ARB214: What to do when things go wrong
We’re all human and we all make mistakes. It is possible in your arbitrage experience (more likely at the beginning) that you will make a mistake, and in sports arbitrage a small mistake that is left unattended can have large consequences to your bankroll.
That is why good arbers triple-check everything at every stage of betting, and know what to do when things go wrong.
Below we discuss three stages of betting and what to do if things go wrong during each.
Stage 1: Before confirming any bets
If you are performing all the triple-checks then you might discover before you confirm the first bet that there is an error somewhere. In addition, odds can move against you at any stage leading up to confirmation of your bets.
At this stage you haven’t confirmed any bets so if you find an error or are otherwise uncomfortable about executing the arb then simply walk away. Be safe, not sorry.
Stage 2: After confirming your first bet
Once you confirm your first bet then you are committed to the arb, there is no walking away. If any of the following complications arise after have confirmed your first bet then you need to a) understand the consequences of the situation, and b) decide on a plan of attack for dealing with the issue. Complications can arise from:
- odds moving against you before confirming the remaining bets;
- your discovery of a mistake in your bets;
- your realisation that the bookmakers have mismatched rules;
- a palpable error being called on one of your bets; or
- any other issue that causes you to have an open position.
An open position (i.e. a bet with one bookmaker that has not been completely matched off with an equal and opposite bet(s) from another bookmaker) is no different to putting a single wager on a team to win – it is gambling.
The good news is that if you discover the complication before the match ends then you have until that time to deal with any open positions. There are two ways to deal with open positions:
- Leave it open – although this is against the principle of sports arbitrage, it is one possible path to take when dealing with open positions. An arber might take this path if a) the open bet is on the favourite to win and the arber is comfortable with the gamble; or b) they have investigated the option of closing the position and have found that the guaranteed loss from closing the position is of similar size to the potential loss from leaving the bet open.
- Close the position – this is the preferred path to take if possible. Closing the position will not put significant funds at risk, and in some cases still results in a profit, albeit smaller than expected. Closing the position involves first understanding what went wrong, on which team the open position exists, and the magnitude of the open position. Once this is determined then it is simply a matter of using the arb calculator to find the next best odds available with another bookmaker and place an appropriately –sized bet with that bookmaker.
Stage 3: After the end of the match
Sometimes you inadvertently overlook errors in your checks and find out after the match has finished and bets have been settled that the actual profit/loss on the arb is different to what you expected. Depending on your luck, the difference might be favourable or not.
At this stage there is nothing you can do about the mistake other than take it on the chin. You need to find out how and understand why you went wrong so that you don’t make the same mistake in the future. It’s a hard lesson to learn.
As mentioned above, we’re all human, we all make mistakes, and it is possible in your arbitrage experience that you will make a mistake. We have provided the steps to take if things go wrong, but as the saying goes “prevention is better than cure” meaning you should take all necessary precautions and perform the necessary triple-checks in order to eliminate mistakes from your arbing.
Should something go wrong that is outside of your control (for example odds moving in the 5 seconds between confirming two bets) then you can take appropriate action and likely still make a small profit – at worst you will walk away with a small (less than 3% loss) which is quickly made back on the next arb you execute.