Arbitrage is ‘Sure Betting’
In the world of sports betting the art of arbitrage involves wagering on both or all sides of an event with the right combination of odds and stakes in place to make a profit whatever the outcome of that event.
The principle of arbitrage is ‘sure betting‘, supposedly with minimum risk (for the seasoned arbitrageur) and long-term, guaranteed profits.
Surely this is the closest you can come to attaining the “Holy Grail” in betting? Or maybe not?
Despite the apparent rewards on offer the number of worldwide professional sports arbitrageurs is in the low tens of thousands, not more. In comparison, the German stock market employs over 3,200 staff, whilst one of the largest providers of automated arbitrage services, RebelBetting has even fewer subscribers than this number (as we write).
So, why such a relatively small group of customers taking advantage of the so-called ‘guaranteed’ gains averaging between 1.5% and 3.5% per bet (a typical ‘arb‘ provides around 2.5%), with perhaps 15-25% potential profit on the capital employed each month? That’s a far higher reward than any bank, building society, or share dividend offers!
Is Arbitrage legal?
There is no question that arbitrage is legal because the arber is simply exploiting price differences in the market, effectively buying and selling (bets) as any trader does. There is nothing illegal about this.
However, it is understandable that bookmakers are not fond of arbers. Every company has the right (even arbitrarily) to decide who their customers should be and many bookmakers prohibit arbers from their books. As soon as suspicion is aroused bookmaker accounts are quickly limited or even closed.
High Capital Requirement and Personal Characteristics
Successful arbitrage betting ultimately guarantees small returns but the sacrifice is that the process requires large funds. The money is tied-up in the venture for a potentially long period of time.
Pursuing an average 2.5-3.0% profit per betting round and targeting a return of 15-25% of the capital employed per month, the ‘arber’ needs, for example, a starting bank of at least 25,000 € in order to make 5,000 € profit per month.
Wow! A lot of money required at the start to make it worthwhile, and entering the arbitrage arena on these terms will be impossible for many.
Of course, arbitrage betting is a pretty safe investment, but in addition to substantial funds it requires not only great expertise but also some strong personal characteristics to make it possible at all:
- Many time-consuming calculations must be performed. Ouch, lots of maths!
- Clear and complete records of every transaction must be kept. How boring!
- Discipline and consistency has to be maintained at all times. Far too unsocial!
And lastly, a really stable, reliable and fast internet connection is essential, without any limitations to any bookmaker or exchange worldwide.
However, the average punter is perhaps not such a ‘professional’ investor, but bets for fun and/or the excitement of watching an event knowing that money is riding on the outcome. Of course, he hopes to profit from the wager but his are gambles, not investments. Is that the reason why there are so few ‘arbers’ out there and active in the market?