What is Arbitrage Betting?
A sports bettor is said to be indulging in arbitrage betting when he employs a system which exploits the differentials in odds offered on a specific betting market at two or more different bookmakers, for instance, Bet365, Pinnacle, Betfair etc. Why it is so popular among sports bettors is because there is a guaranteed profit involved, as the combined odds result in a negative margin, which works in favour of the sports bettor. Read on to find out more about the basics of arbitrage betting strategy.
It’s important that you open accounts with multiple bookmakers (at least 2) at preferably different locations for arbitrage betting. Furthermore, you should go only with reputed bookmakers as doing so will help you avail the best betting odds, at low margins and higher betting limits.
Why arbitrage betting situations occur on a fairly regular basis is because bookmakers have different opinions on specific betting markets. This happens all the more frequently if there are obscure events, wherein there is plenty of variation in terms of margins provided by the different bookmakers.
Bet365 is considered to be a highly popular online casino cum bookmaker that offers some of the best odds on the Internet, for instance, in some cases you may even get margins in the vicinity of 1.5% for baseball and soccer games. Bet365 also has a low margin policy on all the markets posted by it. As a result, anyone serious about arbitrage betting must definitely open an account at Bet365. In fact, refer to any of the widely available and popular arbitrage engines/software and you will see Bet365 highlighted on either side of the arbitrage bet.
In addition, it’s a fairly popular casino platform too. Actually, Bet365 started out as a pure sports betting platform, but expanded into offering other gambling services such as online casino games later. In fact, you can find some of the best online slots
at Bet365. Apart from the slots games, there are many other on offer, such as roulette, blackjack, poker, craps etc. also on offer. However, slots is the most popular of all the casino games.
Arbitrage betting example
Let’s explain arbitrage betting using a simple example. Let’s look at the betting odds offered on a tennis match being played between player B and player C, by 2 different hypothetical bookmakers (including an online casino cum bookmaker), as is shown in the following table:
Player B / Player C / Market %
Bookmaker A odds
3.930 / 1.300 / 102.4%
Bookmaker B odds
2.900 / 1.420 / 104.9%
Arbitrage (Player 1 / CB + Player 2 / CC)
3.930 / 1.420 / 95.9% (4.1% profit margin)
The market percentage for each bookmaker or online casino (edge in its favour) has been clearly indicated. You can see that the market percentage works out to be in favour of the sports bettor, guaranteeing him a 4.1% return (100 – 95.9 = 4.1) when you cross match the odds.
You can apply the same principle to almost any sports betting market and beyond these two selections, covering spread betting too. It has application in the field of live sports betting as well wherein you may witness arbitrage opportunities being frequently available by laying and backing in a regularly shifting marketplace. You are also free to make use of the free bonuses in arbitrage bets, in order to lock your guaranteed profits, however the conditions applicable in that scenario may be highly restrictive in nature.
Possible drawbacks of arbitrage betting
As is the case with any sports betting strategy, there are pitfalls associated with arbitrage betting too. Let’s go over some of them as follows:
In order to fully exploit the arbitrage betting opportunities, a sports bettor must have a good number of well-funded bookmaker or online casino accounts. Furthermore, he should also have ample time to make all those accounts count. All this involves a fair amount of effort and organisation. As a large number of people practice arbitrage betting, especially financial arbitrage, for making a living for themselves, the time invested into all such activities should also be measured as a type of cost.
Betting limitations and account closures
The betting limits on arbitrage betting may be different at different bookmakers, thus restricting your ability to comprehensively exploit various arbitrage opportunities. Please keep in mind that Bet365 offers some of the highest betting limits on the Internet. Furthermore, if you’re interested in learning more about Bet365 and all the current bonuses offered by it, is a must-visit for you.
Some of the bookmakers may also close accounts of sports bettors who register consistent profits through arbitrage opportunities. However, this isn’t the case with Bet365. It’s one online casino that welcomes winners as they allow it to tighten its odds.
It isn’t uncommon for bookmakers to constantly change the offered odds, owing to changes in their risk assessment. Many a times arbitrage opportunities don’t last longer than a few minutes. This makes timing of the bet placements very crucial. And errors are bound to occur whenever it is time-pressured humans involved in these tasks. This is exactly where arbitrage software systems can be of immense help. However, their cost is often so high that it can significantly eat into the sports bettor’s profits.
Cancellation of bets
When it comes to arbitrage betting, bookmakers sometimes cancel the bets wherein they find certain mistakes. It can leave the sports bettor majorly exposed on the other end. Sometimes, such cancellations can in fact wipe out your sports betting profits earned over a considerable time period.
Staking is an excellent strategy that can significantly improve your sports betting returns. It is strongly emphasised in the field of sports betting that the money you bet holds far more importance than what you’re betting it on. We carried out a review of 5 most popular staking methods and have detailed them all here for you to read and figure out which one suits you the most.
Having major expertise in the field of professional gambling, Ed Thorp had an impressive ability of card counting as well. He successfully published two bestsellers on that subject, and attributed majority of his betting successes to a certain staking formula that was a creation of John Kelly Jr., a famous mathematician. As per this formula, the playing strategy is perhaps a third to a quarter, of what a gambler may get out of it. It’s the betting strategy that constitutes the rest of the three quarters or two thirds.
Obviously, it’s pretty easy to state that betting strategy holds great importance. However, what do you think constitutes a useful sports betting strategy?
An experiment was carried out in this regard in which successes of 5 different betting strategies were mapped over 500 bets. A graph was plotted based on the resulting information. This graph revealed the profits made from those 500 simulated bets, using 5 different betting systems, with a winning probability of 55% on a binary bet. The initial betting amount for each one of these methods was £ 100, except in case of the all-in method wherein the starting amount was £ 1000. Every system was initiated using a £ 1000 bank, with the simulation continuing for every method until the final and 500th bet (or until the time the bank was minimized).
It was noted that one particular betting system delivered far higher returns compared to the others, while one dropped out the sports bettor fairly quickly. Please keep in mind that these bets can be placed on any platform, at some offline shop or online casino such as Bet365. Furthermore, is a must-visit if you’re interested in learning more about the best online casinos and the bonuses offered by them.
These 5 betting systems have been outlined below:
Betting strategy #1 – Fixed wager strategy
In this strategy you’re supposed to bet a certain fixed amount in every bet, without varying it at all, no matter what your winnings maybe. The winnings were £ 100 in this example. If your winning probability is 55% on a sports bet with 2.00 odds, using this method implies that you’ve significantly reduced your chances of losing the entire bet amount. Unfortunately, what it also implies is that your winnings will increase only in a very slow and steady manner.
Betting strategy #2 – Proportional betting
When you use this betting strategy, you’re supposed to bet a fraction of your bankroll. This amount has to be in proportion to the edge. Kelly criterion formula (for proportional betting) was employed in this simulation. If you use this betting method, your bet amount would be your edge divided by the betting odds. As the edge is 10% in this particular example, and odds are even, a 10/1 figure would be 10.
Hence, 10% of £ 1000 wallet would be the bet amount, which is £ 100. In the event that bet proves to be successful, your next bet amount would become £ 110, which will be 10% of your new £ 1100 wallet balance. It implies that the winnings will increase far more quickly compared to the fixed wager system, and the losses will slow down.
Betting strategy #3 – Martingale
You’re supposed to double your bet amount post any failed bet, primarily for covering up your losses through the winnings of the next bet. Doing so provides a far quicker increase than the fixed bets, as you’re essentially doubling up for covering any losses. In case you experience any sequential losses, the required bet amount will continue to double, ensuring that you start betting large amounts soon, for covering up your losses.
Betting strategy #4 – Fibonacci
In this betting strategy, you’re supposed to increase the bet amount in a Fibonacci sequence, to the losses with the winnings from your next bet. This betting strategy has the same drawback as in case of the Martingale method. However, it reduces the quickness with which the bet amount increases if you go on a losing run. On the other hand, it also has the same kind of impact on a winning streak.
Betting strategy #5 – Bet everything, each time
You are expected to put your entire bankroll at stake in every bet. A major advantage of this betting strategy is that you are able to achieve huge returns very quickly. What’s the downside? You go bankrupt the moment you lose, and hence would need to exit from the game.
As is evident from the descriptions provided above, proportional betting seems to have a major natural advantage over other betting systems. Imagine that you’ve been on a losing streak and are reduced to your last £ 100. When that happens, you’ll be staking £ 10, and decreasing your stake from there on, allowing you to stay in the game for much longer time period compared to fixed betting system, wherein your last £ 100 would actually be your last wager.
Which of the above detailed strategies works the best?
The bet everything strategy delivers huge gains post the first bet, providing as much gains in one single risk compared to the what’s delivered by others over the first 7 bets. Although the light which burns 7 times brighter, burns 1000th as long, this particular strategy rarely extends beyond the second round!
Your chances of making through 1000 betting rounds at 55% probability are extremely small; so small that it’s practically impossible (though you may have bagged £ 67 billion if you had managed to extend your run till round 27).
Martingale and Fibonacci strategies are fairly progressive betting systems. They also get a promising start, but any huge sequence of losses may ramp up the needed stake amounts. In this simulation, we had lost 11 times back-to-back at round 83. The sequential defeats entirely wiped out both the Martingale’s and Fibonacci’s stakes. By the time those 11 sequential losses were done, the hypothetical bettor using Martingale strategy was required to bet £ 403,000 for recuperating his losses! That’s a pretty large amount, keeping in mind that his maximum purse was only £ 6300. In case of the Fibonacci strategy, the maximum bet amount was £ 33,500, with the purse peaking at £ 4100, prior to the wipeout.
Fixed betting strategy was the only system apart from proportional betting which could ensure loss avoidance. It accrued slow yet steady increments. By the time we reached round 83, the fixed betting strategy purse had increased to £ 3400, and thereafter dropped down to only £ 2300. Although it wasn’t out, there was hardly anything to show for the 95 bets.
The above mentioned 11 bet losing run hit the proportional betting system also pretty hard, bringing down its winnings to £ 2286 (from £ 7359), lower compared to the fixed betting strategy. This reveals the excellent manner in which the fixed betting strategy protects the sports bettor’s winnings. Nevertheless, the fixed betting system had delivered only around £ 6400 by the time bet number 500 was placed, whereas the proportional betting strategy had delivered £ 18,275.
Sports bettors must keep in mind that the above experiment was carried out on a major assumption that you have edge in your favour. The results of all these betting strategies would have changed dramatically in the absence of such edge.
Backing your staking method
The simulation detailed above reveals that different staking methods may have completely different outcomes, even if you keep the other variables unchanged. The only difference between finishing with £ 18,275 and getting wiped out completely post 500 bets was the selection of the right betting system.
However, it’s very important to remember that you can never get an ideal sports betting system. Although Kelly Criterion system delivered good results in the example above, you may need to employ more developed betting systems for different bet types. It’s very important to figure out which specific betting style is ideal for your sports betting strategy, something which you can figure out only through simulation and research.
You must also keep in mind that Kelly Criterion system delivers results only if you’re aware of your edge, which can then be used for calculating your bets. You may continue facing major difficulties in case you calculate your edge wrongly.