Arbitrage betting is when a bettor uses a system that exploits differentials in odds for a specific market at two or more bookmakers. It guarantees the bettor a profit, as the combined odds produce a negative margin - a margin in the bettor's favour. Continue reading to learn more about the basics of an arbitrage betting strategy.
A Pinnacle account is essential for any arbitrage bettor due to its reputation for providing the best odds with low margins and high betting limits.
arbitrage betting situations commonly occur because bookmakers differ in opinion on a particular market. This increasingly happens with more obscure events, where the variation in margins offered across a range of bookmakers is greater.
Pinnacle is widely regarded to offer the best odds online; for example, we offer margins as low as 1.5% for soccer and baseball and apply a low margin policy to all markets posted.
Therefore any serious arbitrage bettor will have a Pinnacle account - with any of the widely available arbitrage software/engines often highlighting Pinnacle on one side of an arbitrage bet.
Watch our video about the basics of arbitrage betting and why Pinnacle is happy to accept it.
Example of an arbitrage bet
To explain arbitrage betting we will use a simple example. Take the odds on a tennis match between Player A and Player B offered by two hypothetical bookmakers as illustrated in the table below.
The market percentage is indicated for each bookmaker i.e. the edge in their favour. By cross-matching the odds from Outcome 1 at Bookmaker A with Outcome 2 at Bookmaker B, the market percentage turns in the bettors favour providing a guaranteed return of 4.1% (100 - 95.9 = 4.1).
This principal can apply to any betting market, beyond just two selections, including spread betting, while it has wide application in live betting where arbitrage opportunities are constantly available by Backing and Laying in a constantly shifting market. You can also use free bonuses in an arbitrage bet to lock in a guaranteed profit, but the conditions that apply are restrictive.
Potential pitfalls of arbitrage betting
As with any type of betting there are pitfalls, and arbitrage betting is no different.
Stake limitation & account closure
Limits vary at different bookmakers, which may hinder your ability to properly exploit an arbitrage opportunity, so it is important to know that Pinnacle offer the highest limits online.
Some bookmakers also close accounts of consistently winning players. This does not happen at Pinnacle; we welcome winners as they help us tighten our odds.
Bookmakers can cancel bets where mistakes have been made, which would leave you exposed on the other side(s). This can easily wipe out your profits accrued over a long period.
To fully exploit arbitrage betting, the player must have a huge number of funded bookmaker accounts, as well as the time to take full advantage. This involves significant organisation and effort. Many practice arbitrage betting for a living (financial arbitrage) in which time invested must also be measured as a cost.
Bookmakers are constantly changing their odds and assessing risk, with arbitrage opportunities lasting seconds rather than minutes. This makes time of the essence, and when humans are time-pressured errors inevitably occur. Arbitrage software systems can help in this regard, but their cost will eat into your profit margin.