Lessons

Introduction to sports arbitrage

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ARB102: What is sports arbitrage?

Sports arbitrage has existed since the beginnings of bookmaking, but has risen to prominence more recently due to the ease at which bets can be placed through online bookmakers.

Sports arbitrage is the act of placing bets on all possible outcomes of a sporting event so that you guarantee a profit no matter the outcome of that event.

Usually, placing bets on all possible outcomes of a sporting event with the same bookmaker, results in you making a loss of a few percent – this is the bookmaker’s margin. However, if you take the best competing odds from different bookmakers, it is possible to generate a guaranteed profit.

A simple tennis example helps explain this. Let’s assume the following scenario:

  • Australian Open final: Murray versus Djokovic
  • Bet365 offers 2.15 for Murray to win
  • William Hill offers 2.05 for Djokovic to win

This scenario creates an arb, because it is possible to place two wagers such that your net profit is positive regardless of the outcome. If this example was real then you could:

  1. bet $100 on Murray at Bet365; and
  2. bet $100 on Djokovic at William Hill

…with the results as follows:

Match result Bet365

wager

William Hill

wager

Overall

profit

If Murray wins –> Win

+$115

Loss

-$100

+$15
If Djokovic wins –> Loss

-$100

Win

+$105

+$5

 

Taking this a step further, you can adjust the two amounts wagered so as to balance the overall profit, regardless of the outcome of the match. For example an arber would:

  1. bet $100 on Murray at Bet365; and
  2. bet $105 on Djokovic at William Hill

…with the results as follows:

Match result Bet365

wager

William Hill

wager

Overall

profit

If Murray wins –> Win

+$115

Loss

-$105

+$10
If Djokovic wins –> Loss

-$100

Win

+$110

+$10

 

As you can see, when stakes are properly calculated before wagering, a fixed overall profit can be guaranteed for a match, regardless of who wins. This is sports arbitrage.

The good news is that you don’t need to do any of the calculations yourself because all alert services do the grunt work for you – they tell you what bets to place and how much on each side.

Here are more sports arbitrage examples.