Pilot Heidi Kennedy
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Greetings, fellow traveller. It’s important to know that before we set off on our journey across the vastness of cyberspace, you’ll be uncovering some strange and wonderful things. And there are few as unique as arbitrage betting.
However, space can often be difficult to comprehend and full of dangers. So, in this guide, I’m not only going to be helping you identify and understand the arbitrage strategy, but also to understand what potential pitfalls there can be. That way, you can travel through the betting galaxy and discover all the wonders it has to offer, without navigating into any black holes.
Before you blast into space, it’s a good idea to know a thing or two about your engine. That’s why, before I explain what arbitrage betting is, you should know a thing or two about odds.
When you land onto a betting site and check out your favourite markets, you’ll doubtless see a whole bunch of odds twinkling away like stars in the bookmaker’s sky. However, they may as well be written in an alien language if you don’t fundamentally understand that they represent probability. Every odd you come across – whether it’s in decimal, American or fractional form – are just different ways of stating an implied probability.
For instance, if you saw 4/1 next to a team on a To Win market, that would mean that the bookmaker thinks they have a 20% chance of winning that game. That is as fundamental as space boots to moonwalking because translating the odds to a percentage means they are no longer abstractions. Like a telescope on a blip in the sky, it’s no longer a UFO but a meteor hurtling towards Earth, or perhaps a lost kite, since my superior officers have demanded I stop frightening cadets with apocalyptic examples.
There are several reasons why it’s important to understand that odds are fundamentally expressions of a prediction in the form of a percentage. Part of that reason is your betting strategy. If you better understand a prediction, you can better determine whether you agree with it or not.
Finding areas of disagreement is vital to smarter betting. But also, something that few people outside this aircraft know, is that they can also be a way of understanding the quality of odds. You need to understand what odds are to decipher the quality of them, which is key to sports betting arbitrage strategies.
Now we know what odds are and have our betting engines up and running, it’s time to get down to the application. When people talk about the quality of odds, they usually mean how an individual market compares to another market. Which one gives you the greatest return and which are fair enough to shine like a constellation for all bettors? But what we’re talking about here is the value of all associated markets. If that sounds complicated, don’t worry: that’s why I’m the captain of this voyage.
The way it works is simple. Let’s look at To Win markets again. You have three possibilities: Team A wins, Team B wins or the end result is a draw. Let’s say the odds behind Team A is 29/10, the odds behind Team B is 5/6 and the draw is given 3/1 odds. That converts to 25.6%, 54.5% and 25%.
They should all come to 100% because one of those things must come true and 100% is certain. In your astronaut training, you probably heard about how you can’t give more than 100% – well, it’s kind of like that. But it doesn’t, it actually comes to 105.1% This is known as the over round.
It’s how a bookmaker makes money as consistently as the moon rising on unpredictable events. It doesn’t matter who wins to them because their profit margin is built into the odds. It’s also the advantage they have on the bettor, even if it’s just a small one.
The reason it was so important to understand the overround is because a sports betting arbitrage strategy is doing exactly what the bookmakers do with the overround. It’s building in your own advantage into the odds. Some consider it less a strategy and more a counter strategy. Just like how we push up against the limit of the atmosphere, arbitrage strategies push against the odds.
Before we continue though, I must warn you that my intention here is to give you all the information I can on the betting galaxies. It’s my duty as the captain of this crew to do so, as I do not believe in keeping the secrets of the universe to myself. This is as neutral as a Vulcan: I’m not trying to sway your betting behaviour in any way. There are dangers to this strategy, which I will get to in a moment.
Arbitrage betting is where you take odds from different bookmarks on all events to get a percentage less than 100%. So, let’s say another bookmaker disagrees with our previous odds. They give converted odds of 29%, 50.2% and 23%. Now, this is a really simple example to illustrate the point. Altogether, this comes to 102.2%, so the bookmaker has its overround.
However, if you placed a bet on Team A using the first bookmaker, and the same amount on the draw and Team B on the second bookmaker, you get an overall amount of 98.8%. That means you have a 1.2% profit margin across equal stakes. In other words, it works very similarly to how bookmakers make money using the overround.
Obviously, this is pretty complicated and the margins are slim, which means that an arbitrage calculator, such as a surebet calculator, is often needed. Regardless of the maths though, the concept behind the arbitrage strategy isn’t exactly rocket science. It’s a case of making the odds add up to less than 100%, and pocketing the margin.
So, you’ve used your arbitrage calculator and you’ve found a space for a profit margin. That’s actually the biggest challenge with this strategy because bookmakers are fully aware of this tactic and move quickly to remove any gaps that allow for a profit. However, it’s possible, and at that point we’re talking plain sailing, right?
Well, that wobble you felt on the bridge wasn’t just your imagination because there are other pitfalls for you to consider. Here are just some of the potential pitfalls you should take into consideration.
This is the simplest one. We’re all human, after all – except Blorg who runs the navigation controls – and we all make mistakes. Even with the surebet calculator, you could still type something in wrong. And because you have to move so quickly, it’s easier than you think to do. Because people often have to bet a lot to make money with slim margins, this also has the potential to lose you a lot of money.
The reason you need to act fast is because betting operators move quickly and adjust odds in order to prevent people from using this strategy. You could have worked everything out entirely correctly and then found that the odds have changed by the time you place your bet. This would turn your guaranteed margin into their guaranteed margin in a snap.
While there’s nothing illegal about this strategy – ultimately, all you’re doing is placing bets that are advertised by the bookmaker – it’s also something that is not tolerated. If you are suspected of using an arbitrage strategy, and they almost always have security measures and terms and conditions to prevent this, you can quickly find your stakes limited, bet cancelled and even your account discontinued.
Remember that the operator is under no obligation to keep allowing you to use that site, and can enforce restrictions as they see fit. Worse still, you could have one bookmaker cancel a bet while the other does not, leaving you out in cyberspace without your helmet on.
As you can already see from our previous pitfalls, losing money is very possible, even if you think you have identified a solid margin. Those margins are generally extremely small: the 1.2% example we gave would actually be a good find as the margins are often much smaller than even that. This means that people who make money from this do so by staking large amounts.
One of the biggest reasons that this tacit is not more commonly utilised is because of the stakes needed. Of course, the right thing to do, in this or in any other circumstance, is to never bet more than you can afford to lose.
I hope you enjoyed this entry into your training. The online betting galaxy is a place of hidden depths, full of ideas you’ve probably never considered before. Arbitrage betting is just one example of how different people approach betting. It’s a good idea though to think of it as part of a rich betting buffet, filled with interstellar delights for you to nibble at, from strategy to promotions, markets to mobile apps. Just keep those pitfalls in mind to help keep you on a clear and steady betting course.