Arbitrage Calculator Explained

Since the Supreme Court’s landmark overturning of PASPA legislation, states have been permitted to construct their own legalized sports wagering marketplace within their respective jurisdictions. Now, millions of U.S citizens have access to an endless range of betting options across a multitude of sporting events. To maximize the chances of profitability from their activity, many punters engage in ‘arbitrage betting.’ 

In simplistic terms, an arbitrage bet is a wager which secures guaranteed profit (or at least ensures no capital is lost) by exploiting two sets of odds, each facilitated by differing sportsbook firms, to generate winnings irrespective of the outcome that materializes. Using an arbitrage calculator easily helps you achieve this.

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How does the Arbitrage Calculator work?

The concept of arbitrage betting is underpinned by a set of complex algorithms, which are utilized to determine what stake a bettor must place for a specific wagering act to become profitable. Indeed, given the intricate nature of the involved sums, an individual who has to work out the figure mentioned above without assistance would be time-consuming, extremely challenging, and potentially often produce inaccurate results. 

Importance of a Calculator

A sports betting arbitrage calculator conducts all the heavy lifting on behalf of the bettor, allowing these types of wagers to be placed with confidence and assurance of a payout. 

An arbitrage betting calculator operates by working out the optimal stake that must be placed on a ‘secondary’ bet, which would back the opposing outcome of the ‘original’ wager to deliver the strongest possible prize pot. 

Step-by-step guide:

1. Initial preparation: The bettor must first locate two bets issued by different sportsbooks linked to contrasting outcomes resulting from the same sporting fixture/event. The arbitrage calculator will later share whether there is ‘value’ in placing wagers on the specific odds and whether it serves as a workable arbitrage bet.    
2. The bettor enters the total amount of money they want to wager, then enters the odds provided by the first sportsbook. This can be referred to as the ‘original’ bet. 
3. The bettor must then enter the odds provided on the conflicting outcome, facilitated by the second sportsbook. This can be referred to as the ‘secondary’ bet.
4. The calculator will then instruct the bettor on what stake must be placed on the ‘secondary’ bet to ensure that profit is made (or at least no loss suffered), irrespective of the result.

Opportunities to take advantage of the arbitrage betting model 

Regardless of the sporting context, whether it be about an individual competing in a singles match, two teams going toe-to-toe in a league fixture, or a competition that involves a group of participants (whether in individual or group format), the arbitrage betting approach can be manipulated to acquire significant wagering returns.  

Perhaps the most pressing arbitrage opportunity in this regard is the upcoming 2022 FIFA World Cup, which sees 32 international sides duel for football’s ultimate prize. Before the opening game between hosts Qatar vs. Ecuador gets the tournament officially underway, sports betting platforms have been advertising an extensive range of odds markets - all of which can be harnessed to secure profits via arbitrage betting.

To whet the appetite for arguably the planet’s most remarkable sporting showpiece, we now review the credentials of several nations who will take to to the field in the Middle East:

Canada

Often casting an envious glance southwards towards its frequently more prosperous neighbor, the Maple Leafs were delighted to end the CONCACAF qualification process in the top spot, ahead of the United States (and indeed Mexico), to consolidate their current position as the strongest force in North American football.

Canada has only ever featured once at a World Cup finals, accruing precisely zero points and zero goals in a chastising appearance at Mexico ‘86. 

However, with a dynamic young Head Coach in John Herdman and a playing roster that includes the likes of pacey Bayern Munich star Alphonso Davies and Lille’s prolific frontman Jonathon David, ‘Les Rouges’ will be anticipating a far more productive campaign. 

Morocco   

Before qualifying for the World Cup in Russia four years ago, the North Africans endured a two-decade-long exodus from football’s most prestigious international competition. Vahid Halilhodžić, who guided the Moroccans’ safe passage to Qatar, has been relieved of his duties since qualification. Astonishingly, this is the third occasion he’s succumbed to such a fate, being dismissed by both Ivory Coast and Japan ahead of World Cups in 2010 and 2018, respectively. 

Halilhodžić’s exit paves the way for Chelsea winger Hakim Ziyech to return to the fold after sensationally quitting the national side after a major bust-up with the Bosnian coach. Ziyech will be joined in the squad by marauding full-back Achraf Hakimi, arguably the Atlas Lions’ current starman. 

Brazil

Assuming the normal position of bookies' favorite, Tite’s men easily stormed through qualification, netting 40 goals and remaining undefeated throughout.

The Seleção were unceremoniously dumped out at the quarter-final stage last time round but avenged their World Cup woes by bouncing immediately back to win the 2019 Copa America. Brazil will arrive in the Middle East still raw from losing to bitter rivals Argentina in the 2021 edition of South America’s continental tournament. Based on their last exploits, they’ll hope this is a positive omen for their chances in Qatar. 

France    

Controversy often follows ‘Les Bleus’ around in their navigation of international competitions, with player spats, managerial meltdowns, and shock results all featuring in recent years. However, those who write off the French do so at their peril.

Within the last quarter of a century, Didier Deschamps has won three major tournaments, skippering France to World Cup and European Championship glory in 1998 and 2000, respectively, before lifting the Jules Rimet Trophy as manager at Russia 2018. 

Deschamps, who has now entered his tenth year as national team boss, has an embarrassment of riches at his disposal, picking from a squad that includes highly-experienced elite campaigners and youthful talent and exuberance.   

Qatar

To some, the hosts will feel a little like an unknown quantity, but those who have followed the progress of Qatari football in recent times will be aware that the ‘Crimsons’ aren’t just there to make up the numbers. 

An AFC Cup triumph in 2019 underlines their international pedigree, while a Top 50 place in the FIFA World Rankings suggests they’ll be at least competitive on home soil. A group of Netherlands, Senegal, and Ecuador will be a good challenge for Felix Sanchez’s side, who will be desperate to prove wrong those who have doubted Qatar’s legitimacy as a worthy footballing power. 

Arbitrage betting strategies 

Before undertaking an arbitrage bet, players must have a firm handle on their betting strategy. Having complete clarity on methodology mitigates the risk of mistakes when calculating stakes and ensures bettors are fully aware of their potential earnings. 

There are two fundamental arbitrage betting strategies:

Making a profit regardless of the result 

In this circumstance, bettors will use an arbitrage calculator to ensure that irrespective of the wager placed, and whatever outcome occurs, no losses will be incurred. Often, unless the stake volume is exceptionally high, these types of bets will result in punters earning an extremely modest profit. However, as winnings accumulate and a player’s ‘payroll’ grows, the opportunity for making a higher investment in bets (and therefore returning greater profits) also increases. 

Leaning towards one potential outcome 

Although this betting style is technically not consistent with the true ‘spirit’ of arbitrage betting, it still presents a solid opportunity to bank some considerable profits. In this scenario, players leave themselves vulnerable to taking a marginal loss to boost their returns if a favorable result lands. In this way, this approach could be said to operate on a sliding scale, where bettors decide how much they’re prepared to lose to grow their potential return on investment. 

This strategy is perfect when there is a genuine belief that a specific outcome may transpire, but there is also some reluctance to back the bet entirely. Therefore, if the desired result doesn’t materialize, the loss level will be far less than if the same stake was wagered on a straightforward moneyline bet.

How to find arbitrage betting opportunities

Perhaps the most challenging part of arbitrage betting is locating appropriate sets of different odds that engineer opportunities to make a profit. As this approach depends on sourcing information from multiple sports betting operators, executing an arbitrage bet requires a little more resourcefulness, patience, and effort than a ‘traditional’ wager would take to place.

Manual searches  

Of course, the more experienced an arbitrage bettor becomes, the more likely they’ll be able to spot a betting opportunity by simply scanning odds offered by various sportsbooks before an event. However, as alluded to previously, it’s difficult to understand whether any value exists in a situation until it’s been administered through an arbitrage calculator. Therefore, manually identifying profitable bets may require extensive trial and error.

Software 

Some software programs perform sweeping checks of online markets and subsequently flag arbitrage betting opportunities. However, any profits made need to be offset against the price of the software. Given the number of illicit actors in this space, bettors should always stringently probe the platform's legitimacy before purchasing. Nevertheless, if a properly functioning tool is deployed appropriately, there is potential to make some serious money through this enterprise. 

Promotions 

Often cited as the most obvious way to procure profits from gambling activity, bonuses acquired through promotional campaigns serve to deliver players even higher returns from arbitrage betting - simply because they’re free. This means that bettors have to part with less (or in some cases none) of their cash when executing their wagering strategy, instantly ensuring a higher return on investment. 

However, if punters consistently revisit the same betting site to take advantage of their selection of promotional offers, some operators may issue a banning order as a consequence. Therefore, players should use varying sportsbook firms when seeking new bonuses. 

Sports betting arbitrage example   

Perhaps the best way to illustrate an arbitrage betting procedure is to convey this through a real-world sports bet scenario. 

Example 

Chicago Bulls vs. Detroit Pistons. 

The Bulls are listed as favorites for this match-up, at odds of -175 (or 1.5 for those using decimal odds) with one bookmaker, whereas the Pistons are underdogs, with a rival sportsbook offering +200 (3.0) on a Detroit victory.

The player wants to stake a total of $100 in the contest but ensure they are profitable. 

Therefore, the player stakes $65.63 on the Chicago Bulls to win and $34.37 on a Pistons’ triumph. Regardless of the outcome, these wagers ensure that the bettor walks away with a $3.11 total payout. 

Should the punter wish to risk some capital to enhance their return on investment further if a specific outcome materializes, they would simply tweak the wagering accordingly (i.e., if a Bulls win is expected, the player places a heavier portion of the total stake on Chicago, and risks losing more money should the Pistons take the win). 

What is the difference between a hedge bet and an arbitrage bet? 

A hedge bet encompasses the same core principle as an arbitrage bet in the sense that two outcomes are backed in an effort to optimize earnings and protect profitability. However, hedge betting is a little more simplistic, as it usually involves submitting two bets facilitated by the same sportsbook. Therefore, it doesn’t require the same research level that an arbitrage wager demands. 

Here, after making an ‘original’ bet on a specific event or competition, the bettor tracks ‘live’ markets as they fluctuate in the weeks, days, or even hours preceding the contest, and when the opportune moment arrives, the player will wager against the outcome they backed in the original bet to lock-in a guaranteed profit. 

Learn more about hedging in sports betting.

For example, a bet is placed on a boxer to win an upcoming bout. This competitor was initially positioned as the marginal favorite. However, in the days leading up to the fight, a large amount of money has been staked on the expected winner to triumph, shortening their odds. Therefore, the less-fancied opponent becomes an ever more significant underdog, with this fighter’s line significantly widened before the contest. To ensure themselves a profit, the player then uses a ‘hedge calculator’ to determine the stake they now need to place as a secondary bet on the opposing boxer. 

Therefore, the critical difference between an arbitrage calculator and a hedging calculator is the time-sensitivity element and the fact that a hedge bet needs only use the services of one sportsbook in its set-up. 

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The risks of arbitrage betting (conclusion)

The usual, inherent risk attached to gambling that players can incur significant financial losses is largely removed here, as an accurately implemented arbitrage bet is always likely to garner a profit or, at worst, result in the bettor breaking even. 

However, there are certain instances where developments could serve to undermine the protection of funds. If a betting operator has made a mistake when initially posting odds, they may delist these, adjust the market, and return the player stake. Clearly, in this situation, with the bettor already committed to their other (either original or second bet), there’s a chance that a profit can no longer be made.

Furthermore, as an arbitrage calculator is dependent on stake values and betting odds being physically inputted, there is always the potential for human error. Although this is not an overly common occurrence, in theory, one mistake could cost an individual a significant amount of money. 

Nevertheless, these risks are extremely low in the context of the broader sports betting space, which relies squarely upon bettor knowledge, player and team performances, and of course, luck, as opposed to a failsafe mathematical equation. 

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FAQs

Please find responses to a handful of frequently asked questions below:

What is arbitrage betting? 

A form of wagering that guarantees an individual profit by backing two conflicting outcomes using odds provided by different sportsbook platforms. 

What is an arbitrage calculator?

A tool used to determine how much of a stake should be leveraged on each outcome to secure a profit regardless of the result. Calculator inputs should be adjusted if a player is prepared to incur some cash risk so that potential return on investment is boosted. 

How is an arbitrage calculator used?

The process for using an arbitrage calculator is straightforward. Players must simply input their desired stake and enter the original and secondary bet odds. The tool will then calculate the wagering amount required for each outcome. 

What is hedge betting?

Hedge betting involves backing the opposing outcome to the original bet made after odds associated with a specific event have altered over time. A hedge bet calculator is deployed to work out the stake for the secondary wager.