A 5 Minute Guide To Sports Arbitrage – The New Internet Loophole That Can Make You Money

By Tukshad Engineer
Posted Sunday, December 12, 2004

Every now and again the internet throws up some real loopholes. One in particular stands out, and if you’re interested in making some fast pocket money then you should check out the concept of sports arbitrage in more detail. Imagine being able to bet on both sides of a sporting event – so that no matter what the result you walk away with a guaranteed profit. Well that’s exactly what arbitrage betting is about – and thanks to the hundreds of bookmakers that continue to offer online services this arbitrage loophole is growing with more and more opportunities to claim guaranteed cash every day. The best thing is that it’s completely legal, simple to do and once you start chances are you’ll get hooked with the guaranteed and fast money that’s there for the take.

Before you get too excited lets take a moment to understand the mechanics behind arbitrage – an age old concept that has been used by banks and businesses for centuries. Arbitrage simply is an inconsistency in the market – where for example due to global differences the same product or service is charged at different prices in different locations. How is this applied to sports betting? An arbitrage opportunity is formed when different bookies have different prices for different outcomes in a particular sporting event. The bottom line is that we can place bets to cover both (all) outcomes with different bookmakers and get back more than we invested each and every time. It’s important to remember that this is a form of investment and not betting – with arbitrage you know your exact return before a ball is kicked or a stroke played. It’s also important to remember that arbitrage returns are generally low – on average yielding 5% to 10% per play – but for an investment that lasts for a couple of hours, that’s pretty good.

An Example
Let’s take a look at a real life example of sports arbitrage. During a ladies single game at Wimbledon between Davenport and Clijsters the bookies Tote and Victor Chandler priced the outcomes differently:
Tote - 3/1 Clijsters to win
Victor Chandler - 2/5 Davenport to win

To return £100 with Victor Chandler above we would have to invest £71.42. To return £100 with Tote for a Clijsters win we would have to invest £25. Our total collective investment would be just £96.42 - and whoever won the game our total return would be £100. We have just made a guaranteed 3.58% on your money within 2 hours. You can find plenty of these arbitrage opportunities each and every week.

How did we calculate how much investment is required to return £100 (including our stake)? We do a very simple calculation:

1. With V.C. the odds for a Davenport win was 2/9. To find out how much you need to invest to return £100 simply make the following calculation:
(a) 2/5 + 1 = 1.4
(b) 100/1.4 = £71.43

2. With Tote the odds for a Clijsters win was 3/1. To return £100 (including our stake):
(a) 3/1 + 1 = 4
(b) 100/4 = £25
Total Investment (£71.43 + £25) = £96.42
Total Return REGARDLESS OF OUTCOME £100
Total Profit (£100 - £96.42) = £3.58 risk free.

Do you see the beauty of this? No matter who won the game you are guaranteed a certain profit of 3.58% - this is a very good return for an investment lasting just a couple of hours that carries absolutely zero risk. The good news is that arbitrage opportunities like these happen many times on a daily basis, and with a little practice you can find quite a few to invest in as you please.

Why Do Arbitrage Opportunities Occur?

Arbitrage opportunities occur when there are differences of opinion on a particular sporting event between two or more bookmakers. Remember that thanks to globalization and the internet you can use an online bookmaker who is based anywhere in the world. There are many reasons why bookmakers may offer wildly different odds on the same sporting event. For a start, many bookmakers overstretch themselves when offering odds – they try and cover every possible market to get as many customers as possible.

This is great news for us because in doing so they will sometimes offer odds on events that they have little or no expert knowledge in. For example, a bookmaker in the USA may know very little about English Division 2 football games, and yet offer odds on them. In contrast, an English bookmaker will be much more “clued up” as to the likely outcomes from the same games. The result? Wildly different odds on the same games, and a feast of arbitrage opportunities and free money for us. And remember, everyday more and more online bookmakers are entering the highly lucrative online gambling market – this is great news for us because the number of juicy arbitrage opportunities will grow well into the future! Also, bookmakers are busy people – and when they are forced to offer odds in pressurized situations they can sometimes make mistakes! Again – leading to a nice stream of easy arbitrage pickings.

How To Start Earning From Sports Arbitrage

Now we have a firm understanding of how arbitrage works and what causes them we're going to see how best to spot them, and how to organise your time for maximum efficiency.

As an arbitrage trader it's vital that you construct a daily checklist of events that you wish to investigate. It's very handy to buy a diary specifically for your arbitrage trades and jot down the specific events you'll be hunting for arbitrages in. Make this a routine - for instance, perhaps on a particular Saturday you want to check the English football Premiership fixtures, the tennis fixtures and the one day cricket series between India and England. Do not randomly hunt for arbitrage opportunities without a system firmly in place.

Now that you've identified the list of events you're going to attack today, what do you do next? Let's start with the tennis fixtures between player A & player B in the below example. We will see how to go about organising ourselves to see if an arbitrage opportunity exists:

Example
You find out that the odds for Player A are as below:
Player A To Win
W.Hill 2/5
Ladbrokes 2/6
Eurobet 2/7
Scandibet 2/7
VC 2/6
And for player B…
Player B To Win
W.Hill 2/1
Ladbrokes 5/2
Eurobet 3/1
Scandibet 5/2
VC 2/1

Here it's obvious that the best 2 prices are 2/9 for player A (W.Hill) and 3/1 for player B (Eurobet). Does an arbitrage opportunity exist here? Yes:

To return a total of say £1000 on player A with W.Hill we need to invest (2/5+1 = 1.4...then £1000/1.4) £714.28
To return a total of £1000 on player B with Eurobet we need to invest (3/1+1 = 4...then £1000/4) £250. Our total investment to return £1000 whichever player wins is just £964. This is a clear arbitrage opportunity and you would then place £714.28 with W.Hill on player A and a further £250 with Eurobet on player B. At the end of the match you will pickup a certain profit of £35.72 - finding just 3 arbitrage opportunities a day of this kind (very achievable) will give you a daily profit of £107.16 - and a tax free monthly income of over £3000.

The traditional way to approach sports arbitrage trading is to have a daily list of sporting events and work through them one by one. If you take this systematic approach with each sporting event you have on your checklist your chances of finding an arbitrage are very good. If you would like to learn more, you can discover a step to step guide of arbitrage trading and a list of daily arbitrage opportunities at (http://www.freemoneyeveryday.com) - for more free education you can also try (http://www.my-online-powerpack.com/subscribersite.htm) which goes into sports arbitrage methods in more detail.

Find hundreds Of Sports Arbitrage Opportunities Daily at (http://www.freemoneyeveryday.com)

About the Author
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