Introduction to Arbitrage Betting

August 11, 2011

People are often very concerned about what to do once they run out of all free bets and can no longer do matched betting. One solution to this problem is doing matched betting again, this time using someone else’s identity. Arbitrage betting is another popular alternative. While finding arbitrage bets can be a little harder than simply collecting all free bets, it also has a higher long-term profit potential.

There are two main types of arbitrage betting. Let’s start with the traditional one.

Traditional Arbitrage Betting

The traditional way of doing arbitrage involves betting in at least two (and possibly more) bookmakers. The idea is that by finding differences in odds among different bookmakers it is possible to back every single outcome of the event so that the player makes a profit regardless of how the event ends.

Let’s consider an example. If there was a football match and by carefully finding the best odds among different bookmakers we could back both teams at 3.5, as well as back the draw at 4.3, we would end up with a guaranteed profit. By placing £10 on both teams and by placing another £8 on the draw, we would win £7 if any of the teams won. In case of a draw, we would make £6.4.

Sounds good, right? But there are a quite a few problems you must consider.

First, the above example represents an excellent arbitrage opportunity. Odds like that are almost impossible to find and typically do not last long. Second, this situation requires that the player has opened accounts with all three bookmakers and has some money in them. However, having funds in multiple accounts requires a huge betting bank. Finally, calculating stakes for traditional arbitrage can be quite confusing, especially considering the time constraints.

Luckily, there is a better alternative.

Arbitrage with a Betting Exchange

Instead of using multiple bookmakers, it is also possible to do arbitrage between a bookmaker and a betting exchange. It is just like placing a qualifying bet, except that instead of the typical small loss you make a small profit by backing higher than you lay.

There are several advantages to this approach. First, you do not have to use multiple bookmakers. It is enough to just use one good bookmaker (or several if you really want to find the best deal) and your favorite betting exchange. Second, you will never have to place more than two bets – forget about the confusing three-bet example you read earlier. And finally, it is a lot easier to calculate the back and lay stakes – just use matched betting calculator as if you were placing a qualifying bet!

The best arbitrage bets will typically appear in UK horse racing markets in the last ten or even five minutes before the race. Note that these markets are extremely volatile and can have rapid shifts in odds. Be prepared and do not attempt to do this if you are new to Betfair.

Before you proceed with doing this type of arbitrage, do not forget about the commission on Betfair (typically 5%). It means that even if you are able to back higher than you lay, you may still end up losing money. For this reason it is essential that you consult our calculator which takes into account exchange commission (and lets you change it, too).

Another thing to consider is that good arbitrage opportunities never last long. For this reason you must place the two bets almost instantaneously. Just as with matched betting, start by placing the back bet and only then do the laying. This can save you from rapid changes in bookmaker’s odds (exchange odds tend to be a little more predictable and they move in smaller steps).

Finally, I advise you to stay away from arbitrage if it sounds too good to be true. If you are using our calculator (and you should be!) it displays a return percentage. Do not expect it to be too high. Your typical arbitrage bets will be around 105% or even less (anything above 100% is profitable).

If the return percentage is 110% or even more, something must be wrong. You are either looking at the wrong markets (this happens way too often…) or the bookmaker has made a palpable error in the odds. To keep a long story short, bookies have the right to void bets that are a result of a palpable error – this is why you have to stay away when the opportunity looks too good to be true.

To conclude, arbitrage betting is a viable method of making money after you are done with all the free bet offers. The preferable way to do it involves using a bookmaker and a betting exchange (not multiple bookmakers). While it is possible to make a healthy profit from arbitrage betting, it requires a lot of skill, patience and discipline. Arbitrage is harder than matched betting and requires a larger betting bank, but it enables you to make money even after you are done with all free bets.

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