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  1. #1
    GPWA Aaron is offline Private Member
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    Default The truth about sports arbitrage | by Simon Renström, RebelBetting

    If you win every time, is it still gambling? The truth about sports arbitrage


    By Simon Renström

    Imagine you could bet on both teams in a match and make a profit no matter the outcome. This is called sports arbitrage, and turns gambling into a profitable investment method. But is it really that simple?

    Many in the industry are familiar with the concept of sports arbitrage and sure bets. People have been trading for almost a decade, and a lot of people have made (and are still making) good money from it. But few know the intricacies and requirements of successful trading.

    Sports arbitrage explained
    Arbitrage is the financial term for simultaneously buying and selling the same asset in two different markets in order to take advantage of differing prices. This means you could theoretically buy shares in British Petroleum on the London Exchange, and immediately sell them on the New York Stock Exchange for a profit. In practice, however, arbitrage opportunities in the financial market seldom exist longer than a few microseconds because of high-frequency trading.

    Arbitrage in sports betting differs in three important ways. First, the bookmakers (the markets) don't strive for perfect balance like the financial markets. The odds (prices) need to be attractive in an increasingly competitive market. This leads to the existence of hundreds of arbitrage opportunities at any given moment.

    Second, the sports markets move very slowly compared to the financial markets. Sports arbitrage situations often exist for several minutes, sometimes even hours. These two differences make sports arbitrage trading thriving and profitable, although it is not without challenges.

    The third important difference is that bookmakers can deny buyers. By limiting expert players, bookmakers can deliver attractive odds and still protect themselves from traders taking advantage of their prices.

    The mathematics of a surebet
    An arbitrage arises when the sum of two or more inverted odds is below 1. The odds need to cover all possible outcomes of the match. Example:
    - Nadal to win has odds 1.80 (-125) at bookmaker William Hill.
    - Federer to win has odds 2.45 (+145) at bookmaker Gamebookers.

    If you place $585 on William Hill for Nadal to win and $430 on Gamebookers for Federer to win you have placed a total of $1,015. The different outcomes of the event are:
    - If Nadal wins, your return will be a total of $1,053 (1.8 * $585 = $1,053)
    - If Federer wins, your return will be a total of $1,053.50 (2.45 * $430 = $1,053.50)
    This means that you will profit $38 or $38.50 depending on who wins the match.

    The catch
    If sports arbitrage trading is profitable, why isn't everyone doing it? It's a good question, and the short answer is because it takes more time and effort than most people can commit to. There are also risks you need to be aware of. Just like poker or day trading, it's definitely not for everyone! There are many challenges involved.

    Most importantly, you need to invest time to educate yourself. It takes at least a week of "paper trading" (trading with little or no real money) before you're up to speed and are experienced enough to avoid the most obvious risks. Placing each trade is quick, but between trades you need to have access to a computer running sports arbitrage software that alerts you to new profitable situations.

    Even though profits can easily reach 10 percent per month, you need to have a large bankroll to get a decent hourly income. Your profits will also be proportional to the time you invest.

    These sports arbitrage opportunities (or “arbs”) usually exist for 1-10 minutes. Some arbs are around longer but that’s more of an exception than a rule. Having software that helps you place trades quickly helps. No matter your speed there is always a small risk that odds will change after you've placed your first bet and you might need to accept a small loss instead of risking your entire stake.

    A long-term challenge is that many bookmakers don't like expert players and will limit your account sooner or later.

    All these challenges can be overcome by an experienced arbitrage trader, but to get there you need to be committed and invest time. If successful, you may be rewarded with 10 percent (often tax-free) profits every month – and without the big risk associated with other investment methods, like trading on the stock market.

    Sports arbitrage for affiliates
    Arbitrage traders always try to bet their maximum allowed stake on every bet. This means they can be among the most valuable customers an affiliate can have. As an example, the average arbitrage trader bets $4,400 every month on Pinnacle Sports. This is 150 times more than the average customer bets at William Hill (according to their annual report).

    Sports arbitrage for operators
    Many bookmakers frown on all kinds of expert players and will try to detect and limit their betting activity. However, all betting exchanges, and bookmakers with more accurate and fast-moving odds (like Pinnacle Sports), welcome arbitrage traders with open arms.

    As the betting industry grows more similar to the financial market, we see an interesting shift in the industry toward automation and more balanced odds. We expect this will lead to slightly fewer arbitrage opportunities, but more importantly, a more welcoming attitude by the bookmakers. With fewer restrictions, profits will increase.

    Simon Renström is CEO of RebelBetting, producers of the world's most popular sports arbitrage software. After 15 years as a software developer and manager at some of the largest IT companies in Sweden, he quit his job to form RebelBetting in 2008 with a small team of gaming professionals and technical experts.

  2. #2
    chaumi is offline Private Member
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    OP I can get why exchanges would not be too concerned about arbers (as they - the exchanges I mean) make money either way. Though I'm sure I recall reading about Betfair shutting down arb accounts in the past? I could be mistaken.

    But I don't get Pinnacle. Clearly? they will lose money in the long run, which is why other bookmakers try to weed it out?

    The exception to this is of course if every (or the financially positive majority) of arb bets went Pinnacle's way (to balance out the losses), or they're relying on mistakes by arbers? Or is it just a lead in loss making stance, where they accept they'll see smallish losses, but increase their reputation and ultimate take overall on more profitable bets?

    I'm not knocking the arb opportunities, just want to understand why the tolerance.

  3. #3
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    TheGooner is online now Private Member
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    Usually arbs don't affect bookmakers profitability on the actual result - there is nothing smart about arb money - other than getting it on the best price - and an individual bookmaker will only be on one side of the result.

    But the problems are 1/ the size of volume - and 2/ cost of doing business.

    Bookmakers don't want to gamble - they want a balanced book. IF you anticipate the volume and have your odds set correctly, then as a bookmaker you can use the volume generated by arbitrage to help to balance the book and get a winning situation no matter what the actual result.

    ARB VOLUME
    ----------------
    The first problem comes when a set of odds at a less active bookmaker stands out and gets hit hard by arbitrage on one side - leaving the bookmaker with an unbalanced book.

    FUNDS MOVEMENT & BONUSES
    ------------------
    The second problem can also be created if the bookmaker offers FREE funds movement with e-wallets or credit cards, because these functions are not free to a bookmaker, banks charge them, and an "arbs" player will often move in money - play the angle - and then move it out for the next bet. Free deposits / withdrawals are for the casual player and a valid cost of business - if the money stays.

    So arbs aren't bad in themselves if it's just about betting the odds, but the way that most bookies are set up for "recreational players" by offering join bonuses and free funds movement means that arb players destroy the value proposition for bookmakers.

    Pinnacle have taken the approach of zero bonus and having only ONE free withdrawal a month. Additional withdrawals are charged at cost. This allows the casual player to move money in and have a withdrawal every now and then , but it also caters for the floating arb player.

    HOW OFTEN IS AN ARB REALLY AN ARB ?
    ----------------------------------------
    Finally, Simon's example of 3-4% on $1000 bet is high, often I see arbs being promoted at 1-2%, and with potential changing odds, and bet limits, you can often find that halfway through the arb you will not actually have much of an advantage at all.

    You can also see how an additional 1-2% charge on money movement removes the arb unless you are willing to keep the money in the account for a month - which is Pinnacles plan.

  4. The Following 3 Users Say Thank You to TheGooner For This Useful Post:

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  5. #4
    johnsoneggeling is offline New Member
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    That's a great one.....

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    donar is offline New Member
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    hi , you say bookmakers " want a balanced book " if they do get a balanced book are they not then just in an arbitrage situation something most of them do not want their customers to be in

    i can never ever imagine an exchange shutting down an arbers account, exchanges make their money when either the back to win or the lay to lose customer wins with their bet , what do they care if the customer is an arber or not , they want you to win. unlike bookies.
    i think sports arbitrage trading must be one of the most misunderstood things going around , i once saw a question posed " is sports arbitrage trading legal ", incredible , i would not worry about Pinnacle losing , the best book by far on the net, just how you think they will lose by accepting bets from arbers escapes me.
    and besides pinny there are many others who welcome arbers and of course the Asian books , if someone is a consistent winner with them ,they just assume their is something wrong with their system , so they try and fix it , they do not ban or limit you like ALL ??????? of the mickey mouse uk books and so many of them are out here in Australia now, donar

  7. #6
    Syndicate is offline Public Member
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    Arbs have become less frequent, and their are too many ''traders'' chasing them. While the theory of ''buy and sell'' sounds great, you have to be quicker than the 1-10 minute scale mentioned above - Furthermore, you have to find them yourselves with your own bots, and they are more likely in ''live-betting''.

    What Rebelbetting and other arbitrage websites offer is fundamentally flawed, because it creates too many people chasing the same odds. It doesn't take a genius to work out that selling the same information to multiple customers is only beneficial to the data supplier.

    Now i could write a book on this, but lets keep it short:

    1. Asian handicap bookmakers such has Pinnacle-sports work with ''dynamic odds'', and that's why they can accept winning clients. Afterall, their system works very similar to the Stock exchange, and the lines move according to the weight of money (like share prices move up and down). Since they are only selling two betting possibilities with an Asian handicap, it's easier to form a round book!

    2. If you believe the likes of the Matchbook exchange are driven by punters betting against each other you are disillusioned - While it might occur on a small scale Matchbook markets are driven by Asian bookmakers. What they are doing is taking the best odds possible, and then selling that bet for 1% commission. On top of that they get paid a small revenue by the likes of Pinnacle, IBC, Singbet, SBO etc for delivering the wager (0.1-0.3%). In some ways Matchbook is creating it's own ''arbitrage'' by commission taking on both sides - Nevertheless, it's a service that you can circumvent by having Asian accounts and trading software such has VOdds, Mollybet, Stag etc - in fact, for high rollers Matchbook offer another service called 3et !

    3. Most bookmakers are directed at the leisure market meaning they are looking for the 99% losers. Once they detect Smart money clients account will be limited or closed. The longevity of betting using such bookmakers for ''arbitrage'' is very short indeed, and if it wasn't then you guys (affiliates) wouldn't be making money - Of course people can open multiple accounts through friends and relatives, but it's messy and creepy!

    4. For the record, their are about twelve bookmakers in the world were you can win without fear of restrictions. Agents supply anonymous betting account numbers that you can change at will, meaning even if the bookmaker wanted to profile clients they couldn't. Their are also a few other possibilities, but it will depend on your agent and the volumes they send these platforms.

    5. No self respecting professional gambler/syndicate/fund would bet with any other bookmaker/exchange other than i mentioned above. We wouldn't even look at the odds on the mass market, because they are meaningless if you can't get on!

    If the likes of Rebelbetting and other Arb sites sold themselves has a superior odds checking site, that would be fine. Afterall, we pay the likes of Betradar and Runningball astronomical amounts for such services!
    Last edited by Syndicate; 18 August 2016 at 3:05 am.

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