What is Arbitrage Betting and Why Should You Care?

Posted by Harry Kane on Tuesday, April 23, 2024

The online gambling and betting industry represents big business for a number of brands throughout the world, with the global market having peaked at a value of $61.5 billion in 2021. The sector is expected to be worth $114.4 billion by the year 2028, as a growing number of countries and US states seek to legalise different verticals.

Sports betting is a particularly fast-growing niche, and one that enables individuals to wager strategically and in a way that actively minimises the risk of loss. One of the more specific strategies is known as arbitrage betting or ‘arbing’, although this represents something of a grey area in the online gambling space. But what does this mean and why should you care as a bettor?

What is Arbitrage Betting?

Arbitrage betting is an advanced gambling strategy that involves covering all potential outcomes in a specific sporting event, in an attempt to guarantee at least a nominal profit. This can involve placing simultaneous bets at multiple sportsbooks, while looking to capitalize on price discrepancies and odds variations to optimise your potential returns.

Arbitrage betting is more popular in some sports than others. For example, betting on sports such as tennis and selected golf markets would only require you to place two wagers, as the draw is eliminated as a viable outcome here. Conversely, you’ll need to cover three possible outcomes when wagering on football, where draws occur 25% of the time on average.

The key to successful arbing is to identify the best value real-time odds and calculate your potential returns in relation to each individual stake. This way, you can guarantee at least some kind of routine on your total stake amount, regardless of the event’s outcome. This why arbitrage betting is considered to be an advanced wagering strategy.

What’s an Example of Arbitrage Betting?

To provide some context, let’s say that you wanted to bet on a football match between Turkey and the Czech Republic at the 2024 European Championships. At one sportsbook, you find that the Turkish side can be backed as high as 2.00, while another has priced the Czechs to win at 4.50. The draw is priced at 4.00 and is the second most likely outcome from a statistical perspective.

Odds of 2.00 imply a 50% probability of a win for Turkey, so you stake $100 on this outcome. There’s a 25% chance of the match ending drawn, so you reduce your exposure in this instance and stake $50. The odds imply a 22.22% probability of a Czech Republic victory, so you bet $45 on this outcome to create a total outlay of $195. This ensures a nominal return on your stake, as detailed below:

• If Turkey Win: 2.00 x $100 – $195 stake = $5 total profit
• If the Match is Drawn: 4.00 x $50 – $195 stake = $5 total profit
• If Czech Republic Win: 4.50 x $45 – $195 stake = $7.50 total profit

Due to the inefficiency in how these markets are priced and the discrepancies that exist within pricing and the implied probability values, this system would enable you to end up in profit regardless of the actual match outcome. However, your calculations must be precise and considered, while you may have to carry out extensive research when comparing odds.

What’s the Legality of Arbitrage Betting?

In any country where sports betting is legal, you’ll find that there’s no law or legislation outlawing arbitrage betting. So, this is completely safe and lawful practice, and one that won’t incur any legal consequences if you’re discovered arbing by a particular sportsbook or betting brand.

However, some sportsbooks frown on the practice of arbing. They may therefore publish specific terms and conditions that prohibit players from placing multiple wagers on the same sporting event, while bonuses and free bet offers will expressly ban this practice. If bookies do observe arbitrage betting, they may also take steps to limit your account, cancel individual wagers or even close your account (in the most significant examples).

We’d always urge you to check out a site’s T&Cs before engaging in arbitrage betting and review the terms associated with any promotional offer too. This way, you can select the best sites for arbing and ensure that you get the most out of this practice. Otherwise, the risk of having bets cancelled will be increased markedly.

How to Engage Successfully in ‘Arbing’

Now that you understand arbitrage betting and how it works, you may be tempted to engage in this wagering system. However, execution is key if you want to make money and guarantee at least a nominal profit in relation to your total stake. So, here are some tips to help you start implementing this strategy!

• Constantly Monitor the Odds Across Multiple Sites: One way to avoid account sanctions is to wager on the same event at different sites. However, this requires careful timing and the constant analysis of real-time odds, in order to identify pricing inefficiencies and wager at optimal value. This is key, as failing to bet at the best value odds could make the difference between profitable and loss-making wagers.
• Understand How Arbitrage Opportunities Occur: In pre-game markets, arbitrage opportunities typically occur when prices are set too high. This can occur because sportsbooks are looking to compete for customers, but end up offering extended odds that don’t adequately reflect the associated implied probability values. In live markets, a bookie may fail to react to in-game events as they occur, creating a temporary window in which you can wager at optimal value.
• Use Free Bets and Offers: The matched betting strategy is an example or arbing, and one that enables you to cover all outcomes of the same match. In this instance, you’ll lay a traditional back bet on a particular side to win at the exact same odds, while ideally utilising a free bet to guarantee a profit. Make no mistake: the use of free bets is crucial when engaging in arbing, as it negates at least one of your stakes and maximises both your chances of making a profit and the size of your eventual return.