Does Arbitrage Betting Work? Is It Worth The Effort? (Guide)

An ‘Arb’ is when a Bettor has the opportunity to place multiple bets on a sports event using different betting companies, and make a profit regardless of the outcome. When using the right tools sports Arbing (or ‘Arbitrage Betting’) is straightforward, procedural and potentially very lucrative.

There’s no doubting that it works. The question is, to what extent? I’ll explain each of the pros and cons of Arbitrage Betting in this complete guide. Then you can decide if it’s worth the effort…

 

The Basics Of Arbitrage Betting


The simplest form of arbitrage opportunity is where the exchange Lay odds are less than those offered by the bookmaker.

For example, if bookmaker has 10.0 for a horse and the exchange Lay odds are at 9.0 then this is an arb. This means a bettor has the opportunity to secure a guaranteed profit by employing the “Back high, Lay low” trading philosophy at that moment in time.

 

► Help, I’m Lost!

Ok. If you’re stuck then it’s probably because you aren’t familiar with the Betfair exchange.

Basically, for Arbing you need to ‘cancel out’ your Back bet at the Bookmaker by Laying on Betfair. By Laying, you’re betting against the outcome that you’ve Backed (at the Bookie), ensuring that you have no risk. The difference in the odds between the Bookmaker and Betfair means that you don’t merely break even — instead you guarantee a profit after the sports event settles.

You can win at either the Bookmaker or on Betfair, it makes absolutely no difference to you!

 

► Arbs sound great so far. Do they happen frequently?

Arbs are an everyday occurrence due to the volatile nature of betting markets. Bookmakers have to actively monitor all other available odds in order to quickly prevent shrewd punters from taking advantage of their odds by arbitrage betting.

 

► How to find Arbs

It’s impossible to find enough arbs manually (i.e without the use of an arb finder) to make it a viable earner.

In my post What’s The Best Sports Arbing Software? I review and recommend the best, most cost-efficient arbitrage finders. These recommendations provide a consistent flow of arbs which appear the moment an opportunity arises.

To get started I highly recommend signing up to OddsMonkey and using their free Odds Matcher. Until you upgrade to Premium (which is only £15 /month) it’s limited — but it will give you a feel for Arbing and Matched Betting*

OddsMonkey Matched Betting Tutorial Step By Step

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The >100% Ratings setting on the OddsMonkey Matcher shows when the Bookmaker is offering better odds than a betting exchange. This is what provides a risk-free arbitrage betting opportunity. But get there quick, as speed is of the essence!

*Matched Betting is basically the same process as arbing except that it (a) uses free bets  and (b) doesn’t require that the Bookmaker has better odds than Betfair. Similar odds are sufficient.

 

► An Example of Arbitrage Betting (maths included)

Let’s work through the previous example using a £10 stake at the bookmaker. To simplify the calculations, I assume 0% commission paid on the exchange. Usually you’d pay 5%. Here are the possible outcomes for the arbitrage bet:

Bookmaker Wins:

Bookie: (£10 x 10.0) - £10 = +£90 profit
Exchange: -(£10 x 9.0) +£10 = -£80 loss

Net result = +£10

Exchange Wins:

Bookie: -£10 loss
Exchange: £10 win

Net Result = £0

What this achieves is great for the bettor: it’s either make £10 or break even at £0.

But this approach does not guarantee a profit each time; the exchange winning returns zero profit. The solution to this problem follows…

 

Calculating Guaranteed Profit From an Arb


To guarantee a profit from an arb the risk must be spread over the outcomes of the event. This is achieved by adjusting the Lay stake using a simultaneous equation… or just an online calculator!

Please skip over this entire section if you’re put off by the mathsy stuff. But if you’re interested, or want to incorporate the calculations into your spreadsheet, then here’s how to work out the Lay stake:

(BookieWinBookiePNL) + (BookieWinExchangePNL) = 
(ExchangeWinBookiePNL) + (ExchangeWinExchangePNL)

Substitute in the 1 unknown variable “LayStake”:

((£10 x 10.0) - £10) + (-(LayStake x  9.0) + LayStake) = -£10 + LayStake

Rearranged & Simplified:

£90 - 8(LayStake) = -£10 + LayStake
£100 = 9(LayStake)

LayStake = 100/9 = £1.11

OK, that’s enough of the algebra.

Now the risk is spread across both outcomes, albeit a slight rounding difference of £0.01. Thus the player has achieved a positive, equal result for any outcome.

Bookmaker Wins:

At bookie: (£11.11 x 10.0) - £10 = +£90 profit
At exchange: -(£11.11 x 9.0) +£10 = -£88.88 loss

Net result = +£1.12

Exchange Wins:

At bookie: -£10 loss
At exchange: £11.11 win

Net Result = +£1.11

 

Do Arbs Bother The Bookmaker?


Theoretically the bookmaker’s overround would ensure that profits are realised on every event, regardless of whether a small percentage of customers are arbitrage betting. This assumes that their books aren’t hugely unbalanced, of course.

The issue is that the occurrence of an arb usually represents a shift in the exchange odds, leaving one or more bookmakers behind. At those moments in time the bookmaker offers odds above the market value, which is great for bettors. And unfortunately giving value to bettors isn’t in keeping with the bookmaker’s business model, so they close the opportunity as quickly as possible and try to reduce how frequently it happens.

Furthermore, bookmakers don’t want to facilitate too many gamblers that show evidence of a capitalistic mindset. In finding an arbitrage bettors the bookmaker identifies customers with the likelihood of profiting by other means — bonus abuse, or value betting for example. Therefore they simply discontinue doing business with them at the earliest point possible.

 

How Difficult Is Arbing?


The process and logic behind arbing is pretty simple — you Back high, and Lay low. If the odds stayed put then arbing would be extremely easy. But in reality it’s a little harder than it seems. Placing bets on arbs throws several logistical complications…

 

► Bankroll

First and foremost, arbitrage bettors require sufficient funds in their bookie accounts to fulfil their back bets as well as the liability requirement on the exchange. This might be a stretch, or simply not an option for some.

 

► Speed & Efficiency

When an arb occurs bookmakers change the odds very quickly to close the opportunity. Products like RebelBetting are therefore required to identify arbs as soon as they appear.

For an arbitrage bettor to capture the odds required for a risk free profit they also have to be well prepared. Ideally, the bookmaker and exchange accounts are logged in and ready to go, balance included.

The exchange is also very busy and competitive around the time of the arb, as other bettors are there for the same reason. Sometimes the bettor won’t get matched at the odds originally available. In the worst case scenario he Lays at a loss to reduce the risk.

 

► Discipline

Arbitrage betting isn’t an activity for those who can’t resist a punt. It’s procedural, and gives little reason to be excited about the outcome of a sporting event [except the guaranteed profit]. Indeed the enjoyment of betting is somewhat removed. In effect, it’s a bit more like working.

 

► Account closures

Although arbing guarantees profits, it will certainly result in account closures for those that do enough of it. It may surprise some bettors to learn that bookmakers close new accounts in as little as one bet.

The decision to close an account is seldom overturned. As unfair as this sounds, it’s unfortunately true.

 

► Terms & Conditions

Most bookmakers have terms & conditions permitting them to close accounts at their discretion if they suspect any form of advantage play from the customer. In addition, bookmakers usually explicitly stipulate that arbitrage betting programs used on their website are against terms and conditions.

Whilst the activity is most definitely not illegal, arbitrage betting leaves users open to several nuisances — such as payout disputes, stringent verification requirements, account locks, and unexpected telephone calls.

 

How Are Arbers Detected?


Arbers have several tell-tale traits that alert the Bookmaker to their activity.

 

► Large deposit and stake sizes are signs of arbing.

If a player signs up and instantly deposits a large sum of say £1,000, and he attempts to place the maximum stake on a selection then it’s likely to raise suspicion. Betting this much shortly after signing up isn’t the behaviour of someone dipping their toes in for the first time. And those sort of funds aren’t usually available to average punters. It smacks of someone who knows what they’re doing; so it’s an easy way for bookmakers to highlight potential arbers.

 

► Peculiar stake amounts are another give away.

Customers frequently betting on “marked” horses often have their maximum bet size capped, or other privileges revoked (e.g. BOG). In order to protect their business interests, stake restrictions are either imposed by automated risk parameters or set manually by the bookmaker. Unfortunately for arbers these restrictions encourage unusual stakes e.g. £5.42. Average punters with full privileges tend to place flat, round stakes. A high frequency of non-round bets comes across as persistent, suggesting the use of a betting strategy or automated program.

 

► Other patterns such as betting at antisocial hours of the day, or at unusually high odds, may alert bookmakers to arbers.

Horse racing activity typically builds up around the time that races begin, which is around 2pm for most racedays. Those who wake up early in the morning to place bets are at risk of being flagged or monitored for value betting or arbing. Equally, a customer frequently betting at high odds demonstrates risk tolerance, or strategy; traits associated with risk free betting.

 

► The IP address also plays a part in alerting bookmakers to arbers.

If a customer comes from an area where groups of syndicates have been known to place value bets then the location alone could be an identifying factor. Other issues with IP addresses are that they make it easy to identify multi-accounting. Let’s suppose a customer was closed down for arbing, and then signed up his brother on another account using the same IP address. Whilst the bookmaker may not entirely discriminate against siblings of the same address, they will be aware that this household, or IP address, have a history of arbing.

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► Companies like Iovation, who provide fraud prevention tools, also work closely with many online betting sites.

Here bookies will share information about unwanted customers and as the Iovation website proudly states, this also prevents Arbitrage betting.

Whatever measures players take to disguise their arbitrage betting activity, bookmakers are still in the best position to recognise arb opportunities. Think about it: if professional bettors can build arb finding software, then so can the bookmakers. It’s not difficult for the bookmaker to note that a customer has started to frequently bet on their arbs. Regardless of what a player’s historic betting activity looks like, the conclusion will be: “this account is an arber”.

 

Is Arbing legal?


Yes, Arbing is legal. Arbers simply pick off “good value” odds, that’s all.

Arbitrage Betting is discouraged by Bookmakers and it often breaks their terms & conditions — but this in itself isn’t illegal. Betfair and other exchanges actually encourage arbing activity as it provides a lot of liquidity to their betting markets. 

To an extent, one may argue that arbing ‘evens out’ the somewhat uneven playing field between Punters and Bookies. What arbers do is [almost] the reverse of what a Bookmaker does. Arbers try to Back at goodvalue odds whilst Bookmakers look to Lay poor-value odds. Anyhow, regardless of arbing the Bookmaker should still earn a profit from their overround. My point being there’s no real harm done.

There are several arbing software applications designed to facilitate sports arbers. Unsurprisingly they aren’t endorsed by Bookmakers! But these products probably wouldn’t exist — at least not so publicly — if there were legal issues in arbing. Rebelbetting is the most well-known service. There’s still a huge amount of interest in the development of arb finders and tools from within the gambling community.

 

So, Is Arbing Worth The Effort?


There’s value in arbing — professionals and hobbyists both benefit from earning an easy, risk-free, tax-free income. So from a profitability point of view, yes, it’s well worth it.

 

► There’s certainly some drawbacks

If you really enjoy betting at specific Bookmakers then it makes little sense to run the risk of permanently losing your accounts over what could be a short-lived injection of only a small profit. Furthermore, you have to consider the time, dedication, effort and bankroll required to make arbing a success.

Plus arbing takes away an element of fun, right?… OK, maybe not. Making money is obviously more fun.

 

► Good software makes Arbing very easy & efficient

I’ve reviewed and recommended some excellent arb finders in my post What’s The Best Sports Arbing Software? The mentioned products transform the concept of arbing into an attractive, profitable venture. They provide tons of value (to more than justify their fee) and considerably cut down the time and effort wasted in searching for arbs manually.

My favourite arb finders:

Rebelbetting is without any doubt the best, most professional service on the market. It’s fast, user-friendly and the most actively developed arbitrage solution today. If you sign up today then you’re entitled to a free trial period that turns into a monthly subscription at the end of the week — but it’s straightforward to cancel the subscription before then.

If you're totally new to Arbing then I suggest getting to grips with Matched Betting first. It's also risk-free and the process is almost identical to Arbing. You can learn more about it from my Step-By-Step Beginners Guide To Matched Betting.

…On a final, sad note: my recommended Arbing software still can’t protect your betting accounts from inevitable closures!

 


Further Reading:

What’s The Best Sports Arbing Software?

Prevent Your Betting Accounts From Being Restricted Or Closed

Step-By-Step Beginners Guide To Matched Betting

The Best Matched Betting Services

How Do Bookmakers Earn? How Big Is Their Edge?

  • ed pierce

    Arbitrage betting seems a lot like parimutual in the states. It does look more effective and more profitable with a lot less risk though! I am surprised more people are betting this way!

    • Yeah I think what you’re talking about there is similar to our Tote betting. Arbitrage is certainly more lucrative 🙂 But taking on the Bookmakers does have its drawbacks, though.

  • Tom Davies

    at the end of the day… you can arb, make some money, get caught and have your accounts closed. Then you’ve still got Betfair to use anyway if you fancy a punt 😛

  • Rob Pitcher

    ballpark figures… how much would you make if you were to bet on let’s say 20 arbs every day at a bookie? and roughly how long would the account last for?

    • It depends on stake size. The amount you return is usually an average ROI on the amount placed. For example, that ROI may be 4% (realistic) – so if the sum of the total bets amounted to £100 then you would expect to make £4. Some arbs are worth more than others, though.

  • Ann M. Jordan

    Do you know anything on different types of arbitrage bets? Dutches, middles, cross-market etc?

    • I do, and thanks for prompting me. I’ll create some more posts on complex arbitrage opportunities.

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