How does Arbitrage Gambling Work & How to Detect it?
Arbitrage gambling is the strategy of placing bets with multiple firms for a sports event such that it guarantees a profit. Click here to know its works & how to detect.
Arbitrage, in sports gambling or betting, is a strategy borrowed from the finance world. In finance, arbitrage is the “simultaneous purchase and sale of an asset to profit from an imbalance in the price.” Adapted to the world of sports, arbitrage gambling is the betting strategy of placing multiple bets on the same game to gain a guaranteed profit.
It is a strategy that leverages the price differences between similar or identical financial products in different forms or on different markets. Arbitrage gambling aims to earn a profit. It is not to express support for any favored team.
What is Arbitrage Gambling?
Arbitrage gambling (variously known as arbs betting, arbing, and surewins) is the strategy of placing bets with multiple betting firms on all the possible outcomes of a sports event such that it guarantees a profit.
An arbitrage opportunity arises when betting firms take a different position on the result of a sporting event. All this means is that betting firms place odds on the results of the sporting event that differ from the bettor’s. If the variance between the bettor’s odds and that of the betting firms is significant, the bettor will make a profit - whatever the result of the game.
How does Arbitrage Gambling Work?
In arbitrage gambling, the goal is to find and exploit the weaknesses in the sports betting industry to earn a profit. Typically, betting firms (called ‘sportsbooks’ in the US, ‘betting shops’ or ‘bookmakers’ in the UK) place odds on sports events such that they bet even or near-even money on both sides. Often, the odds these betting firms place on a game are different from one another, giving rise to an arbitrage opportunity.
In arbitrage gambling, bettors place multiple bets on different results for the same game. One of the bets will win, and the others will end in a loss. When done right, overall, the bettor will make a small profit regardless of the result.
Understanding the ‘Math’
To understand the math behind arbitrage gambling, consider, as an example, a soccer match between Brazil and Argentina. Now consider the odds below - placed by bookmakers:
Bookmaker 1: Brazil +110
Bookmaker 2: Argentina +110
Here, if a bettor bets INR 100 on each team, the total money bet on this game will be INR 200.
Whichever team wins, the bettor will receive INR 110 for the winning bet and the original INR 100, making a total of INR 210.
The bettor had bet Rs 200 on the game and was sure to win INR 210 regardless of which team won. The total profit that the bettor earns on this game is INR 10. This is a good 5% return for an extremely short-term investment. The return will remain the same regardless of the amount of bet. A bigger bettor willing to risk, say, INR 2000, will earn Rs 100 on the same game. Larger bets help grow bets faster. There are, of course, multiple additional nuances- for example, the odds do not have to be identical for both bets. The example above only serves to explain the basic math behind arbing.
Arbitrage gambling requires advanced skills and is not everyone’s cup of tea. Recreational bettors are in it for fun while rooting for their favourite team. Professional bettors are in it for the profit to be made. Between these two extremes are bettors, for whom just the challenge of uncovering arbitrage situations is what is attractive about arbitrage gambling.
Arbitrage gambling requires a considerable investment of time. Even advanced, professional bettors find it challenging to uncover profitable opportunities consistently.
How do Bookmakers Detect Arbing?
Bookmakers have access to the same sources bettors have to get their arbing data. Bookmakers are fine with bettors betting on a few arbed games. Bookmakers treat occasional arbing as marketing and are fine with it. But, if arbing is all a bettor is doing - it is abuse and against the rules.
Security personnel in betting firms, using unique algorithms, can detect arbers. The AML/KYC tools used to detect arbing monitor several parameters, including:
- The size of the bet - Bettors wagering large amounts close to the upper threshold.
- Account Balance - The bettor’s account balance does not vary.
- Frequent Account Withdrawals.
- A bettor picks lesser-known games.
- The bettor repeats bets.
When betting firms detect arbing, they can act against the bettors with measures that include:
- Imposing limits on bets
- Cancelling all current bets
- Deactivating the account
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