Arbitrage Betting Calculations
Learn and master the secrets to Arbitrage Betting Calculations
There are many different ways to calculate profit achieved with arbitrage bets. This page explains how arbitrage betting works and what you have to do to calculate the winning bets. At first, we will show you how to find arbitrage bets. On the example below we will also show you the easiest way to calculate profit by taking advantage of different odds offered by different bookmakers. In the end, we will show you how to distribute your invest into individual bets.
In the beginning finding sure bets and calculating profit may seem like a lot of work, but after few calculations you will be able to find arbitrage bets (arbs) and estimate their profit just by looking at the odds. Throughout these calculations, decimal (European) odds will be used. Don’t worry about betting odds since all bookmakers can display decimal, fractional or moneyline odds.
1. Finding Arbitrage Bets
We look for an event with two possible outcomes (e.g. tennis match – either Djokovic wins or Nadal wins), because arbs in events like this are the easiest to find.
First, you have to find two sportsbooks that offer the highest odds for each player. In the example below one sportsbook (Stan James) offers the highest odds for the favorite (Djokovic) and the other sportsbook (Pinnacle) offers the highest odds for the underdog (Nadal).
If you are planning to find sure bets yourself, the table below could be helpful. As said before, you have to find two sportsbooks that offer the highest odds on both outcomes. One bookie has to offer the highest odds on Outcome 1 and another bookie on Outcome 2. If you learn the numbers from the table, you will be able to estimate if there is an arbitrage opportunity simply by glancing at the odds at sportsbooks’ sites.
Odds for Arbitrage Opportunity
|Outcome 1||Outcome 2|
|1.2||greater than 6|
|1.3||greater than 4.33|
|1.4||greater than 3.5|
|1.5||greater than 3|
|1.6||greater than 2.66|
|1.7||greater than 2.42|
|1.8||greater than 2.25|
|1.9||greater than 2.11|
|2.0||greater than 2.0|
2. Calculating Arbitrage Percentage
After you have found bookies with the highest odds for particular match, you will have to calculate arbitrage percentage. The percentage represents the amount you have to invest in order to receive a total return of 100. In order to get arbitrage percentage you have to divide 1 with each set of odds and then add them together. The formula is:
Arbitrage Percentage = (1 / EU odds) X 100
|Individual Percentage (Djokovic)||(1 / 1.36) X 100 = 73.529%|
|Individual Percentage (Nadal)||(1 / 5.5) X 100 = 18.182%|
|Total Arbitrage Percentage||91.711%|
If the sum of the percentages is less than 100% then you have an arb. For an individual bookmaker, arbitrage percentage is always greater than 100%. The spread above 100% is the bookmakers’ margin or return rate, the amount the bookie earns on offering bets for an event. That is why bookmakers always want to have balanced book. In the example above Stan James bookmaker expects to earn around 5% on bets (73.529%+31.546%=105.075%), while Pinnacle expects to earn around 2% on bets (84.104%+18.182%=102.286%). Usual bookmaker’s margin (return rate) is around 5%.
In arbitrage betting, the idea is to find the odds at different sportsbooks, where the arbitrage percentage is below 100%. This means that the sportsbooks disagree on the chances of the outcome or have accepted too much money on one outcome of the event. This mismatch in odds can then be used to obtain profit.
So the second thing you should do is to calculate arbitrage percentage for your chosen event with two possible outcomes. You do this like in the table above (arb percentage must be below 100% so you can make a sure bet).
3. Calculating Profit
Thirdly, you have to calculate your profit on the investment. When you have the arb percentage it is easy to calculate how much you will profit if you have a certain amount of money to invest. For example, you have $1000 to invest. Here we will show you how much you are getting from this invest. The formula is:
Profit = (Investment / Total Arbitrage Percentage) – Investment
|(Investment / Total Percentage) - Investment||Profit|
|($1000 / 91.711%) - $1000||$90.38|
4. Calculating Individual Bets
Finally, you have to calculate individual bets you have to place to make the same profit no matter who wins. In order to get individual bets you have to multiply investment with individual percentage and then divide it with total arbitrage percentage. The formula is:
Individual Bet = (Investment X Individual Percentage) / Total Arbitrage Percentage
|(Investment X Individual Percentage) / Total Arbitrage Percentage||Individual Bet|
|($1000 X 73.529%) / 91.711%||$801.75|
|($1000 X 18.182%) / 91.711%||$198.25|
So for this example you have to place $801.75 on Djokovic and the remaining $198.25 on Nadal in order to make $90.38 profit of a $1000 investment.
If you think this is too much mathematics or worried that you are just not fast enough to capture the odds, leave it to us at Gaincities. Start talking to one of our sales representatives or brokers today to open your account!