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What is arbing and how does it work?
Arbing, also called Sports Arbitrage, is a betting technique where a player simultaneously places bets on all possible outcomes of an event at odds that guarantee a profit, whatever the result of the event will be. These bets are also known as arbs.
The concept of arbitrage derives from the financial field. Arbitrage is the simultaneous purchase and sale of an asset for the purpose of profiting from price imbalances. Arbitrage exists predominantly because of market inefficiencies. And would therefore not exist if all markets were perfectly efficient and balanced.
Arbing emerges in betting markets either due to bookmakers’ differing opinions on event outcomes or due to errors. Note that some bookmakers offer high odds for several sports, which may differ significantly from the market, in order to attract new clients and make them create a new account.
How arbitrage occurs?
When odds and certain conditions allow, by placing one bet per outcome with different bookmakers, the bettor can make a profit no matter what the outcome of the event will be. From a mathematical perspective, arbitrage occurs when there are a set of odds, which represent all mutually exclusive outcomes that cover all state space possibilities (i.e., all outcomes) of an event. Consequently, the implied probabilities add up to less than 1.
Consider a basketball match between teams X and Y. “Bookmaker A” offers 2.10 odds for team X to win the game, while “Bookmaker B” offers 2.05 odds for team Y. Obviously, if you place the same amount of money on both teams, you will earn at least a 2.5% net profit. However, this is not the best option. If you apply different weights, i.e., 49.4% of the total bet on team X and 50.6% of the total bet on team Y, the net profit rate reaches 3.74%!
That was one of the easiest examples that we could use for simplicity reasons. Take into account that most arbitrage opportunities, or arbs, will be more complicated than this, enabling 2-3 or even more bookmakers. Betting exchanges make arbers’ lives easier by allowing them to lay an event, in reality, sell a bet to a fellow gambler, and thus secure a profit without having to place more than 2 bets!
The crown of all arbitrage action goes to cross-market arbitrage when 2 or more events from different markets are combined to secure profit. Arbing can be practiced manually or with the use of alert services. In recent years bookmakers have adopted this accordingly, and the use of alert services has become a must in an environment of rapidly changing odds.
Arbitrage betting involves relatively large sums of money, given that most arbitrage opportunities ensure very low returns. In addition, this betting practice is not as safe as it may seem. Honestly speaking, arbing is not risk-free. In particular, such errors on odds and malpractices are usually detected quickly by bookmakers, who may proceed with a bet cancellation or account limitation and closing!
To sum up, arbing is an extremely fast-paced process. Its successful performance requires lots of time, experience, dedication and discipline, and of course, liquidity. Arbers should also take into account, among other things, the trustworthiness of bookmakers and exchanges, and use reliable alert services to discover arbing opportunities.