In order to do any arbitrage trading, you need to understand what bet types are out there, what they mean and how they work. Without this understanding you won’t know whether you are covering all possible outcomes or not, nor will you know whether you are looking at all possible arbitrage scenarios. So here is a quick explanation of all of the most common bet types which you will need to understand in order to place some arbitrage bets for yourself.
A match between two teams or players can typically only have one of three outcomes – Team 1 wins, Team 2 wins or a draw occurs. Some sports don’t allow draws to occur, some sports only draw very rarely and some sports have draws frequently – bookmakers have a range of bets which deal with these possible outcomes.
Home – Draw – Away
The most straight forward match bettting market is the 1×2 market, or the Home-Draw-Away market. The bookmaker offers 3 different bets, one for each of the three possible outcomes – only one of the three bets can win. This market is also sometimes called a Three-way Bet.
Another Bet market within the Home-Draw-Away structure, is the Double Chance market. Double Chance bets give you the odds to cover 2 of the 3 Home-Draw-Away outcomes. ie odds to bet on Home AND Draw, or Draw AND Away, or Home AND Away.
Handicaps markets can be made on the Home-Draw-Away structure too. Some bookmakers offer Home-Draw-Away Handicaps, sometimes called ‘Match Handicap‘. These bet markets will give each side a handicap (one positive, one negative) and the draw wins if the score is even after the handicap point has been added to OR subtracted from the winning team. To clarify, you will usually have something like Home (-1), Draw (-1) and Away (+1). The handicap will only ever be applied to one team, either +1 to the underdog (‘Away’ in this example) OR -1 to the favourite . If you bet on the draw, then you can do either one, but not both. If, after the handicap, the score is even, then the handicapped draw bet will win. Just like normal 1×2 bets, only one of the three bets can possible win. Again, these bets can be called Three-way handicap bets.
Home – Away
Similar to 1×2, is the Draw-No-Bet (dnb) market. It works in basically the same way as the 1×2 – it is all about picking the game outcome – but it ignores the draw option, only worrying about which team will win; the home team or the away team. American sportsbook will often call this the Moneyline, refering to how much money you need to bet to win $100 from the favourite winning, which basically gives us the odds of that team winning. Meaning aside, the point here is that when you see the word ‘Moneyline’, you are looking at the odds for a team to win in a Draw-No-Bet market. You will also sometimes see dnb markets represented with a 1-2, copying the 1×2 denomination for a three-way bet, but replacing the x with a – for the Two-way bet.
Another market which gives the exact same results as a Draw-No-Bet market, is a zero point handicap – Usually represented with a (+0) sign, or a (pk). These bets are actually a handicap market, but because the handicap is zero points, you are actually just betting on the winner of the event – once again, ignoring the draw.
Speaking of handicaps, it is also of course possible to have a Two-way bet handicap. American books call these Pointspreads because you are betting on the spread between the two teams points – the favourite gives up the deginated number of points, or the underdog gains that number of points in the final settlement of the bets.
So what does it mean when a draw occurs with the dnb markets? While some sports simply cannot draw (because of over time and penalty shoot outs etc), there are plenty of sports which simply draw ‘rarely’, and bookmakers will often use dnb markets on these sports. When a draw does occur in these circumstances, bookmakers will either simply refund all bets in whole (this is called a push), or they will invoke the “Dead Heat Rule“, which is usually paid out as such: 50% of your bet loses, and 50% of your bet wins – meaning that you lose money if you bet on the favourite, and make money if you bet on the underdog. Bookmakers vary a bit on this point, so if you are betting on dnb markets with sports which might draw, it might be worth checking out the dead heat rule with the bookmakers you are looking at.
An Asian handicap bet is one where there is a non-whole integer handicap given so that a draw outcome is simply impossible. Half point Handicap (+/-0.5), Quarter Point Handicap (+/-0.25 OR +0,+0.5 ) and Three Quarter Point handicaps (+/-0.75 OR +0,+0.5) can commonly be found in all forms of handicapping now, and so are often just referred to as Handicapping in a lot of bookmakers.
By using a half point handicap you can complately remove all chance of a push or dead heat result. For arbitrage purposes, this can be very useful. The quarter point and three quarter point handicaps are a little more complicated though – in effect a quarter point bet is two bets; 50% of your bet is on the whole point handicap, and 50% of the bet is on the half point handicap. This means there is a chance of ending up with half of your bet being a push, and the other half winning/losing.
Read more on Wikipedia about Asian Handicapping if you wish.
Most bookmakers will offer odds on the Over-Under market of sports. These are usually two way bets which use a half point to rule out any chance of a push. Rarely whole point over-unders are offered which may result in a push. The over-under market deals with what the total score of the game will be – a score is set, and you bet whether the final score will be higher or lower than that set score. In Soccer, for example, the over-under line is often about 2.5 goals, so betting ‘Over’ will win if 3 goals or more are scored, no matter which team(s) scored them. This bet market may often be seen under Total Goals #, while you may also find Total Goals applied to another bet market which offers multiple point spans (ie: 0-2, 3-5, 6 or more, for example).
Other Point Based Bets
Correct score market is for bets on the specific final score of the game. Odd/Even market is for bets on whether the final total score (sum of both teams) will be an even number or an odd number. Most other point based bets, first goal scorer etc are pretty self explanatory.
Bet Equivalences and Market Overlap
A couple of bet equivalences are worth noting along with a few more obvious market overlaps.
For a start, a Double Chance bet which covers one team with the draw is equivalent to a +0.5 asian handicap on that same team. A -0.5 handicap is exactly the same as a 1×2 bet on the same team. No team to score first is obviously equivalent to a correct score of 0-0.
As such, it is easy to see that a +0.5 handicap can be used with a three way 1×2 bet to create a simple two way bet (since the 1 or the 2 in a 1×2 are equivalent to the -0.5 handicap) arb. Similarly, a Double chance bet can be easily used with a -0.5 handicap, or with a draw bet to create an arb.
Examples of Possible Arbs and Failed Arbs
For the purposes of these examples I am going to invent two arbitrage terms – Good Coverage, and Bad Coverage. Good Coverage means that the bets that you are going to place do indeed cover all possible outcomes – they are a REAL Arb. Bad Coverage means that there is a possible outcome which will result in a loss. The bets do NOT cover all possible outcomes adequately.
- TeamA (+0.5)‚ AND bet on TeamB in a 1×2 market is Good Coverage.
- TeamA (+0.75) AND TeamB (-0.75) is Good Coverage.
- TeamA (in a dnb, 1-2, +0 handicap market) AND Draw‚ AND TeamB (in a 1×2, Home-Draw-Away market) is Good Coverage.
- TeamA (+0.5)‚ AND TeamB (-0) is Good Coverage and a Side (chance of the losing bet being returned rather than lost)
- TeamA (+1.5) and TeamB(-0.5) is Good Coverafe and a Middle (chance of both bets winning)
- TeamA (+0.5) AND TeamB (-0.75) is Bad Coverage. If the negative handicap is ever larger than the positive handicap, the coverage is always bad.
- TeamA (1×2 market) AND TeamB (-0.5) is Bad Coverage. The draw has not been covered and both bets will lose on a draw outcome.
- TeamA (+1) in a three-way handicap market AND Team B (-1) in a two-way handicap market is bad coverage. If team B wins by 1 goal, one bet will lose and one bet will be refunded, resulting in an overall loss.
This article is not meant to be comprehensive of all betting markets, but hopefully the information contained here has helped you to get your head around the basics, and understand what is going on in the bookmakers where you are meant to be finding arbs. For more information on betting types, terms and jargon, try these articles: