Advantage Gambling for Poker Players

  -   January 21st, 2012   
Posted in: Articles, Industry News, Offline Poker News, Players

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How to Place Arbitrage Bets

The word “arbitrage” is most often used in investing situations to refer to a profit made from mis-pricing or the difference between two quotes. Arbitrage betting is placing two or more bets simultaneously at different sportsbooks when the bookmakers’ prices are different enough that all outcomes are covered. In other words, no matter the outcome, the bettor turns a profit. In gambling parlance, an arbitrage bet is usually just called an “arb.” Poker players who want to increase their online gaming winnings should learn about arb bets.

How Arbitrage Happens

Here’s an example of an arbitrage bet.

Ladbrokes offers – 2.20 for Team A and 1.72 for Team B

Intertops offers – 2.39 for Team A and 1.91 for Team B

If you back both players the right way, you’ll have a small guaranteed profit. Wager on Team A with Ladbrokes and Team B with Intertops. If you want to wager $1,000 total, then bet $363.72 on Team A at Ladbrokes and $535.28 on Team B at Intertops.

Here’s what will happen–if Team B wins, you’ll collect $487.10 from Intertops and lose $464.72 from Ladbrokes. That’s a profit of $22.38, a guaranteed 2.23% return.

If Team A wins, you’ll collect $557.66 from Ladbrokes and lose $535.28 from Intertops. Your profit will be $22.38, or a guaranteed 2.23% return.

Bookmakers go out of their way to avoid an arbitrage betting situation, but it is practically impossible. Having said that, arbitrage is uncommon. Bookmakers know about it, they try to avoid it, but ultimately arbitrage is inevitable.

Is Arbitrage Frowned Upon?

Sports bettors who rely on arbitrage even have a special name: arbitrageurs. They place legal bets, and bookmakers don’t even mind dealing with them because over the long haul the sportsbook still holds an edge.

Bookmakers depend on diversifying their books to turn a profit. It is a myth that bookmakers can’t sleep at night for worrying about keeping their books balanced. Bookmakers diversify their odds on different games to maintain an edge over the long haul.

Can a bookmaker turn down bets from a suspected arbitrageur? Of course—they have the right to refuse service to anyone, like any other business. That’s why most arbitrageurs go out of their way to hide the fact that they’re betting arbs.

How to Find Arbitrage Bets

The first step in placing an arb bet is to do business with at least two bookmakers. Look for differences in price, the higher the better. With Internet bookmakers now a big part of the sports betting scene, arb opportunities are more common than ever.

Arbitrage betting happens because so many different sportsbooks exist, each with their own niche and familiarity with teams and sporting events in their region. The reason sportsbooks offer odds for events they’re less familiar with is to attract business. This is why arbitrage happens—bookmakers offer bets they’re not comfortable handicapping to bring in as much cash as they can.

Imagine you’re a bookmaker in Vegas and you want to offer English football games. There are more English football fans in America than you may think, and many visitors to Vegas are more familiar with the ins and outs of the various English football leagues than bookmakers, especially at lower levels of competition. A bookmaker in London who knows way more about teams in D2 English leagues will almost certainly offer different odds than his Vegas counterpart. The difference between these odds allows for arbitrage betting.

Arbitrage Opportunities

Bookmakers are careful not to leave the door open for arb bets, so these chances are rare. Bookmakers look at the opinions of other bookmakers around the world and try to set their own odds as close as possible.

The sheer number of sporting events around the world, and the ease of access with which people all over the world can watch and bet on sports in other countries, makes arbitrage bets slightly more common today than in the past.

True arbitrage betting requires odds that are different enough to offer at least 5% return. In theory, arbitrage betting when returns of 5% or more exist will lead to guaranteed profit.

Why Arbitrage Is Not a Sure Thing

Remember that arbitrage betting is still gambling, and every form of gambling carries risk.

The number one enemy of arbitrage betting is wager limiting. Even with a 1% return, a large enough wager can return a good amount of cash. Bookmakers know that, so they may implement limits on the maximum wager. Arbitrage bettors that rush into a sportsbook and try to smack $5,000 down on some obscure Pakistani cricket match may as well wear a T-shirt that says “I am an arbitrageur.” That kind of action will lead directly to a bookmaker placing a strict wager limitation.

Another problem with arbs is the overhead cost of withdrawals, deposits, and exchanging currency. If you’re using an internationally-based Internet sportsbook, you’re going to pay as much as 5% in fees. Since arbitrageurs profit margins are thin, a 5% charge will all but wipe out most arb returns.

A final word of caution about arbitrage betting—if a sporting event is postponed, you could be at risk of laying heavy bets on only one side of the bet when one sportsbook lets the bet stand and another cancels the bet. Remember that arbitragebetting requires both sportsbooks to pay out.

There are plenty of barriers to arbitrage betting. To make any money doing it, you have to have plenty of starting capital, lots of free time (so no day job), a decent brain for gambling, and the energy to gamble on games you don’t care about over and over for days.

Think of it like this, arbitrage betting is risk-free in some cases, but it is never effort-free. I stole that line from an old-time arb bettor who recommends against arbitrage betting if you want to have a family or a social life. Also, good arb betting takes time to learn, so you may end up losing a lot of money when you’re first learning to place arbitrage bets.

Finding Arbitrage Bets

To find good arb bets, you have to check bookmakers early and often. That means being on your computer at weird times and for long hours. There are sports betting forums that help people find arb opportunities, and there are all sorts of comparison tools for sports bettors that dig through tons of data and find arbitrage bets for you.

Be careful when first learning about arbitrage betting. The myth that there’s no risk to arbitrage betting is simply not true, especially if you don’t have a good relationship with bookmakers.

Tags: Arbitrage Opportunities, D2 English, Finding Arbitrage Bets, Place Arbitrage Bets

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