Sports betters do you ever use arbitrage betting as in this example?

Arbitrage betting
From Wikipedia, the free encyclopedia

Betting arbitrage, miraclebets, surebets, sports arbitraging is a particular case of arbitrage arising on betting markets due to either bookmakers’ different opinions on event outcomes or plain errors. By placing one bet per each outcome with different betting companies, the bettor can make a profit. As long as different Bookmakers are used for arbitrage betting the Bookmakers do not have a problem with this. Each Bookmaker will still make profit due to their calculations.

In the bettors’ slang an arbitrage is often referred to as an arb; people who use arbitrage are called arbers. A typical arb is around 2%, often less, however 4%-5% are also normal and during some special events they might reach 20%.

Arbitrage Betting involves relatively large sums of money (stakes are bigger than in normal betting) while another variety, betting investment, means placing relatively small bets systematically on overvalued odds most of which will lose but some win thus making a profit.

The best way of generating profit, which has been established in Britain via sports arbitrage, consists of ‘key men’ employing others to place bets on their behalf, so as to avoid detection and increase accessibility to bookmakers. This allows the financiers or key arbers to stay at a computer to keep track of market movement.
Contents

* 1 Arbitrage in theory
o 1.1 Arbitrage using bookmakers
o 1.2 Back-lay sports arbitrage
o 1.3 Bonus sports arbitrage
* 2 Arbitrage in practice
o 2.1 Risks
* 3 See also

[edit] Arbitrage in theory

There is a number of potential arbitrage deals. Below is an explanation of some of them including formulas and risks associated with these arbitrage deals. The table below introduces a number of variables that will be used to formalise the arbitrage models.
Variable Explanation
s1 Stake in outcome 1
s2 Stake in outcome 2
o1 Odds for outcome 1
o2 Odds for outcome 2
r1 Return if outcome 1 occurs
r2 Return if outcome 2 occurs
[edit] Arbitrage using bookmakers

This type of arbitrage takes advantage of different odds offered by different bookmakers. Assume the following situation:

We consider an event with 2 possible outcomes (e.g. a tennis match – either Federer wins or Henman wins), the idea can be generalized to events with more outcomes, but we use this as an example.

The 2 bookmakers have different ideas of who has the best chances of winning. They offer the following Fixed-odds gambling on the outcomes of the event

Bookmaker 1 Bookmaker2
Outcome 1 1.25 1.43
Outcome 2 3.9 2.85

For an individual bookmaker, the sum of the inverse of all outcomes of an event will always be greater than 1. 1.25 ? 1 + 3.9 ? 1 = 1.056 and 1.43 ? 1 + 2.85 ? 1 = 1.051

The fraction above 1, is the bookmakers return rate, the amount the bookmaker earns on offering bets at some event. Bookmaker 1 will in this example expect to earn 5.6% on bets on the tennis game. Usually these gaps will be in the order 8 – 12%.

The idea is to find odds at different bookmakers, where the sum of the inverse of all the outcomes are below 1. Meaning that the bookmakers disagree on the chances of the outcomes. This discrepancy can be used to obtain a profit.

For instance if one places a bet on outcome 1 at bookmaker 2 and outcome 2 at bookmaker 1:

1.43 ? 1 + 3.9 ? 1 = 0.956

Placing a bet of 100$ on outcome 1 with bookmaker 2 and a bet of $100 * 1.43 / 3.9 = 36.67 on outcome 2 at bookmaker 1 would ensure the bettor a profit.

In case outcome 1 comes out, one could collect r1 = $100 * 1.43 = $143 from bookmaker 2. In case outcome 2 comes out, one could collect r2 = $36.67 * 3.9 = $143 from bookmaker 1. One would have invested $136.67, but have collected $143, a profit of $6.33 (%4.6) no matter the outcome of the event.

So for 2 odds o1 and o2, where o_1^{-1} + o_2^{-1} < 1. If one wishes to place stake s1 at outcome 1, then one should place s2 = s1 * o1 / o2 at outcome 2, to even out the odds, and receive the same return no matter the outcome of the event. Or in other words, if there are two outcomes, a 2/1 and a 3/1, by covering the 2/1 with $500 and the 3/1 with $333, one is guaranteed to win $1000 at a cost of $833, giving a 20% profit. More often profits exists around the 4% mark or less. Reducing the risk of human error is vital being that the mathematical formula is sound and only external factors add "risk". Numerous online arbitrage calculator tools exist to help bettors get the math right. For example, the Arb Cruncher sports betting calculator handles calculations for both book arbitrage (back/back or lay/lay) and back/lay arbitrage opportunities on an intra-exchange or inter-exchange basis, and is free. [edit] Back-lay sports arbitrage Betting exchanges have opened up a new range of arbitrage possibilities since on the exchanges it is possible to lay (