A Guide to Arbitrage Betting

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One of the more sophisticated, less mainstream tactics in sports betting is arbitrage wagers. That's a complex word, but all arbitrage betting really means is you're capitalizing on a discrepancy in odds and guaranteeing yourself a profit, regardless of the outcome.

How do you do this? Well, you look at the betting markets and compare different bookmakers' odds for the same game, and you place bets at two different sportsbooks on each of the possible outcomes. If you strike the proper balance between the moneylines on either side of the bet, you've created an ideal arbitrage opportunity and a guaranteed profit. Although it's not strictly limited to outright winner bets, arbitrage is a tricky ethical line to toe, not to mention a finessed style of betting that takes nuance, tons of research, a massive bankroll, lots of experience and an in-depth understanding of the market at large.

That probably doesn't suffice to explain arbitrage betting in full detail, so we'll break it down step by step in this long-form deep dive so you can understand the benefits as well as the risks of this sports betting tactic.

How arbitrage betting works

All you're doing is finding discrepancies in odds at different sportsbooks, and betting accordingly. Although it's not quite a reality in the U.S. as of now, Sporttrade secured a partnership with Twin River Worldwide Holdings in New Jersey with ambitions to create the first stateside sports betting exchange.

Once the betting exchange is up and running, it'll be easier to monitor arbitrage scenarios with second-by-second updates and a bigger-picture look at all the numbers at your disposal. Until then, it's even more of an uphill battle. If you're really serious about it, there's certain software programs to download such as Chetu, and others that can be found via a Google search.

What you're doing as an arbitrage bettor is turning sports betting into a numbers game of sorts, trying to bet on all possible outcomes of a game or match and profit regardless of what happens. Software can remove a lot of the headaches from the process and help you expeditiously locate the numbers you need to act. The problem is, as you'll see with the upcoming calculation section, there's not a lot of money to be made even if you're a bettor who doesn't mind throwing down $100 on a single game.

Instead of explaining this any further here, it's easiest to see how you can put arbitrage into action. Bear in mind, though, it's hardly a foolproof method, or even the most profitable way of finishing out ahead in betting. Arbitrage is really only for seasoned bettors who've essentially made a career out of sports betting.

Calculating arbitrage betting payouts

To figure out how you can make your profit margin, abe's odds comparison engine can be a useful tool, because it aggregates all the major sportsbooks' odds for you so you can see where the best deals are at all times. However, arbitrage opportunities are extremely fleeting — you have a matter of minutes to act.

Arbitrage chances are diamonds in the rough we at abe can help you pursue, but only to an extent. It really takes a seasoned bettor with a lot of money to throw around to execute this type of strategy and see any type of significant profit. Most payouts have a limited, low-single-percentage profit margin, as you'll see here shortly.

As for the calculation bit, it's often easier to locate arbitrage when it's a matchup between two relatively even teams. That is, unless something goes terribly wrong at one of the sportsbooks in the form of a computer glitch, or there's human error inputting the odds, in which case you jump all over that if you see it, with the understanding it could be voided later.

Now, say the Minnesota Twins are hosting the Chicago White Sox. As of this writing that's the closest division race in MLB, with Chicago atop the AL Central by half a game. But with Minnesota at home, its moneyline garners the slightly better odds. In this example, let's say the Twins are -100 and the Sox are +105. Perhaps at another sportsbook, the odds are flipped, since during this year, home-field advantage isn't really a thing and the teams are so close. Chicago has the -100 to win, while Minnesota is +105.

To take advantage of this, you can bet on the White Sox at the first sportsbook with $50 to win $51.25 at +105, giving you a $102.50 gross payout. In order to reach the same payout, you need to bet $51.25 on Chicago's -100 moneyline. Here's how that math goes.

Sportsbook 1: (White Sox +105) @ $50 = $102.50 total payout

Sportsbook 2: (Twins +105) @ $50 = $102.50 total payout

The combined amount you wagered at both sportsbooks is $100. Subtract that number from your total payout for each outcome, and either way, you're finishing with a $2.50 guaranteed profit. This is a very simplistic example, and of course, the profit line is very minimal despite your stake of $100. This again highlights the need to possess a higher bankroll if you're going to be betting arbitrage on a regular basis.

Advantages of arbitrage betting

Depending on how much you wager each time out, you should make a profit if you play it right by following the process mentioned in the first subsection. That's the primary benefit to this strategy. The typical anxiety and risk of losing all the money you put down on a single bet dissipates.

Also, if you're constantly mining for odds, you won't merely be going back and forth between two sportsbooks, but rather creating numerous accounts. At some point, you may get to where you don't need to bet arbitrage anymore, because you know which bookmakers have the best odds on the most consistent basis. It'll become second nature to go to those sportsbooks. Perhaps you won't feel the need to frantically search to bet both sides of the betting lines.

If you can simply carry on with a more conventional betting strategy once you've gained confidence and accrued some bigger profits under your belt, arbitrage betting may not be necessary. Before you bet this way, there's a lot of preparation and numbers crunching involved, and the research side alone can be exhausting. The silver lining to this is, even you decide not to proceed with this betting tactic at all, you'll still have gained so much more knowledge than you otherwise would have.

Not only to do you have a much firmer grasp on where you can find the best odds across the legal sportsbook market, but by nature of arbitrage, you've had to dig deeply into matchups into whatever sport you've felt most comfortable betting on. Maybe you like multiple sports, and have thoroughly assessed which one you think betting arbitrage is most worth the time and money invested. Arbitrage betting makes you a detail-oriented, extremely careful bettor, because you have so few opportunities to pick your spots and place your bets if you're going to rely on it exclusively that you can't afford to miss out on anything. It raises a user's awareness in all aspects of the sports betting game, which is never a bad thing.

Despite the dubious ethics of arbing, too, it's not strictly speaking illegal. There's no law that states you can't do it, and you'll never get prosecuted or arrested for doing such a thing as the law stands. So, even if you are found out and either have your account suspended temporarily or you're banned from a certain sportsbook, you won't face any legal or criminal consequences. All you're really doing at worst is violating a sportsbook's terms of use, which may not refer to arbitrage outright, but should have some type of language in there that discourages the act.

All that being said, there's obviously an implicit sort of trickery and petty theft arbitrage bettors pull off when they're successful. It's key to proceed with caution in the arbitrage arena, for there are perilous pitfalls that await if you aren't careful, including restricted or vanquished account privileges and more.

Disadvantages of arbitrage betting

To be clear, arbitrage betting isn't risk-free, as many bookmakers frown upon the practice and could well keep tabs on your activity. If one bookmaker corresponds with another and inquires about your betting habits and they find that you take advantage of these kinds of bets too often, you could get your account significantly limited or suspended by one or both sportsbooks.

If you were going to go about arbitrage betting on a regular basis, it'd behoove you to set up accounts at as many sportsbooks as possible and vary your use of them as often as you can. The more accounts you have, the harder it'll be to track you down and the more arbitrage opportunities you'll open yourself up to. But this is also harder on the arbitrage bettors, because it's quite a challenge to keep all the accounts straight and try to keep track of where all you've placed bets to avoid leaving a paper trail of sorts that could get your betting tactics snuffed out by bookmakers.

The other problem with needing so much more money to bet in this style is that your depositing tons of money is going to draw a lot of attention. Sportsbooks will definitely take care of customers who bet straight-up and throw lots of money around — heck, those bettors are probably a profit machine for the bookmaker —but there are often deposit limits, and if you're a serious arbitrage bettor, you're going to need to be sending in hundreds or even thousands of dollars per deposit.

Max bets are also a stipulation at sportsbooks. So, not only do you have to find the proper odds deviations at two different sportsbooks, but you also have to figure out how much of a bet nets enough of a profit margin that it's worth the investment in the first place. What you deem to be the best play may not, in fact, present enough positive return unless you exceed the maximum bet amount, which of course, you can't.

Good luck not getting noticed if you're pouring money into all your sportsbook accounts just so you can take advantage of arbitrage in betting, whose instances are few enough and far between as to not be worth it in the long run. It's going to take a lot of big deposits and huge non-arbitrage betting wins before you can even consider doing it on a more frequent basis with minimal risk of being found out.

Combine all those elements together, and it paints a pretty bleak picture for betting this way. Finally, be aware that bettors have all this working against them, and have to make arbitrage decisions in a matter of minutes, not only weighing all the factors that go into placing the bets on all the possible outcomes, but also the risk of being caught and suspended, under an immense time crunch. It sounds like a lot of stress and unnecessary pressure to put oneself through, and almost creates more of a labyrinth of over-analysis than a traditional, straightforward bet ever could.

Matched betting > arbitrage betting

The best way to get a taste of arbitrage without any of the real negative consequences is through matched betting, but this requires doing so right at sign-up.

If you're new to betting, the idea here is you create accounts at multiple sportsbooks, which offer you a certain free bet amount upon joining. At one of the sportsbooks, you use the free bet on one side of the outcome, and at the other, you hedge against it, ensuring that you profit and retain the value of your free bet no matter what.

Matched betting is a fine way to spend your initial sign-up bonus, yet it does, again, erase the opportunity for you to win the maximum you can off your free bet at both individual sportsbooks without hedging in that sort of way. To capitalize on these sign-up deposit bonuses, free bets, and bet matches, please visit abe's page, where we've partnered with many of the major bookmakers to hook you up with exclusive promos upon creating new accounts.

Bottom line: Buyer beware in arbitrage bets

Arbitrage can indeed lead to self-sabotage. You technically have a right to make money at the house's expense. After all, it is true for the most part that the house always wins. Abusing the arbitrage bet is a surefire way to get your account flagged for suspicious activity, though.

It's perfectly fine and wise to just stick with abe's odds comparison engine to err on the side of safety more often than not. While the engine can work as a tool to deploy an arbitrage betting strategy, the chances are fleeting at best, and you're better off with the aforementioned software specifically tailored to target sports arbitrage.

You're better off sticking with the sharps' advice and looking for odds differences with our engine than trying to make a trivial profit on the arbitrage kick. There's enough value on the market that with enough experience of wagering and an in-depth knowledge of where to find good value on certain teams and sports, you're going to be able to finish out ahead of the house, provided you stick to a strict budget and bet responsibly.

In the eyes of a bookmaker, arbitrage undermines the spirit of sports betting. Thus, it's best to retain your account privileges and use our odds comparisons to get the maximum payout on one side of the moneyline, rather than abusing the practice of arbitrage hunting.

Again, bettors require a much higher wagering bankroll when going the arbitrage route. It can't really be emphasized enough how much money you need to see decent returns. Take the Twins-White Sox example from earlier. That scenario could net a $250 profit, yet it'd require a $5,000 bet on both sides. Sportsbooks that see such large single bets will definitely be put on notice, especially if it happens more than once.

Maybe arbitrage is a fun, one-time thing to do that you can view as a deposit bonus of sorts for an existing user, but it should never be the way you sustain yourself as a bettor. Plus, you need to invest way more time and be bouncing back and forth between accounts to make it all work and keep all the numbers straight. All this really does in the end is limit your profit upside, which takes away some of the fun and reward in betting straight-up.

There are other betting education points, strategies and advanced concepts bettors can execute that are more sustainable and have greater upside than arbitrage. For more on abe's tutorials for these, visit our "How to Bet" hub, which exposes our users not only to the basics of this burgeoning industry, but also has plenty of content for seasoned bettors looking to refine their craft and increase their potential profit ceiling.

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© 2020 PopOdds inc. Reserved
If you or someone you know has a gambling problem and wants help, call 1-800-Gambler. You must be 21 years or older to place a bet.