# Arbitrage Betting – 3: Arbitrage Opportunities

With the basics of arbitrage theory out of the way, as covered in my first and second posts, I will now move onto actual arbitrage opportunities. Most people associate arbitrage betting with two concurrent set of differing odds offered by different bookmakers, but virtually all of my arbitrage bets occur with changing odds over time.

### Disparate odds between bookmakers

It is very common for two bookmakers to offer slightly different odds for the same sporting event. For example, as I write this post, SportsBet is offering the following odds for Fernando Verdasco vs Radek Stepanek in the third round of the Australian open.

 Fernando Verdasco | 1.6 Radek Stepanek | 2.35

At the same time, SportingBet is offering

 Fernando Verdasco | 1.55 Radek Stepanek | 2.45

If I sum the inverses of the odds offered by SportsBet and SportingBet I get 1.051 and 1.053, respectively. If, however, you bet on Stepanek with Sportsbet (1.60) and Verdasco with SportingBet (2.45) the sum of the inverses becomes 1/1.60 + 1/2.45 = 1.033, which represents better value. However the sum is still greater than 1, meaning an arbitrage opportunity does not exist. This is frequently the case with disparate odds. Usually the disparity isn’t enough to provide an arbitrage opportunity.

I know for a fact that opportunities do arise if you look around hard enough, but I have personally never found and entered into an arbitrage opportunity as a result of disparate odds between bookmakers. Be careful when making bets of these type, as disparities can disappear quickly. I have made bets in the past where after clicking on the confirm button I have been informed that the odds have changed, and that I can no longer make that particular bet.

### Changing odds during a multi-game series

During a multi-game series you can usually bet in between each day’s game. Examples of multi-game opportunities (to Australians) include test cricket, the MLB (baseball) post season, the NHL (ice hockey) post season and the NBA (basketball) post season. I always take a close look at the American series’ where the underdog has home advantage for the first game. If they win that game then the odds usually change enough to provide an arbitrage opportunity. I prefer betting on American series’ because, unlike test cricket, they can never result in a draw.

During the MLB post season in 2008 I made a bet on the Phillies to win the World Series. At the time the series was locked at 1-1 with the following odds:

 Philadelphia Phillies | 2.05 Tampa Bay Rays | 1.75

Because the Phillies won game 3, the odds the next day were as follows:

 Philadelphia Phillies | 1.5 Tampa Bay Rays | 2.55

If you sum the inverses of my Phillies bet (2.05) with the new Tampa Bay odds (2.55) you get 0.88, which is below 1, meaning an arbitrage opportunity did exist. Out of principal rather than anything I did enter into the arbitrage opportunity to make a guaranteed profit, although my initial bet on the Phillies wasn’t substantial. To make things a bit more interesting, say I had bet \$100 initially on the Phillies at 2.05. If I had bet 100*(2.05/2.55) = \$80 on Tampa Bay I would have won \$25.00 if the Phillies had won he series and \$24.00 if Tampa Bay had won the series, with no risk of losing money.

The downside of series betting is that if the team you initially bet on doesn’t gain the upper hand, you will never be able to enter into an arbitrage opportunity. Only if your initial bet gains the advantage will you be able to lock in a guaranteed profit.

### Intra-game betting

The theory behind intra-game betting is exactly the same as for series betting except you have to make your decisions much more quickly. Note that Australian’s aren’t permitted to make intra-game bets over the Internet. You can only bet over the phone once a match has started.

### Changing odds leading up to an event

Occasionally betting sentiment differs from the original set of odds offered by the bookmakers. Betters place a disproportionate amount of bets on a particular outcome, which forces the bookmaker to change their odds.

For the first game between Australia and New Zealand in the 2008 rugby league world cup, I remember a bookmaker offering 1.20 for Australia to win. This struck me as being strange because they were only offering 1.20 for Australia to win the whole tournament. By kick off, however, the odds had reduced to 1.10. I bet on Australia for that match so I don’t have all of the original details with me, but suppose the following odds were offered at the time.

 | Initial Odds | Odds just before kick off Australia | 1.20 | 1.10 New Zealand | 5.50 | 8.50 Draw | 31.00 | 31.00

If I had placed a \$100 bet on Australia initially, and then a 100*(1.2/31)= \$4 bet on a draw and a 100*(1.2/8.5)= \$14 on a New Zealand win just before kick off, I would have a guaranteed profit. With Australia winning that match I would have won \$2.00. This figure may not blow you away, but it represents a guaranteed 1.7% return on your investment in a matter of days.

Most bookmakers offer sign up bonuses in the form of free bets for new members. If you sign up for two or more agencies, you could pit your free bets against each other between the bookmakers. Consider the odds for a Sunderland v Fulham game below.

 Sunderland | 2.25 Draw | 3.2 Everton | 3.2

If you were to sign up for three agencies and obtain \$100 in free bets for each possible outcome, you would be guaranteed at least a \$125 return, keeping in mind you only receive the net profit.

There are a number of caveats to this strategy. First, most agencies require that you bet on an event with odds of at least 2.00. Second, most agencies require that you “turn over” your winnings at least twice before withdrawing them from your account. So if you won \$125 with an agency, you would have to make at least \$250 worth of bets before that \$125 could be withdrawn.

### Exchange rate warning

If you have betting accounts in different currencies, be sure to keep in mind potential exchange rate fluctuations when calculating arbitrage bets. Personally I would only enter into an arbitrage bet across two currencies if the guaranteed profit margin was substantially larger than the exchange rate volatility.

So there you have it. My mini-series on arbitrage betting is now complete. I will likely post further arbitrage related posts in the future, but this initial series was designed to get you onto the same page as myself. If you haven’t done so already, be sure to check out my homemade arbitrage calculators in the Tools section.