7.4 Arbitrage and Trading Principles

Arbitrage and trading bet is a mathematical situation to win a bet, no matter the final score.

Arbitrage Betting:

Arbitrage can be achieved between two opposite bets like Under2.5/Over2.5, Both Teams to Score: “Yes or No” etc.

It can be achieved before the kick of or in-play the game.

How to understand when there is an arbitrage situation.

Let’s make an example:

At the game Swansea vs Liverpool, 01-05-2016

Under2.5 has an odd : 1.95

Over2.5 has an odd : 1.98

How to understand when there is an arbitrage:

Εg. Start by placing a bet at Under2.5.

Indicator Rate (IR) = ( Under2.5[odd] – 1.00 )     (1)

There is an arbitrage if:

Over2.5[odd] >= Under2.5[odd] / IR                     (2)

The available stake for Over2.5 is:

Over2.5[stake] = ( Under2.5[odd] / Over2.5[odd] ) * Under2.5[stake]                   (3)

In the above example I first make a bet at Under2.5.

I will bet 100€ at Under2.5 with odd=1.95

From (1):

IR = 1.95-1.00 = 0.95

In order to make an arbitrage bet, Over2.5 odd must be bigger than:

From (2):

Over2.5[odd] >= 1.95 / 0.95 = 2.05

In Betfair Exchange I can bet with odd 2.06.

If Over2.5 has an odd=2.06, the available stake to make profit at all scores is:

From (3):

Over2.5[stake] = (1.95 / 2.06 ) * 100 = 94.66

Finally,

Under2.5 : odd=1.95, stake=100.00€

Over2.5 : odd=2.06, stake=94.66€

Profit at all scores 0.34€.

Arbitrage betting can be achieved in traditional bookmakers sometimes before the kick of but more common in-play the game.

Trading betting can only be achieved in an Exchange market because we need a Back and a Lay bet.

Trading can be achieved before the kick of or in-play the game.

The situation to have a trading is very simple. You only need:

Back bet > Lay bet

Let’s make an example

At the game Swansea vs Liverpool, 01-05-2016

Back Under2.5 has an odd : 1.95

Lay Under2.5 has an odd : 2.02

If place a bet at Under2.5 with stake=100€ and odd=1.95

If before the kick off or in-play:

Lay Under2.5[odd] < 1.95 then you can make a trading bet,

Lay Under2.5[stake] = ( Back Under2.5[odd] / Lay Under2.5[odd] ) * Back Under2.5[stake]

Let’s assume Lay Under2.5 = 1.90

Lay Under2.5[stake] = (1.95 / 1.90 ) * 100 = 102.631€

Finally,

Under2.5 : Back odd=1.95, stake=100.00€

Under2.5 : Lay odd=2.02, stake=102.631€

Profit at all scores 2.63€.