What is Arbitrage Betting? Detailed Explanation & Examples
Arbitrage betting or "arbing" or "arb" is a term you may have heard in online betting. So what is arbitrage betting? What benefits does it bring to you? The answer will be revealed below!
What Is Arbitrage Betting?
In fact, Arbitrage betting is a term taken from the stock and retail markets. In this case, arbitrage is understood as the act of buying an asset in one market to sell it simultaneously in another market at a higher price. The same goes for Arbitrage betting.
Arbitrage Betting, also known as arb betting, sure bets, miracle bets, and sure wins, is a form of chance in which you will bet at many different bookmakers to cover all the outcomes of a match to ensure a profit for you.
Arb bet occurs when bookmakers have different views on the outcome of a particular match or sporting event. Therefore, the odds for that match at these sportsbooks will be different. If you come across the same situation, you will definitely reap profits regardless of the outcome of that match.
In short, arbitrage betting will guarantee you a profit regardless of whether the back or lay wager wins.
How Arb Betting Works
To better understand how Arb Betting Works works, you can follow the real-life example we show below.
Suppose you participate in a virtual horse race, you will bet on Red Rum at the bookmaker and betting exchange with the following odds:
Sportsbook (Back bet)
Betting exchange market (Lay bet)
|Red Rum 3.25||Red Rum 2.88|
Usually, you will have to pay a commission on lay bets; this is usually 2%, so factor this into your calculations.
Calculating how much to stake for arbitrage bets
Let's say you bet on Red Rum $100 at a sportsbook.
So for your arbitrage bet to be profitable, or at least tie, regardless of the match's outcome, you need to calculate the correct amount of the lay bet. You will calculate according to the following formula:
Lay stake = (back odds x back stake) / (current lay odds - exchange commission)
So the lay stake for Red Rum at betting exchange will be:
(3.25 x $100) / (2.88 - 2%) = $113,64.
So to make sure your arbitrage bet is profitable, your exchange betting balance will need to be $213.64.
Or you can also use the arbing calculator to help you quickly figure out how much you need to bet to ensure a profit.
If the back bet wins, your real profit will be:
Profit = (back odds - 1) x back stake - (lay odds -1) x lay stake
Example: Profit = (3.25 - 1) x 100 - (2.88 - 1) x 113.64 = $11.36
If the lay bet with the exchange is successful, your profit will be calculated according to the following formula:
Profit = (lay stake x (1 - commission)) - bookmaker stake
Example: Profit from lay bet = (113,64 x (1 - 2%) - 100 = $11,36
Either way, you can make an $11.36 profit whether Red Rum wins the race or not. This proves that as long as you calculate well, you will be able to choose to play this type of bet often.
Although the profit earned from arbitrage at each bet is relatively small, you will make much more than before if you play many times a day.
How Arbitrage Bets Look in a Real Betting Site
Before betting exchanges, Arbitrage bets are usually made between two or more bookmakers. However, now that most bookmakers offer very similar odds, this bet is becoming less and less popular, but not unheard of.
For an arb to occur between bookmakers, you need to determine the highest odds for each outcome. The table below will help you quickly realize the possibility of making arb bets across bookmakers:
|Outcome 1 odds||Outcome 2 odds|
If you find odds similar to outcome 1, then odds that are greater than what is identified in outcome 2 would present an arbitrage opportunity.
Example: You want to bet on an archery match between player A and player B. The implied odds and probabilities are as follows:
|Player A to win||Player B to win||Market margin|
|Bookmaker A odds||1.30 (76.92%)||3.70 (27%)||104%|
|Bookmaker B odds||1.40 (71.43%)||2.98 (33.56%)||105%|
Note: the calculation of implied probability is determined by this formula:
(1/ decimal odds) x 100 = implied probability.
Looking at the table above, you can see an arbitrage opportunity between bookmaker A and bookmaker B. When the sum of the implied probabilities of the two outcomes in both bookmakers is below 100%, it will work in your favor:
|Player A to win at bookmaker B||Player B to win at bookmaker A||Combined market margin|
|Odds||1.40 (71.43%)||3.70 (27%)||98.43%|
As such, you would choose the highest odds for each outcome, with the example above, the market margin is now in the bettor's favor providing a guaranteed return of 1.57%.
Calculating How Much to Stake for Arbitrage Bets
What is needed right now is that you need to calculate the bet amount for each bookmaker to ensure equal profits no matter the final outcome.
Assuming you want to spend $200 to bet on both outcomes, the bet amount at each bookie will be calculated according to the following formula:
Stake at each bookmaker = (Overall stake x Bookmaker implied probability)/Combined market margin
Bookmaker A stake = (200 x 27%) / 98.43% = $54.86
Bookmaker B stake = (200 x 71.43%) / 98.43% = $145.14
The profit you get when player A wins at bookmaker B:
(Bookmaker B stake x Player A to win at bookmaker B odds) - Bookmaker B stake
= ($145.14 x 1.4) - $145.14 = +$58,056.
The profit you get when player B wins at bookmaker A:
(Bookmaker A stake x Player B to win at bookmaker A odds) - Bookmaker A stake
= ($54.86 x 3.7) - $54.86 = +$148,12.
Your overall arbitrage profit, regardless of the outcome, is displayed below :
Player A wins
Player B wins
So, if you place this arbitrage bet, you're guaranteed a profit regardless of whether Player A wins or not.
Three-way Arbitrage Betting
We have just shown you how to calculate arbitrage opportunities for a simple two-way arbitrage bet in detail. But, in football betting, 3-way bets are more common. Therefore, you will need to know how to calculate 3-ways arb bet.
At this point, the calculation will be a bit more complicated. Rest assured! Just apply our detailed instructions below, and nothing can make it difficult for you.
When betting with a betting exchange, you won't need to care about three-way bets as you could back Team A's win on the bookmaker against Team B and then lay them to win on the exchange - which covers anything other than a Team B win.
As for the arb bet at 3 different bookmakers, please follow our instructions below!
Suppose you find the following odds on a game between Manchester United and Liverpool:
|Man United to win||Draw||Liverpool to win||Market margin|
|Odds||Bookmaker A 2.12 (47.17%)||Bookmaker B 3.55 (28.17%)||Bookmaker C 5.40 (18.52%)||93.86%|
The table above shows implied probabilities and shows the market margin is under 100%, which means you can make arb bets at these three bookies.
Calculating how much to stake for arbitrage bets
Just like the 2-way arb bet, you need to calculate the stake amount with each bookmaker to ensure a profit. For example, let’s say you want to put out a total bet on Manchester United vs. Liverpool arb of $2000.
The formula for calculating the stake at each bookie:
Stake at each bookmaker = (Overall stake x Bookmaker implied probability)/Combined market margin.
So, we will calculate the stake for each bookie as follows:
- Bookmaker A stake = (2000 x 47.17%) / 93.86% = $1005,114.
- Bookmaker B stake = (2000 x 28.17%) / 93.86% = $600,255
- Bookmaker C stake = (1500 x 18.52%) / 93.86% = $394,63
Your overall arbitrage profit, regardless of the outcome, is displayed below:
|Outcome||Bookmaker A||Bookmaker B||Bookmaker C||Profit/loss|
|Man United win||+$1125,72||-$600,255||-$394,63||+$130,83|
So for this example, if you placed a $2000 stake across the different bookmakers as suggested, you would guarantee a profit of around $130.
Arbing Is Legal But Risky
Although arb betting is not illegal, you will not be prosecuted for doing so. However, the bookies will not take kindly to arb bet players.
All players who regularly win arb bets through fixed-odds wagers and sports exchange betting will have their gambling activities monitored by the bookie. Therefore, if the bookie discovers you, you will undoubtedly receive consequences, leading to the accompanying risks.
What are those risks?
First, the bettor will have an account restriction at that bookie, such as a limited maximum bet amount or even not placing a bet. Even worse, you may end up on the bookies' blacklist, and you will never be able to participate in some bookmakers again.
Bookies and their traders are adept at shutting down value, especially when reacting to market support for specific outcomes.
To avoid being discovered and exposed that you are an arber, you can apply some of the following tips:
- Place your back arbing wagers in betting shops
- Limit big money bets
- Use multiple betting accounts
- Lose some of the profits you've made through arbitrage betting.
Final Thoughts On Arbitrage Betting
In general, Arbing is a win-win bet for all bettors in case the dealer hasn't discovered you yet.
The most effective way for successful arbitrage betting is to locate margins between the backing and lay the same outcome in a match. This is perfectly legal, but the bookies won't like this.
Hopefully, this article will help you understand how to play arbitrage and how to avoid being discovered by the bookie. Also, don't forget to visit our website for more helpful betting tips and information!