Arbitrage Betting Explained: How arbitrage betting works

Most people who have been betting on sports have heard the term "arbitrage betting", but not many know how it actually works. Here we will explain arbitrage betting, along with examples of this betting tactic utilized by a large number of punters all over the world. Keep in mind that although it sounds easy, arb betting requires a careful consideration, a lot of research and iron clad discipline in order to work for you in the long term. Best you start small and move up as your confidence in your arbitrage betting skills increase. So let's look at what is arbitrage betting and how it works.

Arbitrage Betting Explained

Arbitrage betting, although complex in practice, is very simple in theory. Arbitrage (arb) betting is simply a betting pattern that takes advantage of the difference in odds between bookmakers or sometimes (but rarely) the mistakes of bookmakers when posting the odds. Put plainly, if we have a sporting event with two possible outcomes, let's say a tennis match, an arb bettor will place two bets at two bookmakers. The first bet will back Player 1 at Bookmaker A and the second bet will back Player 2 at Bookmaker B. This, however, only works when the odds posted at those bookmakers differ to the point that this betting pattern will allow a small profit. So this is basically how arbitrage betting works - the bettor finds differing odds on the same event at two bookmakers and then backs one side at one bookie and the other side at the other bookmaker. In theory it sounds very easy, but the math that must be done is a bit complex. And keep in mind that on average an arbitrage bettor will make about 1% profit, which makes high stake bets so important. Doing this with £/€/$100 would net you a very miniscule profit.

Now, let's look how actual arbitrage betting works with a complete example. Let's say that there are two bookmakers posting odds on a tennis match with two outcomes, i.e. which player will win the match. The odds are as follows:

	Bookmaker A	Bookmaker B
Player 1	1.65	1.41
Player 2	4.30	4.00

In order to make arbitrage betting works, as you can see we need the bookies to have different odds on the game. Let's say we go about with a small 4-digit wager. To make arb betting works, we will bet £1000 on Player 1 at Bookmaker A. This would give us the first outcome payout at 1000x1.65=£1650. Now, we will arb the other bookie and calculate how much we have to bet in this scenario to turn some profit without risking anything. We do this as follows: we divide Player1 odds at Bookmaker A by the Player 2 odds at Bookmaker B and then multiply the outcome by our first bet, which was £1000. This will tell us how much we have to bet at Bookmaker B for the arbitrage bet to be successful. Let's do the math:

(1.65/4)x1000=412.5

Therefore we have to bet £412.5 on Player 2 at Bookmaker B, which would also give us a possible payout of £412.5x4=£1650. As you can see, no matter the outcome, we are guaranteed to be paid £1650. Subtracting our total stake in the arbitrage betting example would give us: £1650-(£1000+£412.5)=£237.5 in pure profit. Now, we should note right away that this is just an example, we made up those odds to illustrate best how arbitrage betting works. In reality, the difference in odds and with that - your profit, will be much smaller. That's why most arbers bet large amounts of money, often in the 5-digit range.

In addition to the large bankroll and liquidity requirement to be a successful arbitrage bettor, there are many pitfalls associated with this type of betting and while we are happy to explain how the arb betting works, we don't encourage people to try and become arbers. A small mistake or miscalculation with the large amounts being bet could result in a disaster, for example. Also, almost all bookmakers frown upon this type of wagers, although there are a few bookmakers for arbitrage betting. If you decide to go with arbitrage betting, make sure you know the high risk involved. Be prepared to risk large amounts of money, spend a lot of time doing diligent research and over all else - be very disciplined.