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As usual, with any 'Risk Free Offer' being advertised on the net (and Sports Arbitrage is most certainly being advertised a lot on the net!) there are risks involved...
Conceptually, an arbitrage is an exchange where your profit is known beforehand, the transaction is carried out, and you are guaranteed a payout from one bookmaker or the other which will total more than the outlay.
However there are always additional 'behind-the-scenes' variables at play which constitute threats to the legitimacy (and subsequent profitability) of your arb.
Luckily, most of if not all of the larger risks can be avoided in the process of arbing by having a good and understanding of them. Through this understanding, it's easy to develop disciplines and techniques to eliminate these threats thus making sure all of your arbs remain risk mitigated and your profits positive.
In this article we'll discuss the biggest threats to be aware of as an arber and provide some invaluable tips for dealing with them.
1. Differing Bookmaker Rules
Each and every bookmaker is sourced from different parts of the world, all by different people and often catering for somewhat different markets.
As such, these sites can be vastly different from each other and different bookmakers will sometimes have different rules for how to handle the outcomes for a game.
Some examples of conditions in which the outcomes from the booking perspective will change are:
Consider an example case where two separate bookmakers will offer bets on the result of a sports match. The odds presented seem to provide an excellent return in an arbitrage trade, however: one of these bookmakers states clearly that in the event of a draw that all bets will be made 'void' meaning that your stake will simply be returned to you. The other, however, says that it will regard the winner of the match to be whichever team had the greatest amount of points after overtime.
These slight variances in rules can be catastrophic to the validity of your arb when say, in the event of a draw, one side of your arb is refunded while the other remains a completely stark, free-standing, open bet. Having one side of your bet voided, put simply, destroys the arb.
You then have a 50/50 chance of winning and losing, so it isn't all bad - however - as a professional arber your goal should be to constantly seek to remove any risk factor. A standing bet poses a legitimate risk of losing whereas a legitimate and correctly executed arb will not.
The solution to this is to learn what rules each bookmaker uses with any sport you are going to bet on. When you have an arb between two bookmakers, make sure both bookmakers use the same rules and there will be no potential loss.
Manually, this involves checking the rules of each bookmaker to ensure that both sides of your arb are covered under the same rules. The hugest majority of bookmakers are inter-compatible. Only bet like with like.
Over time you will become quite familiar with the rules of your favourite bookmakers and probably This is probably the easiest problem to overcome but is definitely a problem somebody who only understands the mathematical principles of arbing would encounter.
Happily, most alert service software you will use can easily show you grouped, rules compatible bookmakers, or better yet you can find bookmaker sports rules and a variety of other terms and conditions in standardised, easy to understand listings at SureBetBookies. I would recommend that each time you go through your calculations on an arb you should make it part of your process to double-check the bookmakers in SureBetBookies to ensure each of the bookmakers rules are compatible at least until you are familiar.
2. Palpable Bookmaker Errors
All bookmakers have a clause in their terms and conditions which basically states that if they make an 'obvious error' in their odds, they can cancel the bet at any time. This risk manifests itself particularly in arbitrage bets because we are specifically looking for odds which are higher than usual. If one of the odds we have used in an arbitrage trade was in fact a mistake made by the bookmaker and they decide to invoke this rule, we are obviously left with the second bet standing uncovered. This creates a risk as that remaining bet may lose.
Ultimately the call of ‘palpable or human error’ is up to the bookmaker, and there is nothing gamblers, or arbers, can do to change that. However, we can follow a few simple rules for identifying odds which might be errors. Any arb which is 5% or over should arouse an instant suspicion and cause you to look very closely at the odds involved.
The most common form of error is reversed odds, where the odds or handicapping of the favourite and underdog have been swapped. Check for this. Are the odds for either of the bookmakers more than 25% higher than odds offered by other books on the same event? It is likely an error if they are.
Additionally, do the two books agree on whether the favourite is obvious or not?
An obvious favourite/underdog is indicated by odds under 1.85 and over 2.25 respectively. If one book offers odds of 1.90 and the other odds of 2.50, then one book is saying that the game is close (1.90), while the other is saying that the outcome is obvious (2.50 will ‘clearly’ lose).
Only trust arbs where both sets of odds are within the 1.85 and 2.25 range, or both odds are outside of the 1.85 and 2.25 range.
That being said, be wary of odds that are identical… 2.20 vs 2.20. It is likely that one bookmaker in that instance has reversed their odds. That is, they have most likely accidentally given the home team the away teams odds and vice versa.
If you place one bet and then take too long to place the second bet, you may be too late to get the correct odds, or you might miss the second bet completely. Missing the second bet leaves you open to potentially losing that bet, but of course, it also leaves you open to potentially winning. Gambling is not the objective of sports betting arbitrage though, so this is a risk.
4. Placing the Wrong Bet
Small accidents can cost a lot of money. Thanks to threat number 3, Dawdling, you are invariably in a rush when placing bets, and hence at a risk of making a stupid mistake. For example, if you are betting on an over/under and at one bookmaker both over and under have the same odds it is not uncommon to accidentally back the wrong option and end up with two bets on the same outcome! Rushing and making mistakes is a potential risk.
Inexperience is probably the biggest risk of all because it manifests itself in all of the above risks either in the creation of the problem, or in the inability to respond to the problem. Not understanding odds, not understanding bet types, not understanding how bookmakers work and not knowing how to react to an unexpected situation means you may lose money. Losing money is precisely what is to be avoided, so inexperience is indeed a risk factor.
The SolutionThese three are grouped together as they are all part in part the same solution to each problem.
It's important to understand that in order to move fast, you have to take it slow in the beginning and learn how to do it properly.
In the beginning, you need to start 'trading' without actually betting real money. Find the arbs, go through the motions, pretend you are doing it but don’t actually bet anything. This is called ‘Paper trading’.
This allows you to learn how the bookmakers work without risking your money. It also builds experience (Threat #5). As you gain some experience you will navigate to the correct destination faster (Threat #3) and place the correct bet more reliably (Threat #4).
With the basics under control you will need to progress past paper trading to real money in order to understand how the bet confirmation process takes place, and so trading with very small amounts is a necessary second step.
Part of 'Take It Slow' should be carried all the way through your arbing career. In the opening months you should triple check everything.
If, after all of that checking everything is still in order, then you very quickly take one reliable bookmaker to the final confirmation page. Go to the second bookmaker and submit that bet. Wait the 2 second to make sure that bet has been accepted. As soon as it has been accepted submit the bet at the first bookmaker.
Okay, so Arbitrage may seem difficult in the beginning, and the truth is it does have a learning curve but any legitimate opportunity to work at home and make a good profit at the same will always involve real work.
Once you master the few basic principles and continually apply the above triple check steps, you will very quickly improve the rate at which you can place an arb.
Your mind will be triple checking everything as you go, and you will flow through the whole
process without needing to think about it. But in the beginning...
You have to take it slow!
The good news of this page is that every one of the risks listed above has a simple solution to minimise or completely remove the potential loss.
The great news is that over the long run, statistically speaking, if you only ever backed one side of every arb you will still come out at a profit. Since arbs specifically use odds which give a greater than 100% return on investment, either one or both bets have odds which are greater than the statistical chance of that outcome winning.
If you were to be totally indiscriminant in your betting (50-50 selection of favourite or underdog) then your long term return would average out at whatever your average arbitrage percentage was. Statistically, making a mistake on every arb is still winning. However, we don’t practice this because like all 'statistically correct' gambling systems, a long losing streak will wipe our bank balance out and we won’t be able to place the bets which are meant to win and bring us back to into profit.