Arbitrage Betting – Is It Legal?
With the number of online bookmakers available to punters these days, the market is changing rapidly. Online bookies occasionally have vastly differing odds and offers, giving rise to arbitrage.
What is Arbitrage Betting?
Arbitrage is not something that’s exclusive to online betting – far from it.
So, in economy and finance, arbitrage simply means taking advantage of a difference in the value of something between two markets. Specifically, capitalising on this difference to turn a profit. It’s been an aspect of trading for as long as anyone can remember.
So let’s apply this basic concept to online betting in particular.
If two bookmakers have very different ideas about what the odds are for a specific event or market, one can take advantage of this by placing one bet per each possible outcome with the two different bookies. Thus, whatever the outcome, the punter would win a certain profit margin, making arbitrage, or ‘arbing’, theoretically risk-free profit.
So, does arbitrage betting work in practice? Yes, most definitely. Mathematically and practically, arbing is a “sure” way of making a profit via online punting. There are other factors to consider though, so keep reading to find out more.
How Does Arbitrage Betting Work?
We’ll illustrate this point by using a simplified example.
Let’s say you’re betting on a Champion’s League match where Barcelona is playing Liverpool, like in the 2019 semi-finals. Now, let’s say one bookmaker gives 11/10 (2.10) odds to win for Liverpool, and a different bookmaker gives 11/10 (2.1) odds to win to Barcelona.
If you were to bet £100 with the first bookie and £100 with the second, you would have a payout of £210, no matter which way the match went. This translates into a guaranteed £10 of profit.
This formula can get much more complicated with unbalanced odds, but you get the idea. A simple trick of figuring out whether an offer presents an opportunity for arbitrage is to calculate the implied probability of both outcomes. For the example from earlier, that would be:
Liverpool at 2.1: 1 / 2.1 = 0,476 = 47.6%
Barcelona at 2.1: 1/ 2.1 = 0,476 = 47.6%
If the two probability percentages add up to less then 100% (in this case, 95.2%), arbitrage is possible. The smaller the sum percentage, the bigger the profit margin.
Is Arbitrage Betting Legal?
Well, the short answer would be – yes. From a legal perspective, it’s just customers trying to get the best value for their bets. And aren’t we all?
Do bookmakers like it though? Not a little bit. In fact, the terms and conditions for signing up to most betting sites explicitly forbid betting arbitrage.
In practice, this means that you can’t be legally sanctioned for arbitrage, but your account will be closed promptly and permanently. Remember that most bookmakers have been in the game for much longer than you, and can usually figure out what’s going on very quickly.
To sum up, betting arbitrage works as a way of rigging the system for risk-free profit. It does have its consequences though, and you should try to avoid doing it with your favourite bookmakers.
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