There are various descriptions of this particular type of arb but it amounts to the most lucrative type of arb if it happens. It is the situation when we can win on both sides of the arb, strange, but true. If we take the game of soccer here is a real example.
We can see that the odds for the total number of throw-ins in a game are split into 3
bets. Ladbrokes may choose to price less than 21, 21 to 24 and 25 and more. Bet365
may choose to price this up as less than 26 in a match, 26 to 29 and more than 29.
They may be priced like this:
Less than 21
21 to 24
Greater than 24
Ladbrokes
15/8
7/4
7/4
Less than 26
26 to 29
Greater than 29
Bet365
9/5
7/4
2/1
You can see that with Ladbrokes we would take greater than 24 throw-ins at 7/4 and with Bet365 we would take the odds of 9/5 on less than 26 throw-ins. This would produce a nice arb. Refer back to the chart 7/4 is percentage 36.36 plus 9/5 is percentage 35.71 making an outlay of 72.07 (36.36 + 35.71) for a return of 100.
However if the middle ground of 25 throw-ins occurred both sides of the bet would pay out. This is a middle payout, bonus whatever you want to call it, but our return would be 200 not 100, both sides of the arb would be winning bets. For the bet to succeed we need to have this ‘middle ground’ where the two different sets or ranges are offered by different bookmakers.
Once in a lifetime? No, actually this is more common that you might imagine and can be very lucrative. Also, on the occasions that this arb does appear I have found that they tend to be available for longer than a typical arb paying a single figure percentage.
As discussed in previous chapters there are a number of different bets that follow this pattern of three different ranges giving rise to the possibility of a double payout.
The thing is who really knows how many throw-ins are going to occur in a match and how on earth do you price this accurately. A good team will tend to get more throw-ins as they are attacking the opposition more and throw-ins are given away as they defend. But the total number in a match is difficult for the odds compiler to accurately call.
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Here in lies a lesson for discovering arbs. On certain events it is quite difficult to estimate the odds of an event occurring with any accuracy. They can get it horribly wrong. In this example it is quite possible that both sides were wrong as an arb of nearly 30% is unusual.
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But the odds compilers must keep their odds competitive otherwise they will not attract any business. Before we start feeling sorry for bookmakers, let us move on......
Skewed arbs
Following on from the previous example lets assume that we knew the average number of throw-ins in a game is usually about 30. Clearly, in this example, Ladbrokes has lost the plot and has priced this one wrongly. Armed with this information we can be reasonably sure that the greater than 24 bet is much more likely to win than the less than 26 bet.
What we can do is adjust the arb in favour of the event that is most likely to occur to increase our profit. We do this by skewing the stakes so that if the less than 26 bet wins we just get our stake returned but if the more than 24 bet wins we shall have increased our overall profit.
We would bet 40 units on less than 26 with Bet365 at odds of 9/5 and 112 units with Ladbrokes at odds of 7/4 for greater than 24 throw-ins. Then if there were less than 26 throw-ins, which is the less likely event to happen, we would win 112 (40 @ 9/5) from Bet365 but lose the other 112 staked with Ladbrokes. We would therefore break even.
However the more likely outcome is that the number of throw-ins is greater than 24
and so we would win 308 (112 @ 7/4) from Bet365 and lose the stake of 40 with Ladbrokes. In this example the total stakes were higher but you can see we have skewed the bet so that we are judging, due to strong evidence, that one side of the arb is more likely to pay out than the other and profiting from this.
Only use skewed arbs if you are reasonably certain that one side of the event is more likely to happen than the other. We are not in the business of gambling. Although we would not lose money we want to avoid making judgement calls unless it is clearly in our interest to do so.
Split-arbs
This section opens up the possibility of creating arbs on an event by combining bets that on the face of it are unrelated. They are known in the trade as ‘split arbs’.
Let me explain further. There are only certain events where this is possible. The one most favoured is tennis. But it can work in other sports. In a tennis match you can bet on the outright winner, as explained previously. You may also be able to bet on the set score of the match. This will depend on the tournament and which stage of the tournament you are at.
Typically Grand Slam events offer set betting from the first round but for smaller tournaments bookmakers will wait to later rounds to offer set betting. For a match which has match result as well as set betting we may be able to spot a split arb. The
‘split’ comes from one half of the bet being made up of the match result and the other half being made from the set result.
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A typical tennis match may have the following match result betting. The prices are illustrated in decimal format:
A
B
C
D
E
Player A to win outright
1.5
1.4
1.44
1.55
1.5
Player B to win outright
2.5
2.75
2.5
2.42
2.5
Player A to win 3-0 in
5
4.5
5
5.4
5
sets
Player A to win 3-1 in
4.33
4.5
5.5
5
5.4
sets
Player A to win 3-2 in
5
4
3.3
4
4
sets
Player B to win 3-0 in
12
14
12
11
11
sets
Player B to win 3-1 in
8
8.5
8
7
8
sets
Player B to win 3-2 in
5
5.1
5.2
5
5
sets
The best prices for each event are highlighted in bold. As you can see if you went for the match result the best two prices from bookmakers B and D would have resulted in a bet of 64.29 + 36.36 = 100.65%. Not quite an arb. However if you combined the price for player B to win outright and player A to win each combination of set betting then the result is very different. Look at the chart below and the relevant percentage prices are listed.
A
B
C
D
E
Player A to win outright
64.29
Player B to win outright
36.36
Player A to win 3-0 in
20.00
sets
Player A to win 3-1 in
18.18
sets
Player A to win 3-2 in
20.00
sets
Player B to win 3-0 in
6.67
sets
Player B to win 3-1 in
11.76
sets
Player B to win 3-2 in
19.23
sets
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The four bets highlighted would have resulted in a book of 36.36 + 20.0 + 18.18 +
20.0 = 94.54%. This is an arb of over 5% profit and most people would not even have considered this combination. What is more, three losing bets on your account to one winning one is an added bonus as it disguises your activity as an arb trader.
The split arb was created imaginatively using two different types of bet but which would result in all events being covered. The outright win for player B and the set results for player A resulted in a ‘split arb’ of over 5%. Clearly the above example is men’s tennis over 5 sets. Quite often the men’s game is best of 3 sets, it depends on the status of the tournament. As you probably know the women’s game is always best of 3 sets. This potentially makes this type of arb easier to compute.
Tennis is the best sport for making this type of arb. You can use other sports for example soccer with half time and full-time results against the outright winner, however we need to consider the draw also in soccer and these are less lucrative opportunities.
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