We can analyze this risk-free strategy a bit further.Yngwie/Sawyer wrote: If you want to take your chance with Value Betting but scared of risk, you can use risk-free method also. It works this way,
You're simply arbing but leaving the profit on softbook side.
When arbing you make like this,
Chicago +100 (2,00)
New York +120 (2,20)
Arb value is %4.76.
You can risk 1200€ on Chicago at 2,00 and New York at 1091€ for 109€ profit regardless of result.
You risk 1200€ on Chicago at 2,00.
And just 1000€ on New York at 2,20!
If Chicago wins, your net profit is 200€!
If New York wins, then your net profit is 0€. You're breakeven.
This is equivalent of placing an arb of €1100 on Chicago and €1000 on New York and a straight bet of €100 on Chicago.
The value from the arb now drops to €100. If we assume that the expected return of the Chicago bet is 15%, although this may be a little optimistic, the value of the straight bet becomes €15. This yields a value of €115 for the risk-free strategy overall which is a little higher than that of conventional arbitrage. Perhaps over the long haul this strategy could yield 5% more profits over arbitrage which is not bad given that we are not taking any risks, but if we want to achieve higher profits we must bet much more aggresively.