What is arbitrage betting?

What is arbitrage betting?

Learn the basics of an arbitrage betting strategy

By Michael Gales Apr 9, 2013

This article explains what arbitrage betting is - a system for exploiting differentials in odds for a specific market at two or more bookmakers. It guarantees the bettor a profit, as the combined odds produce a negative margin -€“ a margin in the bettor's favour. Learn the basics of an arbitrage betting strategy.

A Pinnacle Sports account is essential for any would-be Arber due to its reputation for providing the best odds with low margins and high betting limits.

Arb situations commonly occur because bookmakers differ in opinion on a particular market. This increasingly happens with more obscure events, where the variation in margins offered across a range of bookmakers is greater.

Pinnacle Sports are widely regarded to offer the best odds online; for example, we offer margins as low as 1.5% for soccer and baseball and apply a low margin policy to all markets posted.

Therefore any serious Arber will have a Pinnacle Sports account, and any of the widely available arbitrage software/engines often highlight Pinnacle Sports on one side of an arbitrage.

Watch our video about the basics of arbitrage betting and why Pinnacle Sports are happy to accept it.

Example of an arbitrage bet

To explain Arbitrage betting we will use a simple example. Take the odds on a tennis match between Player A and Player B offered by two hypothetical bookmakers as illustrated in the table below.

Arbitrage Betting Example

Player 1Player 2Market %
Odds Bookmaker A 1.300 3.930 102.4%
Odds Bookmaker B 1.420 2.900 104.9%
Arbitrage (Combining Player 1/BA & Player 2/BB) 1.420 3.930 95.9% (4.1% profit margin)

The market percentage is indicated for each bookmaker i.e. the edge in their favour. By cross-matching the odds from Outcome 1 at Bookmaker A with Outcome 2 at Bookmaker B, the market percentage turns in the bettors’ favour providing a guaranteed return of 4.1% (100-95.9=4.1).

This principal can apply to any betting market, beyond just two selections, including spread betting, while it has wide application in live betting where Arbitrage opportunities are constantly available by Backing and Laying in a constantly shifting market. You can also arb free bonuses to lock in a guaranteed profit, but the conditions that apply are restrictive.

Potential pitfalls of arbitrage betting

As with any type of betting there are pitfalls, and arbitrage betting is no different.

Stake limitation & account closure

Limits vary at different bookmakers, which may hinder your ability to properly exploit an arb, so it is important to know that Pinnacle Sports offer the highest limits online.

Some bookmakers also close accounts of consistently winning players. This does not happen at Pinnacle Sports; we welcome winners as they help us tighten our odds.

Bet cancellation

Bookmakers can cancel bets where mistakes have been made, which would leave you exposed on the other side(s). This can easily wipe out your profits accrued over a long period.

Complexity

To fully exploit arbs, the player must have a huge number of funded bookmaker accounts, as well as the time to take full advantage. This involves significant organisation and effort. Many practice arbitrage betting for a living (aping financial arbitrage) in which time invested must also be measured as a cost.

Illusive

Bookmakers are constantly changing their odds and assessing risk, with arb opportunities lasting seconds rather than minutes. This makes time of the essence, and when humans are time-pressured errors inevitably occur. Arb software systems can help in this regard, but their cost will eat into your profit margin.

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