a bookmaker is higher than the lay odds at an exchange.
While bookmakers may set their own odds for the exchanges, they are determined by supply and demand. This makes them more competitive. Odds can differ due to different opinions, mispricing of odds, slow response to other sites or slower reaction to higher-priced odds.
To make a profit, bookies depend on their betting margins. This is the difference between the offered odds and the true probability of an event. The implied probability, which is the conversion of odds into percentages, of any outcome of an event in a fair market would be 100%. This sounds confusing. Imagine there are only two possible outcomes for an event, with each outcome having exactly 50% chance of happening. If you correctly predicted, the odds of each outcome being 1/1 would mean that a PS10 wager would net you a PS10 profit.
This sounds great for the player but it is not a profitable scenario for bookies. This market is 100% because there’s a 50-50 chance that either outcome will occur. If the odds were even, the bookie would be paid out on average twice as much as it wins. Bookies set prices above 100% to make profits and not reflect the true likelihood of an event happening. The market’s price is based on a percentage greater than 100. This is called the margin or “overround”. If the implied probability of 103% is true, then the margin is 3%. On average, bettors would lose a certain amount for each pound they wagered.
Arbing can be done when the market price is below 100% and the odds for one outcome at a bookmaker are lower than the lay odds against it at an exchange. This is possible because the lay odds must be lower than those for the back.
Here’s an example of Arbitrage betting
Let’s say you wish to place a wager on a match of tennis at a specific bookie. Each player is priced using decimal odds. The implied probability in brackets is included.
Player A – 2.50 (40.0%). Player B – 1.50 (66.7%)
The market price for this player is 106.7%. This gives the bookie an advantage and allows them to make profits. Let’s suppose that an exchange offers the following lay odds for Player A:
Player A does not win – 1.73 (57.8%).
The market margin is 97.8% if you back player A and place a bet against them at an exchange. This means that there is an opportunity to bet. Lay betting at an exchange is different from back betting because you effectively play the role of the bookmaker. You can place a PS10 lay wager on Player A losing at 1.73 odds and win PS10 if it comes in, but you lose PS7.30 if Player A wins.Last Updated on October 11, 2021