All we have to do here is bet on Nadal at 2. Do you see why the arbitrage betting strategy is so popular now? We just needed to spot the opportunity and get our money down.
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This was actually a pretty easy opportunity to spot. There were only two possible outcomes, and the odds for both were higher than 2. Anyone with even a basic understanding of odds should be able to realize that this is an obvious opportunity to take advantage of. Most opportunities for using the arbitrage betting strategy are harder to spot and require doing some calculations. We talk you through how to identify suitable opportunities for this strategy later. The tennis match between Nadal and Murray was an example of an arb, as we could bet on both players and be assured of an overall profit.
The odds at different bookmakers and betting sites are usually quite similar, as you saw earlier. This is because the people who set the odds the odds compilers have to take a number of different factors into consideration. Most odds compilers set the initial odds for a market based on what they think is likely to happen in the relevant event. They will, of course, build in their profit margin at this point too.
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They typically have fairly similar views as a result. Odds compilers sometimes WILL have noticeably different views on the likely outcome of an event. This can easily lead to a pricing discrepancy that creates an arb.
The arb we highlighted earlier, for example, could have existed simply because the odds compilers had opposing opinions on which player was most likely to win. They would have set their odds accordingly, which would have led to the arb being created. Arbs can also be created when the odds compilers make adjustments to their initial odds.
They also have to make to them based on the weight of money coming in. The weight of money is important because bookmakers always try to create balanced books. The arb in the Nadal versus Murray match could just as easily have been created due to weight of money. This would have meant the odds for Nadal went up at one site, while the odds for Murray went up at the other site. Understanding WHY arbs happen is probably the most complicated part of learning the arbitrage betting strategy. All you need to know is that they DO happen.
The best way to identify arbs is basically to just study the betting markets yourself, keeping a sharp eye out for appropriate pricing discrepancies. With practice, you should be able to instinctively spot opportunities where arbitrage betting is likely to be possible.
There are then some relatively simple calculations you can do to confirm either way. You should find the best odds available for each outcome and then apply the following formula. This will give you the IAP for each outcome. The best available odds for Nadal to win were 2. The next step is to add these together, which in this case would give you An arb exists whenever the TAP is less than Anything between 98 and offers very minimal profit and is rarely worth the effort.
Unless you can get large stakes on it, that is. The only other calculation you need to do is the one that tells you how much to stake on each required wager. The idea is to make sure that you get exactly the same return or very close regardless of which of your wagers actually wins. To work out how much you should bet on each outcome, you must first decide how much you want to stake in total. You then apply the following formula for each possible outcome. As you can see, the calculations used for identifying arbs are not exactly complicated.
There are some alternatives to finding arbs for yourself though.
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For example, there are many websites and forums on the Internet that are dedicated to publishing and discussing arbing opportunities as and when they appear. There is also software you can buy that will search the online betting markets for arbs, and subscription services that will automatically notify you of any arbs. The most common arbitrage bet is made by taking positions in the market across a bookmaker and a betting exchange - backing at the bookmaker and then laying the same outcome on the betting exchange. The odds on the bookmaker and the market implied probabilities in brackets - learn how to calculate betting margins - are displayed below:.
The table below highlights this is an arbitrage opportunity as the combined implied probability for bets is To calculate your lay stake on the Smarkets exchange you simply use the following calculation:. Before betting exchanges arbitrage bets were made between two or more bookmakers - these are becoming less prevalent because most bookmakers have very similar odds. Having said that they do still occur.
For an arb to occur between bookmakers you need to identify the two bookmakers offering the highest odds on each outcome. The table below can help you quickly recognise if there is a potential arb across bookmakers. If you find odds similar to outcome 1, then odds which are greater than what is identified in outcome 2 would present an arbitrage opportunity:.
The odds on both bookmakers and the market implied probabilities are displayed below:. This clearly shows an arbitrage opportunity between bookmaker A and bookmaker B. By cross-matching the odds for each outcome across the two bookmakers the combined market margin is now in the bettor's favour providing a guaranteed return of 1. Now you must calculate how much to stake with each bookmaker to guarantee an equal return without consideration for the result. Now you know how to calculate arbitrage opportunities for a simple two-way arbitrage bet, you can look at three-way or 1X2 arbs.
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Three-way arbs are more prevalent in football where there is a possibility of a draw. When arbing with a betting exchange there is no need for three-way arbs as you could back Manchester United to win on the bookmaker against Liverpool and then lay them to win on the exchange - which covers anything other than a Liverpool win. So this example is for a three-way arb between three separate bookmakers. Now you need to calculate how much to stake with each bookmaker to guarantee an equal return depending on which bookmaker you win with.