How to succeed with arbitrage
Right, so how do you know if an arb exists? You use maths. Here is an example of how to calculate if an arbitrage exists or not:
Let's say that there is a boxing match on. For sake of example, let's say that Lewis is fighting Tyson. You may find on the internet that the best price on Lewis is 5/4, whilst for Tyson it is 6/4 (this will be from a different bookmaker!)
Now, what you want to know is whether an arb exists - will betting both ways on this result ensure that you make money?
To find out, you need to convert the odds to percentages.
Divide the right-hand side of the odds by the sum of both the sides. Then multiply by 100 to reach a percentage figure. We are looking for a result of under 100. So let's try it:
Percentage odds for Lewis: 4 / (4 + 5) x 100 = 44.4%
Percentage odds for Tyson: 4 / (4 + 6) x 100 = 40%
add: 44.4 + 40 = 84.4%
This figure is under 100, therefore an ARB EXISTS!!! Time to make some sure money.
By placing a bet at these odds at the different bookmakers would guarantee a profit!!! But how?
Here is the *key* part:
You MUST NOT back the two players in equal parts. If, for instance, you put £50 on both of these players you could lose money. The KEY to an arb bet is to back the different outcomes/fighters/players etc., IN PROPORTION TO THE ARB RATIO.
So, once you have worked out the percentages for the arb, then you must back accordingly.
Hence, in the above example, if you put £44.44 on Lewis, and £40 on Tyson, then you are guaranteed a return of £100, and a profit of 100-84.44(the stake) = £15.56. This is a *guaranteed* profit. Increasing the size of the bet would increase the profit, in proportion.
So, to recap, here you are looking for a combined total of under 100. The same applies with situations where there are three possible outcomes. Then, when you identify an arb, you must remember to back in proportion to the percentages. So, above, to find this out, you do 44.44 / 40 = 1.1. So you should always place a bet of 1.11x greater on Lewis than Tyson. This way you are always guaranteed a profit with the bookmakers you have identified as not charging tax or commission etc.,
Congratulations! You would have successfully made a profit from this.
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