Arbitrage betting, trading and hedging

Contents

    1. Arbitrage betting
      Taking advantage of the difference in odds offered by different sportsbooks to guarantee a profit no matter what the end result is. This is also called scalping.
    2. Trading
      Taking advantage of the change in odds over time to guarantee a profit no matter what the end result is.
    3. Hedging
      Betting back against your original bet to reduce or eliminate the amount you can lose.

    There is a lot more to being a winning sports bettor than betting on a team you think will win. If you can get your head around these concepts you will be ahead of 95% of other bettors and have a good chance at long term profit. Plus it is good fun!

    Arbitrage betting

    If 2 sportsbooks have very different odds on the same event you can guarantee yourself a profit no matter what the outcome is! For example if American sportsbooks take a lot of bets for Team USA to beat Germany in the  FIFA World Cup they may have to offer higher odds on Germany, to attract bets and reduce their risk if Team USA wins.

    So if Germany’s probability of winning justifies odds of 1.65 you could get them at 1.80. The same thing will happen in reverse with a German sportsbook. If Team USA’s probability of winning is 6.66 they might be at 9.50 on a German sportsbook.

    If you bet on Team USA to win with the German sportsbook at odds of 9.50 and bet on Germany to win with the American sportsbook at odds of 1.80 (and also back the draw) you will be able to profit no matter what the result. These could be the bets

    SelectionOddsPotential loss (stake)Potential win
    USA9.50100 m฿850 m฿
    Germany1.80500 m฿400 m฿
    Draw4.10200 m฿620 m฿

    These are your possible results

    SelectionIf USA winIf Germany winIf draw
    USA850 m฿-100 m฿-100 m฿
    Germany-500 m฿400 m฿-500 m฿
    Draw-200 m฿-200 m฿620 m฿
    Net result 150 m฿ 100 m฿ 200 m฿

    In order for this to be possible you need the combined probability that the odds represent to equal less than 100%. You can easily check that by putting odds from different sportsbooks into our overround and probability calculator.

    Our odds comparisons have a function to detect arbitrage opportunities and send you arbitrage alerts.

    Risks

    The potential banana skins are that different sportsbooks have different rules for settling bets under special circumstances, like a game being postponed. If you end up with your bets standing at one sportsbook and being refunded at another, you will not have guaranteed profit.

    Also if one of the bets was at an obviously “incorrect” price due to human error from the sportsbook the bet will be refunded and you will not have guaranteed profit. Sportsbooks are covered for this in their terms and conditions.

    In this case you can either let your other bets ride and hope you get lucky, or replace the canceled bet with a bet on the same selection but at lower odds. That will likely guarantee a small loss no matter the result.

    Trading

    Odds can change a great deal in the lead up to a sporting event. This could be due to change in weather or a key player being ruled out due to injury. Odds will change even more during the course of a game.

    If you can predict these price changes you can take advantage of them to guarantee yourself a profit no matter what the outcome.

    The best platforms to trade and hedge on are Nitrogen (review) and BetBTC (review) because they have the most games available for live in play betting.

    Let’s say in a FIFA World Cup “draw no bet” market Brazil score the first goal, the price for Mexico goes out to 6.00 and you back them for a stake of 100 m฿. Then Mexico scores a goal which brings Brazil’s odds to 1.36 now you back them for a stake of 412 m฿.

    These are your bets and possible results

    SelectionOddsStakeIf Mexico winIf Mexico lose
    Mexico6.00100 m฿500 m฿-100 m฿
    Brazil1.36412 m฿-412 m฿148 m฿
    Net Result88 m฿48 m฿

    Risks

    Trading is only a guaranteed way to make profit if you can predict the direction of the odds price change. For live in play betting that means predicting how the game will go.

    In the above example if Brazil maintained their initial 1 goal lead their odds would not have risen and you would not have been able to lock in a profit. However you would still have been able to reduce your liability by hedging.

    Hedging

    Hedging is when you make a bet then bet back against yourself to eliminate or reduce the amount you can lose.

    Reduce your loss

    Let’s say in the above FIFA World Cup “draw no bet” example you put your 100 m฿ bet on Mexico at odds of 6.00 but then they didn’t make a comeback, their odds got higher and you no longer thought they could win, which means you will lose 100 m฿.

    You can no longer guarantee a profit but you can minimize the loss. The odds on Brazil are down to 1.15 so you back them for a stake of 550 m฿. Your bets and your possible results are.

    SelectionOddsStakeIf Mexico winIf Mexico lose
    Mexico6.00100 m฿500 m฿-100 m฿
    Brazil1.1550 m฿-550 m฿55 m฿
    Net Result-50 m฿-45 m฿

    You are now going to lose no matter what happens but the most you can lose is 45 m฿ whereas without hedging you were going to lose 100 m฿.

    Guarantee break even or win

    A more positive hedging experience is making a risk free bet. This is where if the outcome goes your way you win but if the outcome goes against you, you break even.

    Say you think that a soccer match will not be a draw, so you back no draw before the start of the game for a stake of 1oo m฿ at odds of 1.80.

    To your delight the favorite scores 2 goals in the first half making the draw very unlikely so the odds of a draw drift out to 10.

    Now you want to back the draw but just enough to cover your risk from the initial no draw bet. It’s a stake of 11 m฿ and your bets are

    SelectionOddsStakeIf drawIf not draw
    No draw1.8100 m฿-100 m฿80 m฿
    Draw1011 m฿100 m฿-11 m฿
    Net Result0.0 m฿69 m฿

    You could have backed the draw for more and guaranteed yourself the same profit no matter what the outcome but you still think the game will not be a draw and if you are right you will win more this way.

    Most people would have let the original bet stand on its own and gamble losing 100 m฿ for the chance to win 80 m฿ rather than 69 m฿. They are usually correct because usually you lose value by making that second bet, due to the fact that the odds will include the sportsbooks overround.

    However the the hedging bet is a safe play. The original bet will still lose about 1 in 10 times and no one ever went broke by locking in profit.

    4 comments

    1. george

      Do these sportsbooks work like online billy hill, betfred etc in the fact of restricting bet size or do they take decent size bets ?

      • BitEdge

        The max bets varies a lot between the different crypto sportsbooks. Some are huge, some are small, we list them on each sportsbook’s review.

    2. brandon white

      How come im not breaking even on a draw? What am i doing wrong? If i bet money on a draw too and its not i lose.

      • BitEdge

        That means the odds must be too low to arbitrage or you bet the wrong amounts.

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