Arbitrage Betting Explained

One of the core, defining principles of sports betting is that it’s a win-lose activity; i.e., only two outcomes are possible. The greater perception, in fact, is that betting is more of a risk for the bettor as the reward tilts heavily toward the sportsbook’s side.

This always leaves many bettors with a lingering question: Is there a way to lessen that risk? Alternatively, could there be a method that eliminates the risk entirely and guarantees a return with every bet placed?

The internet seems to offer a possibility that has eluded gamblers for decades: a method that guarantees profit no matter which side the betting coin ends up landing on. Enter arbitrage betting.

What is arbing or arbitrage betting?

In the simplest of terms, arbitrage betting is a method where you simultaneously bet on all possible outcomes in a way that guarantees profit regardless of the eventual outcome.

You usually do this by betting on one side of an event on one sportsbook and then, on a different sportsbook, placing a bet on the same event that counters the initial choice. For example, in a game between teams A and B, you can go to DraftKings Sportsbook and bet that team A will win and then go to FanDuel Sportsbook and bet that team B will win.

This betting method derives its roots from the finance practice of capitalizing on price differences between markets. In that practice, which is known as arbitrage, traders would look for imbalances in the market and trade in a way that guaranteed them a return regardless of how the assets that they were trading performed.

Arbitrage betting is also called arb betting and placing a zero-risk bet, and the practice of doing so is colloquially referred to as arbing. Some bettors also refer to arbitrage betting as matched betting, although matched betting, in principle, is a vastly different concept.

Basics of arbitrage betting

Arbitrage betting may sound easy in theory, but a few things are necessary to ensure that your bet truly is an arbitrage bet. Simply betting one way on one sportsbook and then negating that option on another sportsbook is not arbitrage betting. The requirements below are the core stipulations that define arbitrage betting:

  1. The risk of the chosen events equates to zero.
  2. Profit is guaranteed regardless of the outcome.

Real-life example

The Detroit Lions are playing the Minnesota Vikings in the NFL. Since the two teams are balanced, the moneyline odds will hover around the same values on most sportsbooks. You find two sportsbooks with different odds, which are reflected below:

  • Sportsbook A: Detroit Lions +110
  • Sportsbook B: Minnesota Vikings +110

The scenario above is a perfect one that ideally lends itself to arbitrage sports betting. If you were to bet $100 on the Detroit Lions at sportsbook A, you’d stand to win $110. If you were to bet $100 on the Minnesota Vikings at sportsbook B, you’d also collect $110 on a win.

Say that you placed $100 bet on both options. Regardless of which team wins, you’ll receive a profit of $10.

Calculating arbitrage betting on uneven odds

Unlike the example above, most sports betting arbitrage opportunities don’t present themselves in a crystal-clear way. In fact, most arbitrage betting situations rarely have the same type of balanced odds. This means you would need to do some calculations.

Luckily, the method to do so is simple. All you have to do is find the implied probability of the two events in question and add them up. If the sum equals less than 100%, then the event in question lends itself to arbitrage betting.

Say that the Detroit Pistons are playing the Golden State Warriors and the odds for the game on two sportsbooks are like this:

  • Sportsbook A: Detroit Pistons +700
  • Sportsbook B: Golden State Warriors -500

To know whether you can arb in this situation, first calculate the implied probability of the two betting options. The formulas to calculate implied probability for positive and negative odds appear below.

Implied probability for negative odds: odds / (American odds + 100) × 100 = implied probability. (For negative odds, use the absolute value of the odds number.)

Since the Warriors have the negative odds in the example above, their implied probability would be: 500 / (500 + 100) × 100 = 83.3%

Implied probability for positive odds: 100 / (American odds + 100) × 100 = implied probability.

The Pistons are the team with the positive odds. Using the formula above, their implied probability would be: 100 / (700 + 100) × 100 = 12.5%

Now, add the two percentages. 83.3% + 12.5% = 95.8%. The above situation lends itself to arbitrage betting. However, unlike the first example, the stakes here will be different since each outcome has vastly different odds. You’ll need to divide your stakes accordingly to guarantee a profit.

Say you had $200 to wager on the game. To guarantee a profit, you’d divide that stake in the following way:

  • Placing $173.90 on the Warriors would bring a total potential payout of $208.68.
  • Placing the remaining $26.10 on the Pistons have a potential payout of $208.80.

In either case, you’re guaranteed a profit of about $8 regardless of the result. You can also use the formula above to calculate the implied probability of the previous example of the Detroit Lions vs. the Minnesota Vikings where the odds were balanced at +110.

  • Lions’ implied probability: 100 / (110 + 100) × 100 = 6%
  • Vikings’ implied probability: 100 / (110 + 100) × 100 = 6%
  • Add the implied probabilities:6 + 47.6 = 95.2%

As you can see, the situation is also ideal for arbitrage betting because the sum of the implied probabilities is less than 100%. And dividing stakes on the above is easier because the odds are balanced.

Is arbitrage betting really possible?

All the formulas and rules aside, the most important question that one may have regarding arbitrage betting is how possible is it to consistently win bets using this method?

Well, the good news is that this method is one of the most realistic out there. All you have to do is find an ideal situation that lends itself to arbitrage betting and wait for the profits to trickle in at the end of the day. That’s why arbitrage betting is also called zero-risk betting.

The bad news, though, is that many other factors may complicate this easy method and turn it into a difficult one for most gamblers.

The first issue is that it is incredibly difficult to find arbitrage betting situations. Of course, you can’t practice this method on one single sportsbook, so you’ll have to search for situations where sportsbooks price things differently. And most books tend to price their markets in a very similar manner. Even when they deviate, the difference isn’t usually so pronounced as to create such a valuable price difference.

This is mostly true for the popular betting options. If you really want to arb, it might be smarter to focus on niche markets where the bookies may have wrongly priced some markets. Also, because of the internet, some opportunities may appear and disappear rapidly, so a sense of timeliness is necessary when you spot such arbitrage betting opportunities.

Bettors looking to try this method should also take note of the amount of research it requires. Arbitrage betting opportunities will not just present themselves; you’ll find that you’re constantly buried deep in spreadsheets calculating odds from various sources. Remember, though, that if the method were an easy one, there would be no reward attached to it. So the sacrifice is necessary on your part if you really want to reap the rewards.

Lastly, since arbitrage betting is a zero-risk method in principle, the margin accompanying this method will be minimal. In the example above, a stake of $200 returned $8. If you’re opting for this method, you should be extremely patient.

You might be tempted to sink thousands of dollars into this method, but the key is to always steadily grow your bankroll. Also, some sportsbooks have betting restrictions that limit the amount you can bet, and since this method hinges on multiple books, the best alternative is to stick to a reasonable amount that doesn’t break your bankroll and keeps your betting account in good standing.

Is arbitrage betting legal?

One other concern that bettors may have is whether there are any legal consequences of practicing arbitrage betting. Luckily, as long as you live in a state with legal online sports betting, you can freely practice arbitrage betting.

In such states, you can freely join as many sportsbooks as you want and look for imbalances in their betting markets that you can then capitalize on.

However, sportsbooks always try to ensure that they have the edge and will be on the lookout for bettors who practice such methods. The fine print in their terms and conditions lets them close your account at any time.

One way to avoid this is by betting rounded-off amounts. In arbitrage betting, like in the example above, you may find that after dividing your stake, you’ll end up with amounts like $173.87. So instead of betting this exact amount, you can round off and bet $174, which the sportsbook may view more favorably.

Arbitrage betting at online sportsbooks

Arbitrage betting has become viable because of online betting’s growth.

The method might still have been possible before online betting, but the practicality of doing so would have been nearly nonexistent because of all the activities involved. You’d have to drive from one sportsbook to the next in the hopes of finding something of value, and even if you did find an arbitrage situation, the small profit margin might have been consumed by other things like the cost of traveling.

With online betting, the convenience of placing a bet from anywhere means that all the travel has been eliminated. Additionally, since arbitrage betting requires efficiency, you don’t have to worry about potentially missing a pick because of traffic.

Is arbitrage betting for you?

Arbitrage betting can be a way to guarantee small profits. However, you shouldn’t adopt it if you’re just looking for a get-rich-quick method because a lot of patience and research is necessary for it to be effective.

So before opting for the method, you should weigh the pros and cons. If you’re perfectly comfortable with a low-risk method requiring hours of research and calculations with a low-profit margin but a guaranteed long-term yield, then arbitrage betting might be for you.