Arbitrage Betting : Back only arbitrage bets.

Arbitrage betting is theoretically a 'risk-free' betting system in which every outcome of an event is bet upon so that we can create a 'no lose' bet. A known profit will be made by the bettor upon completion of the event, regardless of the outcome.

Arbitrage positions can be found when two different sources of odds (bookmakers or betting exchanges for example) become imbalanced and one set of odds are offered for a larger price than can be expected. This creates a 'backers book' where the different event outcomes can be backed for a total percentage of below 100% and so a 'no lose' position locked in..

To work out our arbitrage position is quite straightforward, we need to firstly convert our odds to decimal (if they are displayed as fractions) to do this we simply add the numerator (top figure) and the denominator (bottom figure) together then divide by the original denominator (bottom figure), so in the example of 6/4 odds

we add 6 +4 = 10 / 4 = 2.5

Our next stage is to turn the decimal odds to a percentage equivalent, to do this we simply divide 100 by our decimal odds so in our example of 2.5 odds (or 6/4 in fraction terms)

100 / 2.5 = 40%

We are now in a position to hunt for an arbitrage, so let's highlight our technique with a fictitious snooker match. We have Player A vs Player B now we open our bookmakers odds comparison site (oddschecker, bestbetting etc) odds and we see Player A is priced at 4/5 and player B is priced at evens with William Hills. So our first stage in seeking an arbitrage position is convert both odds to a % and when added together the total value must be BELOW 100% to create our guaranteed winning position

Player A odds 4/5 = 4+5 = 9 / 5 = 1.8

Player B odds 1/1 (or evens) = 1+1 = 2 / 1 = 2

Now we convert our odds to percentages

Player A = 100 / 1.8 = 55.56%

Player B = 100 / 2 = 50%

Now find the total 'book' price by adding the percentages together

55.56 + 50 = 105.56%

In this example we would not be able to create an arbitrage as we would lose 5.56% of our outlay. To create our guaranteed winning position the total book price must be LESS than 100%

However we notice that Ladbrokes have different prices on this same match, Player A is priced 4/6 and Player B is priced 6/4. When we convert both ladbrokes prices to our 'book price' we find ourselves again in an 'overound' position (this is the term when the total percentage is greater than 100% or is in the bookmakers favour) we have 67% +40% = 107%. So in this case we would lose 7% of our outlay at these odds.

If we look at combining the two different bookmakers best odds to create our own 'book price' we come up with a very different picture. If we take Player A's odds with William Hills 4/5(better than Ladbrokes price) and Player B's odds with Ladbrokes 6/4 (again the better bookmakers price) now let's do our calculation again.

Player A = 4+5=9/5=1.8....100/1.8 = 55.56%

Player B = 6+4=10/4=2.5..100/2.5 = 40.00%

So we now have a 'book price' of 95.56% or to put it another way we can make a No Risk Profit of 4.44%.

Now we work out how much we want to stake on this arbitrage. For the purpose of this example we will use a total stake of £220. So let's see how we work out our individual stakes. First thing to do is see the profit potential for our arbitrage so 220 * 4.44% = £9.77.

Our staking is worked as follows

Player A = 220(total stake)+9.77(profit) /1.8= £127.65

Player B = 220(total stake)+9.77(profit) / 2.5 (odds)=£91.91

So we have a total outlay of £127.65 + £91.91 = £219.56 if either player wins we return a total of

£127.65 x 1.8 = £229.77

£91.91 x 2.5 = £229.78

In this example we invested a total of £219.56 and we are guaranteed a return of £229.77 so our total profit on this risk free arbitrage is £10.21. When we use arbitrage betting in the real world we should look at it in terms of not betting but 'investing' as the return is known before the event finishes once both odds are locked in place.

Arbitrage positions occur many times and across many different markets, such as football betting, cricket betting, golf betting, horse racing, political betting and financial betting. Virtually any market were odds are priced up by two or more sources you can look extract an arbitrage investment from.

Hope you have found this explanation useful and informative, arbitrage is a very useful weapon to have in any betting armoury if you would like to learn more about arbitrage investing why not look at Value Horse Finder to create unique EW arbitrage positions on the UK Horse racing markets.

Until next time
Stay Lucky
Dave and Nessie.