Arbitrage or Zero Risk Betting

As you can see from the rest of this site, when it comes to betting I like to risk as little as I possibly can on any bet. This helps to both protect my betting bank and also let’s me sleep a whole lot better. One of the ways we can do this is to use Arbitrage, or as it is more commonly known, Zero Risk Betting.

So what exactly is Arbitrage Betting?

Arbitrage is defined as:

“… the practice of taking advantage of a price difference between two or more markets: striking a combination of matching deals that capitalize upon the imbalance, the profit being the difference between the Market prices”. (Source: Wikipedia)

Put simply, when we apply Arbitrage to betting, it means taking advantage of different prices given by different bookmakers on the same event.

The Overround

Before we place any Arbitrage bets we first need to understand the “Overround” that the bookmakers apply to all betting events.

For example, if we take a simple betting event, like a snooker match between two players, then because in Snooker there is always a winner, then there only two possible outcomes. In this example we will say that a single bookmaker is offering the following odds:

Player A : 3/5 (or 1.60 in Decimal Odds) and
Player B : 11/10 (or 2.10 in Decimal Odds)

From the odds we can see that the probability of Player A winning is 62.38% (1 / 1.60 x 100) and the probability of Player B winning is 47.62% (1 / 2.10 * 100).

Add these probabilities together and we get 110.00%.

Anything above 100% is known as the Overround. So in this example we can see that the bookmaker will make 10% profit (regardless of the outcome) as long as they can take bets in the right proportions (i.e. the Stake x Probability). So if we assume a £100 Stake then this is what happens when the bookmaker lays those odds.

He would lay £62.38 at 1.60 for Player A and £47.62 at 2.10 for Player B.

If Player A wins then he pays out £62.38 x 0.60 or £37.62 and keeps the £47.62 from Player B giving him a profit of £10.

If Player B wins then he pays out £47.32 x 1.10 or £52.38 and keeps the £62.38 from Player A again giving him a profit of £10.

This is how bookmakers make money. Obviously they are not always going to be able to lay bets in the correct proportions so to account for this they are constantly adjusting their odds. Trying to maintain their Overround and their profits.

The Underround

In order for us, the punters to make guaranteed profits, we need to be able to bet (again in the correct proportions) where the probabilities on all the outcomes add up to less than 100%.

Let’s take another set of odds (albeit exaggerated to prove a point), only this time we want to illustrate the Underround.

Player A : 11/10 (or 2.10 in Decimal Odds) and
Player B : 11/10 (or 2.10 in Decimal Odds)

Again we work out the probabilities. The probability of either Player winning is 47.62% (1 / 2.10 * 100). Which, when added together gives 95.24%. An Underround of 4.76%.

We now back both players for £47.62 (£100 Stake x 47.62% Probability) at odds of 2.10. Here’s what happens;

Whichever Player wins we will receive £47.62 x 1.10 or £52.38 but lose £47.62 on the other Player giving us a net profit of £4.76.

So in this scenario we make £4.76 no matter what the outcome may be.

Events with Multiple Outcomes

The same principles apply no matter how many outcomes there are.

In a football match there are three outcomes, Home, Draw and Away. And as long as the probabilities for all three outcomes add up to less than 100% then we can profit no matter which outcome wins, but only as long as we stake the correct amount on each outcome.

In Summary

Of course you will not find a single bookmaker offering the kinds of odds we have used in our Underround example, but as bookmaking is more competitive now than ever, you will find different bookmakers offering a wider range of odds for the same event. So if you look for the best odds from each bookmaker, and combine the probabilities, there are plenty of Arbitrage opportunities everyday.

In our Underround example we would have staked £95.25 but made a profit of £4.76 (no matter who won the event), that’s a return on investment of 5%. Not too shabby for a bet which carried absolutely no risk.

You do, however, need to be careful when Arbitraging. You need to make sure that the bets you are placing are all for the same event and have the same/similar rules. For example in a football match one bookmaker may be offering the odds for the result after 90 minutes and the other bookmaker is offering the result for an event which includes extra time, etc.

Odds like the ones we are looking out for do not hang around for very long so you need to be quick. This is why I would recommend using something like 100% Winners. Their software quickly finds the most profitable Arbitrages (aka Arbs) so that you don’t have to. Also you will find that when using 100% Winners a 5% Arb is somewhat on the low side, with profits of 10%-20% being more the norm.

Remember, there is no need to use large stakes when you are first starting off. You should always stay well within your comfort zone, maybe even try paper trading at first just to get the hang of it.