Topic: The paradox of arbitrage betting (and how to make money on it) (Read 387 times)

The problem is that bookmakers (at least in my country) fight successful bettors not only on formal grounds (prohibition of arbitrage bets, multi-accounts for receiving bonuses, etc.) but also simply because such bettors are profitable. It can be called differently, like a ban on "value betting", but basically, for no reason, successful bettors have their betting limit reduced and they are practically deprived of the opportunity to bet at least some significant amounts.

You’re referring to live betting which is really impossible to do this because book maker change there odds every seconds. I believe this arbitrage betting is applicable on prematch games since you will need to compare all the odds in different sportsbook. I’m familiar with bookmaker error but I never encounter one of it in my years of placing bet on sportsbook. If anyone already done this theoretical strategy, Maybe giving feedback here will give motivation to pursue on this strategy.

It might be hard to provide data for such arbitrage opportunities because the market is moving so fast. There are probably hundreds of people looking for the opportunity to make some free money. So I would expect as soon as there is an arbitrage the first few people will get money quickly and the opportunity disappears quickly. The bookmakers try to no have risk for themselves, so they will adjust quotes quicky. The more people buy one leg of the bet, the faster the odds will adjust.

I'm not aware that there's a scenario that 2 book maker offer an exact opposite odds on each outcome. Can you provide a sample bet pick from different Casino that this kind of arbitrage betting can be applied? This will only happened if one of the bookmaker commit an error on placing odds but as I remember most of the bookmaker has a centralized data on all of there odds so it's very hard to spot a match that contains this scenario. Or I'm understanding your point in the wrong way.

I will really appreciate if you can provide actual sample even if you don't actually place a bet. Just a comparison sample. Nice thread by the way boris!

This is an interesting topic to discuss. The concept of arbitrage betting has taken on a completely different dimension in the gambling world in recent years. A true classic arbitrage bet should be one that you always win 100%. I have read that such players are often quickly banned from gambling sites. What you see more nowadays is that they place a value bet, you don't need 2 bookmakers for that. That's the big problem with an arbitrage bet, you have to play at 2 bookmakers and the limits shouldn't be a problem. The terms and conditions may also work against you.

You're right for 1. Theoretically, there is nothing different when it comes to EV and yes I do agree that some arbitrage opportunities can be long-lasting, but these are definitely rarer to come by.

I disagree with your second point however.

There is an inherent difference between a surebet (which returns you a profit, without risk) and what you've shown. Yes, EV is positive but you have significant variance in your outcomes. You always have a non-zero risk of losing all your bankroll with this.

1. The theoretical possibility is one thing, the practical implementation is another. I showed a theoretical possibility. And in fact, arbitrage opportunities are not fleeting phenomena at all - for example, if you bet a week before the event, then you will most likely have the opportunity (long in time) to make an arbitrage counter-bet. If this opportunity does not appear, then you can wait for the start of a sporting event and catch such a bet in live mode.

2. The problem of the presence or absence of the necessary bankroll does not cancel the fact that there is an opportunity to make arbitrage bets.
I do not see a fundamental difference in risk, since at a distance (as I showed in the calculations in the first post), from the point of view of mathematics, such bets are equivalent to classical arbitrage.

I'm not sure this coordination you think is going on exists, at least beyond a group of subsidiaries that exist within a wider gambling company. Not just because that sort of collusion actually helps competitors who are mispricing their bets, but also because this kind of profitable arbitrage is so rare already and there are plenty of peer to peer marketplaces that will almost instantly close any gaps. You'd be lucky to make 1 or 2 percent after commission from regular trading. Most people make money in this arbitrage game but taking advantage of different promo offers but even those run out if they start to cost the sportsbook too much. The most obvious reaction from any sportsbook will just be to ban a player who is regularly taking profit from their country, that is how they shut down such activity.

For example, let's take the simplest case when we have the opportunity to make an arbitrage bet and get money without risking anything:
There are two outcomes of the event: 1 and 2, and let's say that at bookmaker A we can bet on outcome 1 with odds of 2.05, and at bookmaker B we can bet with the same odds on outcome 2.

It turns out that if we make two bets (for example 100$) on both events, we will get a guaranteed profit:

100x2.05 - 200 = 5$ net profit from a bet of $200

100x2.05 - either bet on event 1 or bet on event 2 wins
200 - money spent to place both bets

But there is a problem that bookmakers (most of them) prohibit arbitrage bets and most likely exchange information about the players who make them in order to get rid of them later. Is there a solution to this problem?

I think yes: the probability that of the two events 1 and 2 the first or the second will happen is the same. This means that if we bet only on event 1 (or 2) we will (on average) either win $105 or lose $100.

(105 - 100)/2 = 2.5 $ net profit from a bet of $100

Conclusion: if you find an opportunity to make an arbitrage bet, then you can bet only on one of the outcomes and on average you will still be in the black plus avoid problems with ToS of bookmakers.

^

What I don't see happening here is the OP mentioned that casinos may possibly exchanging info of their players?
I don't think they are doing that, unless, they are sister companies. But if not, I don't think competitors are talking to each other.
Anyway, some bettors are really earning from this strategy, but this is not for all. It requires patience and techniques to get your profits.
But I do believe that some players are trying this strategy for themselves especially if they know very well the sports.

When MMA was more one dimensional, I used to hit a winning bet like this around once a month. Maybe ever other month.

Its much harder today with inside information being used more to setup non obvious mismatches.

But at one time, it worked very well.

It is an arbitrage strategy which might also be described as a hedge. Only with a more segments, greater potential profit & higher probability of failure. Multi segment hedge?

It's normal that they will prohibit shady acts including arbitrage betting because that can make them lose in the long run but to prohibit the bettor that wins in a normal and fair way? I guess there is something with the way they think. We should stop playing on them immediately, there are now lots of sports betting sites online and some can allow VPN so that you can still access them if your country is often on the banned list.

In trading, there was also arbitrage but never heard they disallow it but, they only make it a little harder for the trader. They increase the fees and minimum withdrawal so that it discourages someone to do arbitrage.

That's a terrible way of looking at it and you're just exposing yourself to an extra 1.74% margin on the bookmaker's side. It would only ever make sense if there was some sort of promotion for placing a 3 leg multibet that would make it worthwhile, and chances are the bookmaker might see it as promotion abuse in the case.

If you place the multibet with 1 mBTC on each side, you have a chance at either 2.9 mBTC profit or 1.58 mBTC profit. You can also bet 2 mBTC on your "locks" and end up with 2.2 mBTC in profit (4.2 mBTC payout) guaranteed. However, if you'd prefer to have a chance at more profit, you could play a dice roll at 1% house edge and bet 0.62 mBTC on a 2.13x bet (for 0.7 mBTC profit). Thus, you have a 46.48% chance of ending up with 2.9 mBTC, and 53.52% chance of ending up with 1.58 mBTC.

If we assume that the market for your "arbitrage" leg was efficient, the implied vig-removed probability of each outcome is 57.82% (1.70) and 42.18% (2.33). Thus, by placing a dice roll instead of "arbitrage", you have a 4% higher chance of ending up with the larger sum of money. You could argue that you believe the 2.33 fighter has a greater chance of winning than the odds implied, but then we would be getting into value betting territory and you'd be purposely taking a stupid -EV bet on the 1.70 fighter for no reason.

The problem is that bookmakers (at least in my country) fight successful bettors not only on formal grounds (prohibition of arbitrage bets, multi-accounts for receiving bonuses, etc.) but also simply because such bettors are profitable. It can be called differently, like a ban on "value betting", but basically, for no reason, successful bettors have their betting limit reduced and they are practically deprived of the opportunity to bet at least some significant amounts.