What is arbitrage betting?

Normally a bookie’s odds add up to more than 100% in implied probability. That extra is their margin. But bookies don’t all agree, and sometimes the best price on each side, taken from different bookies, adds up to less than 100%. That gap is an “arb”, and arbitrage betting means backing every side of it.

Watch out first

The arithmetic is simple. The practice isn’t, and that’s where people lose money:

• Odds move. You place the first bet, and the second price is gone before you click. Now you hold one ordinary bet at a big stake.
• Bets get cancelled. Bookies void bets placed on obvious pricing errors, which leaves you with one naked side.
• Rules differ. One bookie voids a tennis bet on retirement, another settles it. Both of your bets can lose.
• Accounts get limited. Soft bookies restrict or close accounts that arb regularly. It’s within their terms.
• Human error. A mistyped stake or the wrong market turns a small paper margin into a real loss.
• Money is spread thin. You need balances in many accounts, and the paper margins are small, usually a few percent before mistakes.

Example of the maths

A tennis match. Bookie 1 has Player A at 2.10. Bookie 2 has Player B at 2.05.

• 1 ÷ 2.10 = 47.6%
• 1 ÷ 2.05 = 48.8%
• Total: 96.4%. Under 100%, so on paper there’s an arb.

If stakes are split in proportion to those percentages, the return is about the same whichever player wins, and slightly above the total staked: a paper margin of roughly 3.7% here. That figure assumes both bets are accepted at those prices, both stand, and both are settled under the same rules. Each of the problems above breaks one of those assumptions.

Related terms

It’s a cousin of dutching, where you split stakes at one bookie, and of matched betting. I see arbing as a job, not a hobby. If you want betting to stay fun, this probably isn’t it.