What is Sports Arbitrage?

Luke Arthur

Sports arbitrage is a type of financial transaction that takes place when an individual uses multiple sports books to create a low-risk transaction. The idea behind sports arbitrage is that an individual can try to find discrepancies in odds on sporting events and place bets in opposite directions with two sports books to make a profit. The profits that are generated from this strategy are generally small percentages which require the individual to bet more money to make a bigger profit. While this strategy is designed to be a risk-free endeavor, there are some risks associated with it, including the risk that one of the sports books could cancel a bet at any time.

Businessman with a briefcase
Businessman with a briefcase

Many sports bettors often use the technique of sports arbitrage. This practice has become more common now that a majority of sports betting takes place online. Individuals can use the Internet to access multiple sports books and the odds on hundreds of different sporting events at any given time. When a discrepancy is found between two sports books, an individual can use this to his or her advantage.

When the odds are discovered, a bettor will then place bets in opposite directions. By doing this, regardless of the outcome of the game, the individual will be able to make a profit. This results in a small profit for the investor that is equal to the discrepancy in the two different odds.

In most cases, an individual can hope to make somewhere between 2% and 5% with each bet. In some cases, larger percentages can be realized, depending on the sporting event. Individuals who hope to make larger amounts of money with this strategy have to invest substantial amounts of money. This adds a level of risk to the transaction, because the individual is then risking a larger amount of money to make a profit.

Even though many individuals view sports arbitrage as a safe endeavor, arbitrage betting is not risk-free. In fact, there are several risks that an individual must be aware of. For example, once both bets are placed, one of the sports books could decide to cancel the bet before the sporting event takes place. When this happens, the bettor will still have one bet open with the other sports book and will take on a large amount of risk at this point. Another potential problem with sports arbitrage is that the odds can move quickly, and an individual has to be quick to catch a discrepancy in many cases.

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