- Joined
- Jan 17, 2015
- Messages
- 3,842
- Reaction score
- 1,147
- Points
- 113
- Location
- Lincolnshire
- Supports
- Ipswich Town
Gambling Tips: How to Use an Arbitrage Calculator
When we hear the word arbitrage, we think of Wall Street hedge fund managers and billion dollars being exchanged in a complex algorithm that few of us know much about. But arbitrage, in its most rudimentary form, is essentially buying low and selling high or vice versa.
If we want a more formal definition then let’s hand it off to the people who do this for a living. According to the Oxford dictionary, arbitrage is “the simultaneous buying and selling of securities, currency, or commodities in different markets or in derivative forms in order to take advantage of differing prices for the same asset.”
But sports bettors can engage in arbitrage as well and the optimum way to do this is to have multiple online betting sites with which to wager so you can compare several moneylines on one particular game. You need at least two online books to make this happen but the more “outs” you have the more likely you are to spot an arbitrage opportunity.
Certainly, for the more complex wagers, an arbitrage betting calculator can be the most beneficial tool to use but let’s make this simple. Let’s use a baseball example and assume the Red Sox are playing the Yankees. As we scan the MLB lines, we see that the Yankees are slight favorites over the Sox at most of the online books. But they are not all in agreement as some of the sites are dealing the Red Sox as favorites.
As we peruse the lines and evaluate any arbitrage opportunities, we see that bookmaker A has the Yankees at -107 while bookmaker B has Boston favored at -120. Assuming there is a 10-cent spread between the favorites and underdogs we can now bet New York at -107 at A while then betting Boston +110 (120-10 cent spread = +110) at B.
Now that we are locked in, there is no way we can lose this wager. It’s guaranteed because the arithmetic works. Yet, that doesn’t mean we are guaranteed to make money, we are only fully insured not to lose any. Let’s go through both possible scenarios below:
Scenario 1: The Yankees Win. In this scenario, we have bet the Yankees -107 to win $100 over the Red Sox. That means we are risking $107 to win $100. But we have also bet the Red Sox at +110 to beat the Yankees which means we have wagered $100 to win $110. The result is the following: We win $100 on the Yankees but lose $100 on the Red Sox giving us a zero-sum outcome, or simply put, we broke even. No harm, no foul, we were guaranteed not to lose money and we didn’t. Unfortunately, when the favorite wins in arbitrage, we always break even but never do we lose a penny.
Scenario 2: The Red Sox Win. In this scenario, like the one above, we have bet the Yankees -107 to win $100 over the Red Sox. That means we are risking $107 to win $100. But we have also bet the Red Sox at +110 to beat the Yankees which means we have wagered $100 to win $110. Because the underdog Boston Red Sox have won in this scenario, we are making money because of arbitrage. You see, we lost our Yankees bet which cost us $107, however, we won our Red Sox wager which returned us $110. Now it’s time to do some simple math to figure out how much we won. Red Sox winning (+$110) minus our losing Yankees bet (-107) equals a profit of three dollars.
But we can you hear from here – who wants to win a measly three bucks? Well, if you are a customer at some of the best betting sites then you will undoubtedly be able to get high limits. And once you are able to get these lofty limits then you can swap with much bigger dollar amounts at no risk to you.
Let’s say in the above scenario that instead of betting $100 on each side you are betting $10,000. Now instead of making $3, you are making $300. In only two successful arbs using a three-cent spread, like the one in our example, you will make as much money as most people do in a week. Remember, always use the assistance of an arbitrage calculator to make sure that your numbers are right and there is no downside, only blue skies ahead!
When we hear the word arbitrage, we think of Wall Street hedge fund managers and billion dollars being exchanged in a complex algorithm that few of us know much about. But arbitrage, in its most rudimentary form, is essentially buying low and selling high or vice versa.
If we want a more formal definition then let’s hand it off to the people who do this for a living. According to the Oxford dictionary, arbitrage is “the simultaneous buying and selling of securities, currency, or commodities in different markets or in derivative forms in order to take advantage of differing prices for the same asset.”
But sports bettors can engage in arbitrage as well and the optimum way to do this is to have multiple online betting sites with which to wager so you can compare several moneylines on one particular game. You need at least two online books to make this happen but the more “outs” you have the more likely you are to spot an arbitrage opportunity.
Certainly, for the more complex wagers, an arbitrage betting calculator can be the most beneficial tool to use but let’s make this simple. Let’s use a baseball example and assume the Red Sox are playing the Yankees. As we scan the MLB lines, we see that the Yankees are slight favorites over the Sox at most of the online books. But they are not all in agreement as some of the sites are dealing the Red Sox as favorites.
As we peruse the lines and evaluate any arbitrage opportunities, we see that bookmaker A has the Yankees at -107 while bookmaker B has Boston favored at -120. Assuming there is a 10-cent spread between the favorites and underdogs we can now bet New York at -107 at A while then betting Boston +110 (120-10 cent spread = +110) at B.
Now that we are locked in, there is no way we can lose this wager. It’s guaranteed because the arithmetic works. Yet, that doesn’t mean we are guaranteed to make money, we are only fully insured not to lose any. Let’s go through both possible scenarios below:
Scenario 1: The Yankees Win. In this scenario, we have bet the Yankees -107 to win $100 over the Red Sox. That means we are risking $107 to win $100. But we have also bet the Red Sox at +110 to beat the Yankees which means we have wagered $100 to win $110. The result is the following: We win $100 on the Yankees but lose $100 on the Red Sox giving us a zero-sum outcome, or simply put, we broke even. No harm, no foul, we were guaranteed not to lose money and we didn’t. Unfortunately, when the favorite wins in arbitrage, we always break even but never do we lose a penny.
Scenario 2: The Red Sox Win. In this scenario, like the one above, we have bet the Yankees -107 to win $100 over the Red Sox. That means we are risking $107 to win $100. But we have also bet the Red Sox at +110 to beat the Yankees which means we have wagered $100 to win $110. Because the underdog Boston Red Sox have won in this scenario, we are making money because of arbitrage. You see, we lost our Yankees bet which cost us $107, however, we won our Red Sox wager which returned us $110. Now it’s time to do some simple math to figure out how much we won. Red Sox winning (+$110) minus our losing Yankees bet (-107) equals a profit of three dollars.
But we can you hear from here – who wants to win a measly three bucks? Well, if you are a customer at some of the best betting sites then you will undoubtedly be able to get high limits. And once you are able to get these lofty limits then you can swap with much bigger dollar amounts at no risk to you.
Let’s say in the above scenario that instead of betting $100 on each side you are betting $10,000. Now instead of making $3, you are making $300. In only two successful arbs using a three-cent spread, like the one in our example, you will make as much money as most people do in a week. Remember, always use the assistance of an arbitrage calculator to make sure that your numbers are right and there is no downside, only blue skies ahead!
