Back / Back sports arbitrage
This involves backing something to happen, for example a win, or some other outcome. Like goals, tries, games, touchdowns, sets and the list goes on.
When the bookmakers disagree on the likely winner, the difference in opinion is expressed in the odds offered by the bookmakers on their website. When the conditions are right it offers sports arbitrage traders the chance to profit.
First lets look at an example of a tennis arbitrage bet using two of the world’s most popular bookmakers. In a tennis match between Rafael Nadal vs Roger Federer there was a difference in prices that generated a profit of about 3%. At this stage it isn’t necessary to know how to calculate everything just to get a feel for what’s happening.
Pinnacle priced Federer at 2.20 and 5Dimes had Nadal at 1.90. A reasonable amount of money to bet per trade would be 1000EUR. This is how the trade breaks down.
A bet of 457.83EUR at 2.20 on Federer wins 572.29EUR. Of course the bookmakers would also return your stake. (stake + winnings) = 457.83 + 572.29 = 1030.12EUR
A bet of 542.17EUR on Nadal at 1.90 wins 487.95EUR. Plus the stake = 542.17 + 487.95 = 1030.12EUR.
Again it’s not necessary to know how to work out the stakes. In fact many sports arbitrage services will do the sums for you.
So, the return minus the expense equals our risk free profit. The arbitrage trade returns 1030.12EUR and costs 1000EUR to set up. That’s a risk free profit of 30.12EUR.
An experienced trader would place around 10 of these trades each day: and a small profit turns into something quite worthwhile.
Why do these pricing inconsistencies or under round prices occur?
We highly recommend you to read articles relating to specific bookmaker reviews. It will help avoid common mistakes and find the best ways to find sport arbs.
With the advent of online bookmakers, there are now hundreds of bookmakers with online fixed odds betting terminals. They are all competing with one another and are located in various countries and time zones. The individuals responsible for pricing a particular sportsbook must have a massive amount of knowledge of that sport.
To compete, bookmakers have to price lots of bets on loads of different sports. There isn’t the expertise to cover every one. They may have the relevant stats but they can’t possibly know every participant and every event. In short mistakes can and do happen. Taking this into account and the difference in time zones you get hundreds of opportunities for sports arbitrage trading every week.
International sporting events can show pricing consistencies. The bookmakers know that they will receive more bets on the home nation team due to national pride. The odds are priced to exploit this fact and tend to be shorter than they should.
Since bookmakers started operating online there has been increased competition in the betting market. With bookmaker trying to outdo the others with creating and promoting special and innovative markets. With a focus on different markets the bookmakers odds can produce arbitrage betting opportunities.
Think of how many sports you can bet on. Then there are the markets within those sports. That’s thousands of odds. A sports arbitrage bet required only two bookmakers to price odds differently to allow a profitable arbitrage bet.
Back / Lay sports arbitrage betting
Sport arbitrage bets can also be found between back and lay prices on a betting exchange for an event. Back / lay sports arbitrage betting has been made possible due to betting exchanges like Betfair. A betting exchange allows members to lay an event (e.g. for a horse to lose). A back / lay sports arbitrage bet occurs when the price offered by a bookmaker is higher than the lay price available on a betting exchange for the same selection. The difference between the two represents your profit. Often a bookmaker can be slow to change the price on a favorite when something has happened to reduce the odds. As the price drops on the betting exchange, you profit by laying low with the betting exchange and backing high with the bookmaker. The same principle works just as well by backing and laying the same selection on Betfair only….without even involving a traditional bookmaker. The trading technique that uses back/lay sports arbitrage on Betfair is called SCALPING.
Book arbitrage or back / back arbitrage bets are more consistent, giving a distinct advantage over back lay arbitrage bets. Further more you need to know a lot about the sporting events to profit from back / lay sports arbs. We will be focusing more on book arbitrage, because it involves less risk and it is easier for novices to pick up.