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The obvious/palpable error clause is present in every bookmaker you will find online, and it is the bane of all arbitrage traders. It basically states that if the bookmaker makes an obvious error in setting or accepting a bet, then it has the right to void that bet at any time. Any bet which is voided (or likely to be voided) under this rule is commonly called a ‘Palp’. Most bookmakers are honourable enough to only void palps before the event starts, but some bookmakers will cancel bets mid-match, while some of the dodgier ones will actually cancel bets after the match is completed (another good reason to avoid dodgy sportsbooks).
If only all palps could be immediately, blatantly obvious.
The consequences of placing a bet on a palp are twofold...
Firstly, if the bet is voided you will be left with an open bet; you will need to search for a new set of odds to cover the voided bet in order to maintain the arb. You will either be able to cover the voided bet with significantly lower value odds (locking in a small guaranteed loss), or you will be unable to find odds to cover the voided bet and be left with an open bet (leaving to chance a large loss or large win).
The second major consequence of placing a palp, is that it identifies you to the bookmaker as a potential 'sharp' or arbitrage trader. You are in effect openly admitting to them that you are going to use them for their weak lines (odds higher than they probably should be), and take full advantage of any weakness they show – without mercy. Most bookmakers will respond to this by limiting your account to relatively small bet volumes to help protect themselves against the losses they will face at your hands. Losing key bookmakers to tiny bet limits can be particularly frustrating.
So with good reason to try to avoid placing palps, the trick is in spotting them. Exactly what constitutes 'obvious' is always left undefined by bookmakers, and when the clause is enacted usual varies a lot from bookmaker to bookmaker. The best we can do as arbers is follow a few guideline rules until experience kicks in and makes it much easier to just recognise when a bet is a palp rather than great value.
Some of the guidelines below will only apply to two way arbs (two team no draw bets, asian handicaps, over/under, etc). This should be quite obvious in each example as only the ‘two’ odds will be referred to. Obviously the two way specific guidelines are no good for when dealing with 3-way arbs.
The first step is to simply look at the marketplace – compare the odds of your arb with all of the other odds available at other bookmakers. Most decent alert services will allow you to view all odds for the bet you are looking at with a simple click, but if they don’t you can use other free odds comparison services for this function. You are probably looking at a palp if one of your sets of odds is clearly out of line with all of the other bookmakers, while everyone else has a general agreement about the odds. If there is a wide range of odds and your odds are just the best of that range, then that is probably a good arb.
Exactly what makes your odds 'clearly out of line' is not easy to define and is something which you will come to know with experience (it will probably help to look at the marketplace for every arb you place, so you can regularly see what a good arb looks like in comparison to all of the other bookmakers). It is impossible to give a definite value difference because of how odds work – the difference from 1.10 to 1.20 is actually very large, while the difference from 10.00 to 12.00 is really quite small. So the value differences of 0.1 vs 2.0 are misleading. Percentage difference is more useful, but still not completely reliable for the same reason; comparing odds of 2.00 to odds of 4.00 is a 100% difference, but so are odds of 250.00 vs 500.00. In the first case, if the market agrees the odds are around 2.00, then the lone book with odds of 4.00 is without doubt a palp. In the second case, if the market agrees the odds are around 250.00 then the single book with odds of 500.00 is probably fine.
Another strong indicator of error is finding an arb where the odds seem to disagree as to whether the game in question is going to be a close game (odds near 2.0), or a game with a clear favourite and underdog (one team well below 2.0, and one team well above 2.0). For the purpose of providing a rough guideline, anything between 1.85 and 2.25 indicates a close game, while anything outside that range indicates a clear favourite and underdog. Arbs should always be between odds that indicate a clear underdog vs a clear favourite, or they should be between odds of two close teams.
If you find an arb where one bookmaker offers odds of 2.5 for one team, it means they think that this team is a clear underdog. If the other side of the arb is 1.9, that means this bookmaker thinks their team has about a 50-50 chance to win (not a clear favourite or underdog). In order for these odds to be real, it would mean the bookmakers don’t just disagree on the correct odds for the game, it means they completely disagree on everything about the game. In this age, such a thing really doesn’t happen.
The only possible explanation for this example which doesn’t involve an obvious error in odds setting is that there has been a major swing (MVP of favourite team injured, for example) and one of the books moved their odds faster than the other one (this is what arber dreams are made of btw).The point of this guideline, is to simply give you another indication that something might be wrong, and to go looking for the cause of this discrepancy. The section below describes a number of the common errors to look for.
In a way, all palps should come down to this – that is what the ‘obvious error’ is ideally referring to; someone accidentally typed a 2.5 instead of a 1.5 and the typo should be obvious to anyone looking. Unfortunately, not all typos are quite that obvious. If the bookmaker meant to set their odds at a relatively low 2.70 compared to the market average of 3.0 with a high of 3.35, but accidently typed in 3.70 instead, you could easily think that this book was simply the best option available and miss the obvious error.
So a constant thought when checking out an arb is to quickly run through a range of likely typos and transposed digits. Look at the general marketplace, and work through some of these examples of common errors, and ask whether the odds would look more reasonable in each instance:
Simple Number Substitution
Like the example above, simply typing one number when a different was meant. So if the odd is 3.6, compare it to the marketplace and see whether 2.6 is more in line with the norm. It probably isn’t worth doing that same exercise with any numbers after the decimal point though, because you will be left second guessing every arb if you do that.
This one is usually pretty obvious because both odds in your arb will be above 2.00, which should never happen in 2-way bets except for when the game is really close, and both sets of odds are right around 2.
Nearly always the underdog will be given a positive handicap (+1.5 goals for example) in an effort to even the odds (bring them close to 2.00). So if you see a + handicap on the favourite (and the odds are still around 1.9-2.0), the bookmaker has probably accidentallyswapped the – for a +.
Swapped + / – Sign in US Odds
US Bookmakers will usually set their odds in the US format (+110, -110), so it is possible for a favourite with its negative indication on the odds to be accidentally entered with a plus, so what should be entered as -230 (1.43) might be accidently entered as +230 (3.30). So even if you are not working with US odds, remember that the bookmaker might have made an error in setting the odds in US mode, which will then be automatically converted to whatever odds you like to work in.
There are more errors than these four, but these are the major ones and give you a solid basis to figure out other ones. You will probably spot more as you look around at odds provided by your alert service.
As an educational exercise, go out of your way to inspect the obvious palps your alert service sends you. During a quiet period look for any 20%-80% arbs which have been reported by your service recently and take the time to look at the marketplace and the bookmakers themselves and see if you can spot exactly what is wrong – figure out what error has been made. You never know, you might find a real 20% arb which you otherwise would have let slide on the assumption it was going to be a palp ;).
Eventually spotting palps becomes second nature. Until then, these guidelines will help you spot them. Follow the advice above to regularly look at the general marketplace of any arbs you place as well as any particularly large percentage arbs which you would normally assume to be a palp without actually looking. If you keep exposing yourself to good arbs in comparison to the marketplace, and palps in comparison to the marketplace, you will start to get a feel for it pretty quickly.
Good luck, and may every voided bet you get stuck with leave you with a winning bet, rather then a losing one!