The latest phenomenon to hit the betting scene in the lat few years is the Betting Exchanges. These are bookmakers with a difference. Whereas traditionally the public could only bet on one side of a bet, on a betting exchange you can also lay the bet as if you were acting as the bookmaker. This is person to person betting.
The exchanges are actually only a method of putting the transaction of the two sides of the bet together. The 'punter' nominates the price at which they are offering to have a bet and this needs to be matched against a 'punter' who will take the reciprocal side of the bet. By seeing and being able to participate in both sides of the bet a number of interesting possibilities arise.
The agreement between the two sides of the bet is agreed and the Betting Exchange make their money by taking a small percentage (typically 5%) of the winnings on the market. As with traditional bookmakers, no taxes are payable by the individual as the betting exchange is taxed out of its profits. One other aspect of the exchanges is that the total amount of money being wagered is there for all to see. You will see different amounts of money being offered on bets at different prices.
Exchanges make a profit by taking a commission, usually 5%, on your net winnings on your market. If you lose no commission is payable.
Here is a recent example of an international football match, Poland versus England.
One can see that the odds are in decimal format. The punter has the opportunity to back the result or lay the result. The amounts of money indicated are the maximum amounts wagered by other punters to match your bet against at that price.
You can see that the best price to back Poland to win is 5.1. However there is only
£117 on offer at this time, so this would be the maximum bet. If you would like to take slightly reduced odds then 5.0 is available and the maximum available wager is
£879.
If you wanted to act as the bookmaker and lay the Polish team to win then the odds would be 5.2. the odds in the pink columns are the ones offering the best odds at that time.
Total Selections
Back
Lay
(3)
Poland
4.9
5
5.1
5.2
5.3
5.4
£321 £879 £117
£677
£9
£33
England 1.94 1.95 1.96
1.97
1.98
1.99
£1342 £5047 £69
£5800
£1384
£451
The
3.4
3.25
3.3
3.35
3.45
3.5
Draw
£1078
£293 £741 £578
£2679
£156
Visit www.SportsBettingLoophole.com
Typically the Betting Exchanges will have keener prices, but you must remember the small percentage that the exchange takes as profit when the bet is settled.
There are tutorials on the exchange sites explaining how the bets are placed and what you will pay. This course assumes a certain amount of knowledge on this and so it is imperative that you do visit these tutorials. Also you can practice placing bets for free until you are confident of the way they work.
The Betting Exchanges should be used as another source of prices and also in laying a bet to complete the arb. Note however that the odds comparison sites will not include the commission when listing their odds. This is because the commission typically will start at 5% but may be reduced if your turnover is high enough.
There are many arbitrage opportunities to be had from using the exchanges as the prices are nearly always keener.
It is also easy to see what your possible maximum stake is going to be, it will depend on the amount of business, or liquidity, on the corresponding half of the bet.
If the price that you are looking for to make an arbitrage is not available you can offer it on the exchanges and see if it is taken. Then you can complete the arbitrage. This is a very important source of revenue. If you can lay the bet on the exchange then you potentially have another route to creating sporting arbitrages. However you will need to make sure that the other part of the arb doesn't disappear in the meantime.
The majority of the betting activity clearly takes place in the run up to an event. This is obviously demonstrated by the amount of money being wagered on the exchanges.
It is there for all to see.
The prices will fluctuate more and more the closer the event comes to starting. There is more than one way to profit from the exchanges by looking at the amount of money being wagered and whether the weight of money is on backing or laying the competitor or team.
However this involves an element of risk and so falls outside of the remit of this course. Use the betting exchanges to create arbs. To reiterate you will find the prices are a lot more competitive in most cases.
Betting Exchanges have fallen foul of some adverse publicity recently, I am not entirely sure it is justified. Any conceivable type of bet that a bookmaker offers is likely to be offered on the Exchanges. However they are here to stay and threaten to take a slice out of the bookmakers’ profits. Betfair.com is currently the largest Exchange but do an internet search for others. Watch with interest!
These Exchanges are driven by the growth in the internet and the on-line community.
Visit www.SportsBettingLoophole.com
Chapter 13 - Avoid getting spotted as an arb trader.
It might have crossed your mind by now that the bookmakers are not stupid. At this point I have to admit that I do have a grudging respect for bookmakers. They have a difficult task balancing their books between offering competitive odds and making a profit.
The odds compilers who stick their neck out with early prices and prices that contradict the market have an attitude that rewards them at the end of the year when they look at the bottom line. Serious punters respect them for offering a fair game and not being sheep that just follow the herd!
However they are there to make a profit and as soon as they suspect you of arb trading they will possibly curtail your activity. They can close your account but in reality they are more likely to limit the stakes you can place on any event. Your account will become ‘marked’.
Once it is ‘marked’ there is very little you can do to change this. The bookmakers mark accounts in different ways ranging from good customer (mug punter) to unprofitable customer (professional punter).
A marked account will seriously curtail your activities as the stakes you can place will be drastically reduced, say £50 to £100. After a while you should expect to be betting upwards of £500 on each leg of your arb, if maximum stakes permit.
It’s difficult to list the limits that bookmakers will allow you to place as it will depend on your status as a customer. If you are betting a lot then the bookmaker will for example give you a new number to call so that you can place your bets quicker. This is a sure sign that they think you are a ‘good customer’ (loser to you and me).
Inevitably they will raise the limit on the maximum stake that you can place, if you have a proven record of large losses.
Ladbrokes, among others, act in a fashion similar to this treating their better customers with a better service. Clearly via the Internet everyone gets the same web address with which to place their bets. However you may find your Internet limit is also creeping up if you become more valued.
Clearly not all bookmakers will offer the same betting limits on an event. They each have their own limits and set a level of exposure. The limits may well vary from week to week for no discernable reason.
Some bookmakers will not display their limits and this can only be found in the first instance when placing the bet. This can be frustrating especially if the other half of the arb has already been placed. It is a risk and something that needs to be considered.
Only past experience will give you information on what the bookmaker is likely to accept from you. The other factors which might affect their decision are the time of day, have they currently the resources on hand to assess the risk of a large bet, and the amount of money already wagered by other 'punters'.
Visit www.SportsBettingLoophole.com
Even if you are winning a few hundred pounds a month from one bookmaker this isn’t a great deal, but if you are a consistent winner then they will start to suspect. In reality you may be making several thousand pounds a month but your activity will be spread across a large number of firms.
It would be unusual to consistently win more than £500 a month from a single bookmaker using arbing. This would indicate that the bookmaker is consistently getting their prices wrong.
At this level of winning bookmakers will not share information of clients’ activities between each other as this is fairly small change to them. They are only likely to exchange information on fraudulent activities which could cost the industry money.
Remember creating arbs is perfectly legal and ethical.
Let us first analyse how they would spot you as being an arb trader, placing consistently high stakes. This is less obvious than it sounds. Betting is such big business that the amount of high stakes being wagered is quite unbelievable. This is particularly true of horse racing, which although, as stated before, isn’t very good for arbs, one more big bet goes relatively unnoticed.
If you are wagering a few hundred then this should be O.K. If a bookmaker will not take a bet of say £500 then they can’t really be that big and will not be your first port of call. However don’t just dismiss them. It is when you win consistently big bets that the suspicions might arise.
The nice thing about arbs trading is that for every winning bet there is at least one losing one, except for the rare occasions when you might win a double whammy. This hides your activity so that it is less suspicious. As you don’t know which side of the bet is going to win it can be a little frustrating to see one account with all wins on it and another with all losses.
The winning account may well get marked as suspiciously successful. Don’t forget bookmakers don’t mind the occasional winning bet, in fact they like it because it keeps the customers coming back, but regular successful winners that affect their bottom line are very bad news and must be stopped.
This is why 3 way bets like win, lose and draw outcomes are good because for every win you will have two losing bets on your accounts. Admittedly the wining bet will outweigh the two losing ones, but a greater number of losses on an account than wins will disguise the fact that overall your trading is in profit.
On a regular basis the bookmaker will run a report to list those clients which are making a profit. The report will typically be divided into sports, betting amounts, types of bets and frequency of bets. A high wager infrequently on a particular sport will ring alarm bells. As an arb trader you should be able to hide your profitable trading.
It would be unlikely for a successful arb trader to brag that they have had their account closed because this limits their trading possibilities and can be considered a Visit www.SportsBettingLoophole.com
set back. There are about twenty main bookmakers that I like to keep returning to because they offer the best arbs and take the highest wagers.
These ‘favourites’ should be treated with special care if at all possible and try not to draw unnecessary attention to your trading activities.
Betting on unusual events at a consistent level will draw attention to your activities.
There is only so much money they will accept on minor league Scandinavian soccer matches before suspicions are aroused! The rule here is to try to spread the bets across a number of firms if at all possible. Especially if you are winning.
If possible use friends and relatives to open accounts in their name and use their accounts. Be sure you can trust them!
Typically an arbs trader will not leave all their funds on deposit. To avoid being marked try doing this where appropriate. By this I mean making sure that you have enough cash flow to trade with elsewhere. Some bookmakers will charge you to deposit funds and also withdraw funds. This may be a slight nuisance but once you have deposited the funds with the bookmaker you will quickly retrieve this money by making arbs.
In these cases it would be wise to leave the funds on deposit so that further fees are not incurred. Perversely the same bookmakers may well off an initial bonus of 10% or over on your funds just for depositing them. This clearly offsets any transaction fees.
The method of payment you use should ideally be by debit card, or you have the possibility of using credit cards. There are other methods which incur fees and each bookmaker's terms should be checked. However the bookmaker is usually so pleased that you are depositing funds with them that they can often waive charges or offset them with bonuses as described above.
In their experience once a 'punter' is loyal to one firm they stay with them and often don't consider using other firms. They are considered 'good' customers which translates as long term profitable customers. Clearly they are not to know you are exercising arbs.
Visit www.SportsBettingLoophole.com