The risks involved in Arbitrage trading.

These are the previous articles on this subject just in case you missed them:

As usual, with any supposed ‘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 unforeseen variables which can ruin even the best laid plans.

Maximum limit on stakes

A number of experts agree that the maximum stake limits usually placed by the bookmakers may affect your arbitrage sports betting strategy, and it may prevent you from placing your full stake while arbitraging. So before placing bets, check that none of the bookmakers you have registered with-in the arbitrage have a maximum stake limit. Also, don’t forget to note and understand that all the betting exchanges prices are subject to some kind of stake limit. Therefore, before taking up arbitrage sports betting, carefully look at all the available liquidity options, including prices at the number two and three slots, and don’t make decisions based only on the best prices. There is no escaping the fact that there are some instances in arbitrage sports betting that all your money at the best price gets hoovered up. It is worth mentioning in that part as promised, about the Bookies which will make your arbing life harder and will limit your accounts after a few bets. Even though they have “delicious odds” and it is easy to find arbs with them, they won’t tolerate you too long. They are as follows:  Paddy Power, Stan James, Betfred, BlueSquare, BetClic, Ladbrokes, Expekt, Unibet, Nordicbet, Gamebookers, Sportingbet, Bwin, Victor Chandler. So most of them are called “European bookies” and you should make ensure you restrict your arbs with them or don’t hit them too hard. Asian bookies and exchange betting sites are more than recommended for a longer arbing carrier.

Differing Bookmaker Rules

Different bookmakers have different rules for how to handle the outcome in the case of a draw, in the case of a pitcher changing before a baseball game, in the case of extra time in hockey, in the case of an incomplete game of tennis etc. There is a risk one bookmaker will return your money, and the other will act on the bet completely (paying you your winnings, or keeping your money if that bet lost). If there is a difference in rules and one bookmaker acts on the bet while the other simply returns your bet, then you have a 50-50 chance of winning and losing, so it isn’t all bad. But it is a risk nonetheless.

Obvious Bookmaker Errors

All bookmakers have a clause in their terms and conditions which basically state 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.

 

Dawdling

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.

Placing the Wrong Bet

Small accidents can cost a lot of money. Thanks to dawdling risk. 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

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.

But don’t be scared as in the next article you will receive some Antidotes for your doubts!

The next article in this series can be found here: The Cures for your Arbing ills

 

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