Arbitrage Betting
Arbitrage betting or arbing for short is a betting system with which the gambler guarantees himself a profit by placing a bet on more than one outcome of the same match. People who practice this are called arbers and the bets they place are often labelled miracle bets or sure bets.
Matched betting is one form of arbitrage betting. It usually requires having an account with at least two bookmakers or betting exchange providers where one of these offers free bets. The free bet is placed on one of the outcomes and then all the other outcomes are covered at other bookmakers in order to ensure profit.
Both arbitrage betting and matched betting work best when there are only two possible outcomes on who will win the match, which makes sports such as cricket and tennis perfect for these types of betting.
How to Be an Arber
Arbitrage betting is only achieved when there is a difference or a discrepancy in odds between two bookmakers. This can occur due to different views on how high the odds should be or it can simply be a result of an inadvertent mistake by the bookmaker.
Many people don’t consider arbing as a form of gambling because it is much more similar to some mathematical methods than it is to gambling.
In arbing luck plays no part whatsoever. And often people who are deep into arbitrage betting say that they don’t even follow most of the sports they bet on.
So how is arbing achieved? Well, as we already mentioned arbing is most easily done when there are only two possible outcomes in a match. That’s why final outcomes in football are not so popular with arbers (there are 3 outcomes to cover – 1 X 2) and why the Over / Under markets (only two possible outcomes) are usually targeted.
Bet at Betting Exchanges Not at Bookmakers
Most of the time arbitrage betting is done at betting exchange websites such as Betfair or Ladbrokes. This is because they are free markets with odds not set by a bookmaker.
When the odds are not set by a bookmaker they are higher, because they don’t have an overround factored in them. An overround, or also known as a bookmaker margin or an edge, is the act of adjusting true odds so that they ensure that the bookmaker always makes a profit regardless of the outcome of a match.
Let’s take a look at an easy example from the IPL in which Mumbai Indians are hosting Gujarat Lions. Below you can see a representation of what are the real odds that each team gets out of 100% (available at betting exchange sites such as Betfair) compared to the adjusted odds offered by a bookmaker.
Real Odds (Betting Exchanges) Mumbai Indians to win: $60 stake at 1.67 - to pay out $100 Gujarat Lions to win: $40 stake at 2.50 - to pay out $100 Adjusted Odds (Bookmaker) Mumbai Indians to win: $60 stake at 1.43 - to pay out $85 Gujarat Lions to win: $40 stake at 2.00 - to pay out $80
As you can see in the example with real odds, the relative probability of a Mumbai Indians win is 60% (1.67) and the probability of a Gujarat Lions win is 40% (2.50). When combined together, they add up to the expected 100%.
In the second example (bookmaker odds), the odds go over the expected 100%. That’s the overround which guarantees that a bookmaker will always make profit. For example, an Indians win will be priced at 70% (1.43) and a Lions win will be priced at 50% (2.00). The bookmaker is guaranteed to make a profit of $15 in the worst case scenario.
Compare Betting Offers
Whenever the combined odds from betting providers go above 100% the betting firm is in advantage. However, whenever there is a negative margin and the combined odds are less than 100% then the customer has the edge.
This is usually achieved by combining two betting offers from two different betting providers. Let’s compare the Betfair odds for the Indians – Lions match with those of Ladbrokes and see how arbitrage betting works.
Arbitrage Opportunity
Betfair Odds Probability Margin
Mumbai Indians to win 1.70 58.8% 100.8%
Gujarat Lions to win 2.38 42.0%
Ladbrokes Odds Probability Margin
Mumbai Indians to win 1.60 62.5% 102.5%
Gujarat Lions to win 2.50 40.0%
Odds Probability Margin
Indians to win (Betfair) 1.70 58.8% 98.8%
Lions to win (Ladbrokes) 2.50 40.0%
The above margin of 1.2%, even though it is quite small, is an opportunity which an arber will definitely use. If an arber puts down $1000 on an Indians win at Betfair, and $680 on a Lions win at Ladbrokes he is guaranteed a profit of $20 as you can see below.
Odds Stake Winnings Indians to win (Betfair) 1.70 $1000 $1700 Lions to win (Ladbrokes) 2.50 $680 $1700
The total stake on both bets comes to $1680 and whichever way the match ends the winnings are always $1700. This guarantees you a $20 profit even before the match has started.
The example above is the main reason why arbitrage betting is so popular with betting enthusiasts. And even though the margins in favour of the punter are really small, meaning that if you find a margin or 3% in your favour you will have to consider yourself really lucky, the promise of guaranteed profit is something that no one can turn down.
Arbitrage Betting Downsides
However, because arbitrage betting is almost like a glitch in the Matrix of bookmakers, it is expected that it would have a few pitfalls. These include stake limitation, account closure, bet cancellation and illusiveness.
Stake Limitation
Most bookmakers have a limit when it comes to stakes. This does not apply to betting exchanges, but if your stake is too high it might remain unmatched by others.
Account Closure
When a bookmaker catches you on their radar as an arber then it is only a matter of time before they close your account. Some bookmakers claim to never close customer’s accounts, but you can count those on one hand.
Bet Cancellation
If an easily noticeable mistake has been made with odds, the bookmaker will soon notice it and your bet will be cancelled. This will leave you exposed on one half of your bet and you will be biting your nails for the remaining bet to come to fruition, which is definitely not the point of arbing.
Highly Illusive
Bookmakers always try to assess the risk of being exposed by arbers and arbitrage opportunities are becoming more difficult to exploit every day. A lot of arbers use arbitrage software to help them find favourable margins, but these pieces of software are often pricy themselves.
In addition, arbitrage betting is really complicated and you need to be able to cover a lot of bookmakers’ offers. This takes a lot of time and energy and for many people it is similar to a full time job.
The Bottom Line
An arber must be diligent, composed and patient. Favourable margins are difficult to come across and when you do manage to find one it will usually yield small profits.
However, the fact that people don’t even consider arbing as a type of gambling says a lot. It’s a risk free method most of the time and almost always there is a constant return on investment.
How is Matched Betting Done?
Matched betting is also known as back or lay bet matching and for good reason. It is a form of arbitrage betting, but in order for a gambler to do it he must have access to free bets offered by bookmakers.
Matched betting is considered as a risk free method of gambling, just like arbing. A matched betting enthusiast must possess at least two betting accounts. One to place the back bet at a regular bookmaker and one to place the opposing lay bet at a betting exchange.
The first thing that an individual has to do is to make sure that he is eligible for a free bet. However, most bookmakers require players to first place a bet, and then they are offered a free bet.
Players work around this rule by making a back bet at a bookmaker and then safeguarding it with a lay bet at a betting exchange which means that losses are kept at a minimum.
After they have done this, they now qualify for a free bet and can try their hand at matched betting. We will explain the basics of matched betting by using the same example with the Mumbai Indians and the Gujarat Lions.
Bet365 Odds Stake Winnings Profit Mumbai Indians to win 1.65 $10 (free bet) $16.5 $6.5 Gujarat Lions to win 2.40 - - - Ladbrokes Mumbai Indians to win 1.60 - - - Gujarat Lions to win 2.50 $10 $16.5 $6.5
As you can see from the example, whatever the outcome of the IPL match, you are always a winner with a profit of $6.5. It is completely risk free and as long as you can obtain free bets the only loss you are going to make is the initial bet to qualify you for the free bet, which most of the time will be minimal.
Downsides of Matched Betting
There are only two downsides to matched betting. The first one is being unable to obtain enough free bets, because there are only so many free bets that a bookmaker can offer to the same account.
The second one is if the bookmaker notices that an individual uses free bets and promotions much too often. This will raise suspicion and will alert the bookmaker that they have a matched betting situation on their hands. This often results in a ban from the site.
The Bottom Line
Just as with arbitrage betting, matched betting can be very profitable for betting enthusiasts who are diligent enough to constantly open new accounts, to follow promotions and to be smart enough not to get caught. Because even though there is nothing illegal with matched betting, no bookmaker likes to lose money.
