Arbitrage Betting Explained
Learn everything you need to know about Arbitrage Betting: What it is, how it works and how to get started.
Short Answer
Arbitrage betting is a way for punters to make guaranteed profits, or at least guarantee no losses, by pouncing on odds irregularities between bookmakers. More specifically, this is done by betting on all of the possible outcomes of a game, which requires rather high stakes and the profit can sometimes be minimal per bet.
For example, you decide to bet on Both Teams To Score (BTTS) for a Premier League game between Arsenal and Man Utd. The game is chosen because you spot the following odds:
- bet365: YES (1.60), NO (2.30).
- Unibet: YES (1.85), NO (2.00).
You end up placing £110 on YES at Unibet, as well as £88.48 on NO at bet365. The total cost is £198.48, but you will win £203.50 regardless of the outcome, guaranteeing a profit of £5.02. Of course, the bookies are unlikely to have the differences laid out above, but it gives you an idea of how arbitrage betting works.
What Is Arbitrage Betting?
Arbitrage betting is one of the hottest trends in the industry right now. There is one big reason why this is the case, as when done properly, arbitrage betting can result in a guaranteed profit.
Usually, when it comes to gambling, the golden rule is that people should never bet more than they can afford to lose. But this does not necessarily have to be the case for arbitrage betting. This is due to the way arbitrage betting works. People can take advantage of the difference in the odds offered by various bookmakers in the UK in order to lock in a guaranteed profit.
Most of the time, the bookmakers are quite closely aligned with the odds that they offer. When browsing a variety of bookmakers for a particular bet, there might be a small difference in the price but nothing that will stand out from the crowd as being particularly good or bad value. Arbitrage betting, therefore, is essentially about spotting the rare cases when the odds do differ noticeably.
Once an opportunity has been spotted, punters cover all of the possible outcomes of the sporting event. The key is making sure that both (if a two-way market) of the outcomes will generate more profit than the total stake. These opportunities do not tend to last long, and this is because bookmakers will rapidly spot when their prices are not in line with rival bookies or betting exchanges.
Nevertheless, Some people have even been able to make a regular income through arbitrage wagers, which are a big part of how the practice known as matched betting works. Arbitrage wagers are typically known as an 'arb' for short, so look out for this term being used as well. Next up, let's take a look at how arbitrage betting works out for players in practice.
How Arbitrage Betting Works
Those who have never placed arbitrage bets may still be unsure about how this all works out. There are two main ways to calculate arbitrage bets: through software and maths.
Most people will find arbitrage betting software to be the best way to get up and running. By entering the relevant odds into the system, it will automatically calculate the right stakes to use in order to secure the most guaranteed profit. Working this out is also possible manually, but it requires a good head for numbers and it increases the risk of mistakes.
At its most basic method, arbitrage betting can be used for football matches in competitions such as the Champions League. Let's use the example of a clash between Manchester United and Arsenal, which is taking place at Old Trafford. For a big game like this, most top football betting sites would likely be in line with each other for markets such as Both Teams to Score (BTTS).
But perhaps one bookmaker differs from the rest, for whatever reason, and you thus spot an arbitrage betting opportunity. The following differences are identified for the BTTS market:
- bet365: YES (1.60), NO (2.30).
- Unibet: YES (1.85), NO (2.00).
You decide to stake £110 on YES at Unibet, as you deem this to be the most likely outcome, with a potential profit of £203.50. You then use an arbitrage betting calculator for the hedge bet, and it tells you to stake £88.48 on NO at bet365, which also comes out to a potential profit of £203.50. This means that you are guaranteed a profit of £5.02 regardless of the outcome.
The potential profit for the original and the hedge bet does not always have to be the same. However, as long as they are each higher than the total amount staked, you will make a profit. We advised you to use an arbitrage betting calculator of some sort, as calculating the prices can take some time, which means the opportunity could disappear before you get a chance to place the bet.
Some punters even use software which crawls the internet and tracks the changing prices for a wide range of sporting events. When a price changes, the software will know about it. This means the odds can be immediately compared to the other prices that are widely available. Although it might cost money to use the software, most punters believe it is worth the money as more profit can ultimately be made.
Using betting exchange sites in the UK is also a popular way to get the most out of arbitrage betting. In the next part of our guide, we will go deeper into how arbitrage betting works with exchanges.
How Arbitrage Betting Works With Exchanges
When it comes to arbitrage betting, there are a few betting exchange sites that can be used but the most popular one is Betfair, while Smarkets is a commonly used alternative as well. But why should punters use exchanges in their arbitrage betting ventures? Let's take a look.
First of all, when using exchanges, punters will need to know about the terms backing and laying. When backing a bet on an exchange like Betfair, this means betting that a certain event will happen. It is the same as a typical wager on a sports betting site. Laying, though, is essentially the opposite of backing. This means laying is betting against an event happening.
Let's go back to our example earlier, the Champions League game between Arsenal and Man Utd. Arbitrage betting for this match would mean betting on - or backing - both teams to score, then covering the other option by laying the same bet on an exchange. It might sound complicated but, after a short while, arbitrage betting can become second nature.
One of the key benefits of using an exchange site for arbitrage betting is it clearly shows the potential profit and loss in real-time as the odds change. This can be particularly useful for those who are new to arbitrage betting, and want to be able to see how quickly all the prices can be amended. Betting exchanges also usually have better value odds than the bookmakers, meaning a bigger potential profit is up for grabs.
Most people find it easier to learn how to do arbitrage betting with exchange sites. However, the alternative is to do arbitrage betting without exchanges instead, so how does that work? Let's have a look.
How Arbitrage Betting Works Without Exchanges
Making money through arbitrage betting without an exchange site is also possible, and this is important to note as Betfair is not available in every country of the world. Instead of backing and laying, arbitrage betting without an exchange site involves a process that is known as dutching, covering all possible outcomes as shown in our example above.
Dutching is possible for a range of sports, but most people who take up arbitrage betting without exchanges will use it for either football or horse racing. Having said that, the best arbs can often be found for minority sports. This is due to the fact that bookmakers will typically have less expertise in these sports, which means they are not as accurate with their odds and prices as they are with elite sports.
When using arbitrage betting software, it is of vital importance to make sure all of the odds are entered correctly when dutching. If a mistake is made, this will put the ability of the wagers to pay out a guaranteed profit in serious jeopardy.
Spotting opportunities for arbs works in much the same way whether or not people are using an exchange. It is possible to do this manually, but it can take a lot of time and effort to keep track of the vast array of different sports and markets that are available to bet on these days.
Arbitrage Betting: Things to Keep in Mind
Make up a plan before starting: As you may have deciphered from our guide, arbitrage betting requires a lot of planning and admin. This is not something you can start on a whim, so make sure to be organised in your ventures. Using a software, as mentioned, is a great way to improve your chances of guaranteed profits with arbitrage betting.
Keep your bookmaker accounts active: This is crucial for anyone who wants to start arbitrage betting, either with or without an exchange. Using arbs is not illegal, but sports betting sites are not particularly fond of this type of betting, and thus it can be good to place a few smaller bets on occasion as well.
Gambling winnings are tax-free in the UK: This is one of the main reasons why arbitrage betting has experienced such a big spike in popularity. Punters who lock in guaranteed profit as a result of arbitrage betting on sport can keep 100% of the cash that they earn.
Isak is an experienced content writer with a background in sports journalism. Having focused mainly on football in the past, he certainly knows a thing or two about the betting industry. At BettingLounge, Isak makes sure that all of the content is up to date, specialising in reviews of UK betting sites.