What is Arbitrage Betting?

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What is Arbitrage Betting?

If you spend a lot of time in sports betting environments, you will often come across phrases like “stone cold lock,” “can’t miss,” and “guaranteed winners.” Despite their frequency, these terms usually amount to nothing more than mere opinions and lack any real value.

What if there was a reliable way to achieve small gains, but it required dedication and careful analysis to find promising opportunities? Are you willing to put in the work to pursue it?

At this time, simply grasp the concept of arbitrage betting that we have discussed. While it may be difficult to fully understand, we will explain how it functions and provide important information in this conversation. You can revisit that question at a later time.

What is arbitrage?

Arbitrage is focused on recognizing discrepancies in pricing. The concept of ‘buy low, sell high’ is applicable in this situation. The basic premise is to buy an item at a low price and quickly sell it for a higher price.

Arbitrage is commonly viewed as a quick way to make money, particularly in the fields of finance and economics. Those involved in this practice are typically referred to as arbitrageurs.

Arbitrage is a strategy utilized in financial markets to capitalize on price differences between two markets. For example, an asset may be undervalued in one market and overvalued in another. This presents an opportunity for an arbitrageur to purchase the asset at the lower price and sell it at the higher price, resulting in a profit.

How to use arbitrage in sports betting

Each game or contest available on online and mobile sportsbooks will come with its own set of odds. While the odds for most events may be similar across various operators, they will not be exactly the same at each one.

Arbitrage in sports betting occurs when profits are guaranteed by taking advantage of discrepancies in the odds market. Later, we will explore specific examples to illustrate how this strategy works.

Initially, arbitrage may seem complex, but it becomes easier when you focus on the basic financial principle: the goal is to make a profit by taking advantage of market opportunities.

Is arbitrage betting worth it?

Finding profitable arbitrage opportunities is mainly a time-consuming task that involves analyzing betting odds from different sources in order to exploit any discrepancies for financial gain.

Furthermore, it is essential to be ready to act promptly. Failing to seize an arbitrage opportunity soon after discovering it could result in it disappearing as the odds change due to further betting.

Sportsbook operators generally do not approve of arbitrage and may flag an account if suspicious activity is detected. However, utilizing this strategy across multiple books can help avoid potential problems.

Line shopping for sports betting arbitrage opportunities

Before placing any sports bets, it is recommended to compare the betting lines. This means looking at the latest odds from different sources to find the most favorable ones. Our live odds feed can be a helpful tool for this purpose.

Line shopping is crucial for arbitrage. To succeed in this strategy, it is important to find small differences in the lines that can be used to your benefit. If the numbers are the same in every place, you will not be able to succeed.

The market may not always be efficient, as even though the top players may agree on big events, betting can still lead to minor discrepancies. Sports bettors and arbitrageurs may discover better opportunities by exploring alternative options.

How to calculate arbitrage betting profit

The idea of an arbitrage play is to spot differences in the odds offered for the same event. For example, let’s say sportsbook A has the following line for an upcoming MLB game.

  • Tampa Bay Rays            +115
  • Los Angeles Dodgers    -105

On the other hand, sportsbook B is offering a different line for the same game, with the numbers moving in the opposite direction at this site.

  • Tampa Bay Rays              -105
  • Los Angeles Dodgers     +115

This is a perfect opportunity for the arbitrage bettor to take advantage of. By placing a $100 bet on the Rays at one bookmaker and an identical bet on the Dodgers at another, they are guaranteed to make a profit regardless of the outcome.

  • If you bet $100 on the Rays at +115 and they win, you will receive a total of $215, including your initial $100 wager and a $115 profit.
  • If you bet $100 on the Dodgers at +115, your total return would be $215, which includes your initial wager and a $115 profit.

The bettor invested $200 initially and is guaranteed a return of $215, regardless of the outcome, resulting in a net gain of $15, equivalent to a 7.5% return on the initial investment. While it may not be a significant profit, it is a dependable return on a risk-free bet.

The potential returns from arbitrage betting will vary based on the odds of the bets you make. In some cases, the returns may be small, only a few points, while in other cases, they could be substantially higher.

Arbitrage sports betting examples

In the previous example, the odds for our hypothetical match were completely flipped. One bookmaker had one side at +115, while the other had the opposite side at the same odds. If only arbitrage opportunities were always this easy to come by.

Unfortunately, it is not possible to consistently bet the same amount on both sides. Accuracy in your calculations is essential to guarantee profits. Let’s review some examples using different sports to demonstrate how it operates.

MLB arbitrage betting

During the MLB season, there are many game-filled days that offer ample opportunities for arbitrage, but successful trading requires thorough research. Let’s take a look at a typical game featuring a slight favorite on the moneyline.

  • Minnesota Twins            -175
  • Chicago White Sox        +155

After exploring different options, you find that a different book provides significantly better MLB odds for the White Sox.

  • Minnesota Twins            -195
  • Chicago White Sox        +185

Is there an opportunity for arbitrage in this situation? Absolutely. To take advantage of this, you would place bets on both teams at different bookmakers. For example, you could bet on the Twins at -175 with one bookie and the White Sox at +185 with another. To ensure a profit, you would need to adjust the amounts you bet on each team.

  • If you bet $100 on the Twins at -175 and win, you will receive a total of $157.10, which includes your original $100 bet and an extra $57.10 in winnings.
  • Placing a $55 bet on the White Sox at +185 would result in a total return of $156.75 if you win. This amount includes the original $55 stake and an additional $101.75 in winnings.

In order to participate in this bet, you must spend a total of $155. If the Twins win, you will earn $2.10, but if the White Sox win, you will only earn $1.75. While these winnings may seem small, the more you bet, the greater your potential profits will be.

NFL arbitrage betting

With breaks between weekly NFL games, there is plenty of time to search for arbitrage opportunities. The high betting activity for each match leads to frequent odds fluctuations on online and mobile sportsbooks.

Let’s analyze this game featuring a slight home favorite on the moneyline.

  • Detroit Lions        +110
  • Chicago Bears      -130

At the start, most bookmakers have similar odds, but as the week goes on, one bookmaker sees a surge in bets on the Bears while the odds at other bookmakers stay the same.

  • Detroit Lions        +140
  • Chicago Bears      -160

If another book has the Bears at -130 odds, you have a great arbitrage opportunity. By placing strategic bets, you can ensure a profit regardless of the game’s outcome.

  • If you bet $100 on the Bears at -130 odds and they win, you will receive a total of $176.90, which includes your initial $100 bet and a profit of $76.90.
  • Placing a $73 bet on the Lions at +140 odds results in a total return of $175.20, consisting of the original $73 wager and a profit of $102.20.

In total, you will be wagering $173 on the game. If the Bears come out victorious, you could potentially earn a profit of $3.90. On the flip side, if the Lions manage to pull off a surprise win, your return would be $2.20. While these individual returns may seem small, they can add up to a significant sum in the long run.

NHL arbitrage betting

In the NHL, moneyline betting drives the need for line shopping, which is a crucial aspect of wagering. While the differences may seem minor, they can add up significantly over the course of a season, ultimately affecting overall profits.

In arbitrage, you rely on the emergence of these points of difference. For example, if a book contains these specific lines:

  • New York Rangers         +135
  • Chicago Blackhawks      -155

On the other hand, a separate book provides a slightly unconventional viewpoint on the game.

  • New York Rangers          +165
  • Chicago Blackhawks       -185

If you enjoy finding arbitrage opportunities, this game will definitely pique your interest. No matter which team wins, you can expect to see a positive return on your NHL bets.

  • Placing a $100 bet on the Blackhawks at -155 could result in a return of $164.50, consisting of your original $100 and a profit of $64.50.
  • If you bet $62 on the Rangers at odds of +165 and win, you will receive a total of $164.30. This includes your initial $62 wager and a profit of $102.30.

You have bet $162 on the NHL game. If the Blackhawks win, you will make $2.50. If the Rangers win unexpectedly, you will make $2.30. Without arbitrage, this profit is not guaranteed.

Other sports you can use for arbitrage betting

Considering both outcomes of a bet could offer a chance for arbitrage, which could be applied to various other sports in addition to those already mentioned.

  • NBA
  • NCAAF
  • NCAAB
  • MLS

This concept could also be relevant in individual sports that involve one-on-one competitions, such as:

  • Golf
  • Tennis
  • Nascar
  • UFC
  • Boxing

Arbitrage success is dependent on analyzing the numbers. Keep an eye on odds from different bookmakers and identify games where there are significant disparities. These games should be explored further for potential arbitrage chances.

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The math behind arbitrage betting

Achieving success in arbitrage betting relies heavily on precise calculations; there is no shortcut. Any inaccuracies could result in financial losses without exception.

Before beginning an arbitrage opportunity, it is important to confirm that the potential profit exceeds the investment made on both sides.

Keep in mind this basic rule for calculating the potential return on standard moneyline bets.

  • Negative odds indicate how much you must wager to win $100. For example, with odds of -110, you would need to bet $110 in order to potentially earn $100.
  • When odds are positive, they represent the potential winnings on a $100 bet. For example, a wager of $100 at +115 odds could result in a profit of $115.

Two formulas can be utilized to calculate the return on bets that work in your favor.

  • Return equals Amount of wager divided by (Odds divided by 100) for negative odds.
  • The return is equal to the wager amount multiplied by the odds divided by 100.

Both formulas begin by working from inside the parentheses and moving outward. The first formula involves dividing the odds by 100, then dividing the stake amount by the resulting number. In contrast, the second formula follows a similar process but instead of dividing, you multiply the resulting figure by the amount wagered.

There are many free online betting calculators available, with some advanced ones even helping with calculations for arbitrage situations.

The pros and cons of arbitrage betting

Arbitrage betting is fascinating because it lets you make money by exploiting market inefficiencies. Here are some of its main advantages:

  • Ensure profits no matter what happens.
  • Comparing prices can help identify opportunities to increase profits.
  • This tool can help you generate returns and boost your bankroll effectively.

Naturally, there are also possible disadvantages to engaging in arbitrage betting.

  • Can be time consuming
  • Lack of precision in your math may result in financial loss.
  • Sportsbooks do not approve of this practice.

In conclusion, if you are able to dedicate time to finding opportunities, incorporating arbitrage into your betting strategy could be advantageous. If this is not feasible for you at the moment, it may be worth exploring arbitrage betting as a potential option for the future.