An arbitrage or an arb is taking advantage of the odds difference between various bookmakers, where ever you can get the best prices. Stakes must be very high in order to take full advantage and to make a worthwhile profit. With arbing we are talking about a profit margin of approximately 2% – 5% as the difference between the best and worst prices on the market are minimal.
The concept of arbing is that you back an outcome at a certain price with a traditional bookmaker and lay it off simultaneously with an exchange to guarantee a low-risk profit. Say for example a bookmaker priced Bubba Watson to win a particular golf major at 8/1 and I found odds of 6/1 to lay on an exchange.
If I simultaneously back Bubba for €100 at 8/1 (9.0) and lay him at 7.0 (6/1) for €130, I am guaranteed a profit either way.
If Tiger wins, I win (€800 – €780) €20.
If Bubba loses, I win (the €130 I have laid minus 5% commission = €123.50 – €100) €23.50.
This is also known as a surebet.
The existence of odds comparison sites (such as betbrain.com, oddschecker.com or oddsportal.com) nowadays make arbing much easier as the work involved in finding the best odds on an event is done for you and is only a few clicks away.
The events that are most suited to arbing are those in which there are only 2 outcomes such as snooker, tennis and darts (in most cases). When there are only 2 outcomes, it will make it easier to calculate how much of a stake is required on each bet in order to make the desired profit. It is of the utmost importance that you get your calculations on the money when it comes to arbing, otherwise, you could stand to lose an extortionate amount of money.
Let’s now take a look at another example of a typical arb (surebet):
In a tennis match (Novak Djokovic vs Any Murray), Paddy Power may offer odds of 1.27 on Djokovic to win and 3.95 on Murray to win.
Betfair then may price Djokovic at 1.45 and Murray at 2.95.
The arbitrage in this situation would be to back Djokovic with Betfair and back Murray with Paddy Power.
To calculate the stake that you must place on the bigger priced selection (Murray) in order to make a profit you must multiply your stake on the shorter price (Djokovic) by the sum of the shorter odds divided by the greater odds.
E.g. you place €250 on Djokovic with Betfair for starters. €250 x 1.45/3.95 = your stake on Murray with Paddy Power = €91.77.
So if Djokovic wins at 1.45, your return for a stake of €250 would be €362.50.
If Murray wins a 3.95, your return for a stake of €91.77 is €362.49.
You will notice that the profit in both cases is almost identical. This will always be the case due to the mathematics. So your profit then will obviously be your profit minus your stake which is as follows:
Profit = €362.50 (whether Djokovic or Murray is victorious) – €341.77 (€250 + €91.77) = €20.73 (6.06%).
This is just an example but as I said earlier you will find that your profit margin will generally be approximately somewhere between 2% and 5% so you need to be placing big stakes to make it worth your while.
There are of course a number of risks involved in arbing which I will now have a look at
It is perfectly legal to use this method of making a profit, however, a bookmaker may freeze or restrict your account if they are aware you are doing this. In this sense it is a bit like card counting in blackjack.
The priced odds on an event can change very quickly so if you see good odds with a firm that will allow for an arbitrage then you need to move fast. As more money goes on the selection from various punters (that know a good price when they see one) the odds can move out (worsen) very quickly which means than an arb may no longer be available.
If you have backed two side of a bet with different bookmakers (an arbitrage) you will no longer have an arb if one bookie voids the selection. This may happen if a selection is priced incorrectly and it is an obvious error. The bookmaker reserves the right to correct the price and void your bet or replace your bet with the correct odds. This may mean that you no longer have an arb and will make a loss no matter what happens. My advice is that if you see a selection that is clearly priced incorrectly then steer clear as many other punters will also have noticed the error and pounced on it which will alert the bookies who will subsequently make the correction.
As you can see from my explanation above, arbing is quite confusing and due to the mathematics involved, it is quite easy to make an error. You may see an arbitrage when there is none or you may make an error in calculating the stake for your second outcome (Murray in the above example) and end up making a loss. You must also acknowledge the fact that the odds change quickly so you need to move quickly and this increases the likelihood of an error. Not only that but if the odds change and you do not notice this updating on your betslip then you could be in trouble. Unless you are a professional or vastly experienced then you should leave arbing alone as the mathematics and analysis is generally much more complicate than the basics explained above.
Tools For Arbing
There are arbitrage / surebet calculators or tools available online if you are adamant about taking this approach such as scalpulator.com and arbcruncher.com.