Arbitrage refers to the process where the bettor guarantees himself a profit irrespective of the result. This opportunity arises when different companies have varying opinions on the price of an outcome making it possible to back each selection to ensure a profit. This is best illustrated using a simple example:
Snooker match between Player A and Player B.
Best odds on offer for Player A are Evens.
Best odds on offer for Player B are 6/4.
Bettor stakes €50 on Player A at Evens to return €100 if Player A wins the match.
Bettor also stakes €40 on Player B at 6/4 to return €100 if Player B wins the match.
Now the bettor has staked €90 in total and is guaranteed a return of €100 regardless of which player wins the match resulting in a guaranteed profit of €10 from an initial investment of €90.
In certain sports bettors must familiarise themselves with the betting rules of each company before proceeding to bet. This is perhaps most relevant for betting on tennis where different companies have different rules regarding settlement of unfinished matches. Depending on the company some bookmakers will settle on a winner if at least one point has been played, others require at least a set to be completed while others require the whole match to be fully completed. A lot of these arbitrage opportunities may occur where there is a fitness doubt over one of the players meaning the player may possibly retire injured before the completion of the match. The only way to ensure you do not lose money in such a circumstance is to make sure that the two companies you bet with have the same rules for settlement on this sport.
The profit margins in these bets are usually quite small so it is preferable to only use them for markets that are to be settled in the near future as betting on long term Ante-Post markets requires you to tie up a lot of money for a period of time to guarantee yourself this profit on settlement.
Anther point to be wary of on arbitrage is that betting exchanges will deduct a percentage of all winning bets on settlement. This deduction must be calculated before you bet to ensure that there is still a guaranteed profit after the deduction.
Fixed odds bookmakers rarely make money off arbitrage customers (referred to as “arbers”) so as a result are likely to restrict the stake factor of these arbers. This means that they will only accept a smaller bet from these customers than they would from their normal customers making it difficult to place large bets and maximise your profit.