By:Sharon
2009-10-14

Arbitrage betting is, in simple terms, using the differences in odds, within the same market with different bookmakers, to ensure that the person making the bet covers all possible eventualities and thus will make a profit regardless of the final result. While in traditional terms this form of betting usually involved large sums of money and was a “cloak and dagger” operation with the “arber” often employing people to make his bets with various bookmakers so as to go undetected, in recent times the development of online betting exchanges such as Betfair, has seen the opportunities for the average punter to try his luck with this form of betting.

The facility offered by betting exchanges to lay as well as back an outcome means that it is possible to find a situation where a punter can lay against a selection in one market against one punter and then find the same market with another punter and back the selection in that market. If the odds offered fall within a certain criteria, namely that the lay bet is shorter odds than the back bet, then regardless of the outcome and which bet succeeds, the arbitrager will make a small profit overall. It is worth pointing out here that the commission charged by betting exchanges on winning bets needs to be factored in.

For example, the 3.15 at Kempton sees a horse called “Eggnog” running. You find one market where a punter has offered odds of 5-1 on Eggnog winning that race. You therefore place a £20 bet on at these odds. Next, you find a market where you can lay against Eggnog at odds below 5-1, the lower the better. Say you find a market where Eggnog is 3-1. You then lay against Eggnog in this race up to a value that covers your bet on Eggnog (£20), but does not exceed the amount you will receive should Eggnog win (£100).  Let’s say you accept one bet at £30 on Eggnog at 3-1. If Eggnog wins the race you must pay the punter who accepted the 3-1 odds £90, however you will receive £100 from the bet you successfully had, plus your £20 stake back.  A profit of £10. Should Eggnog lose the race you will lose your £20 bet backing Eggnog, but receive the £30 stake from the punter for his bet for a profit of £10.

Specialist software is available to search the markets for possible arbitrage combinations and although the profits made are generally small, they can for the punter willing to invest the time and accept the inherent risks (such as cancelled bets which can cause a loss) be a productive way to increase profits on Betfair and other betting exchanges.