Sports Arbitrage Problems

See also

Problems that affect sports arbitrage trading

Despite being sound in theory, there are some practical problems which mean that sports arbitrage trading does not suit everyone.

Odds changing
The biggest problem is that when bookmakers shorten their odds, obviously the arbitrage opportunity disappears. Bookmakers have a predetermined amount of money that they will accept on any selection before shortening their odds to limit their liability. Once this amount of money has been bet on the selection, the odds will be shortened.

Bookmakers will be prepared to take larger amount of money on more popular events before shortening the odds. They will only be prepared to accept relatively small stakes before changing the odds on smaller events.

If you use an arb alert service (discussed later) there will be many people betting large amounts of money on the same selections, so the bookmakers' liabilities are likely to be met very quickly. You'll need to hurry to make sure you place your bets in time before the odds change!
Limited stakes
Ideally you would find yourself a nice juicy 5% arb and stick your whole £5,000 on it, making yourself an excellent £250 profit in a few minutes. In the real world it just doesn't work that way!

As discussed above, bookmakers are only prepared to take a certain amount of money on a selection at the given odds, and they don't let one person take all the money.

Bookmakers set stake limits for everyone. These differ depending on the event. Bigger events attract larger stake limits, whilst smaller events have lower limits attached. Generally you should be allowed to stake between a couple of hundred pounds up to a couple of thousand.

However if/when bookmakers cotton onto the fact that you are an arbitrage player, they're likely to restrict your individual stakes significantly. There are some bookmakers that will pick up on your activity pretty quickly and limit you to ridiculously low stakes like £10!

Read on for my sports arbitrage tips & tricks section where I explain how to avoid the bookmakers' limits!
Long-term arbs
Ideally you would find sports arbitrage opportunities on events that are taking place one or two days ahead so that your winnings would have been returned to you and be ready to bet again within 5 days or a week.

However you will find many profitable arbs on events which are months ahead of time. Investing in these will tie up your money until the event has been decided, meaning that you wont be able to use any of that capital for other, more current arbs. On the one hand it can be argued that investing in a 5% arb that will take two months to return your investment is still far better than leaving your money in a bank's savings account. But it should also be pointed out that there might be a great number of arbs within those two months that you could invest your money in and overall make more profit as a result.

If you're just looking for a little bit of extra money I would advocate betting on long-term arbs because it produces a better return than any bank. Plus you can sit back and relax in the knowledge that you have your extra income sorted. However if you want to maximise your investment capital, it's probably better to invest in a larger number of less profitable arbs in the meantime to show a higher overall profit.
Transaction fees
Some bookmakers will charge for transactions (deposits and withdrawals) from credit cards and/or other deposit methods (e.g. NETeller, bank wire, Western Union etc...) and because we work on small percentage profits, any extra charges can eat into or wipe out any potential profit to be made.

The transaction fees are normally in the form of a percentage charge for the total amount deposited (or withdrawn). Most UK bookmakers do not charge for debit or credit card transactions, but some European or other foreign bookmakers do. Generally the bigger bookies don't impose charges because they are sufficiently well financed to absorb the charges themselves and don't want anything to put off punters from depositing their cash!

It should be noted that if you find a 2.5% arb but one bookmaker charges 2.5% for credit card deposits, you will still make a profit. How is this? Well you'll be depositing at least two stakes with different bookmakers. So you'll only be charged a fee on one stake, not the total mount. Therefore you may stake a total of £1,000 and be charged 2.5% on a £300 stake. So you may lose £7.50 (2.5% of £300) but your profit from the arb is £25 (2.5% of 31,000) and therefore overall you'll still come out with £17.50 profit.
Bookmaker goes bankrupt
If a bookmaker that you're using goes bankrupt, there's a good chance that any money that you still have with them is gone for good. This situation can be easily avoided. Stick to using well-established bookmakers that have a solid track record of paying out.

As a rule of thumb any UK bookmakers should be pretty solid because of the industry regulation in this country. Use bookmakers that are based in countries that also impose stringent regulations such as Australia.

Sports arbitrage tips & tricks

Above I outlined some of the problems that you'll come up against as a sports arbitrage trader. Below are some of those same obstacles and ways around them!

Odds changing
It's best to have a broadband internet connection so that at least you have done your very best to make sure that it's not your computer or internet connection that's slowing you down.

When you are placing your bets you should add the selections to the betslips and have all of them open at the stage where you only need to press confirm. Once you're at this last stage, check that the odds have not changed and quickly confirm all of the bets.
Limited stakes
You need to hide the fact that you're a sports arbitrage player. Once bookmakers catch on to this fact they'll limit your stakes and therefore your profits will disappear!

Here are some important points to remember:
- Never bet the maximum. Always bet 20-25% under the maximum allowed.
- Always stake whole numbers (e.g. £33 instead of £32.76 etc...) so as not to stand out.
- Don't bet on the same selection with that bookmaker again. You may find another arb on the same event, but don't use the same bookmakers to bet on the same event or selection again.
- Don't back more than one selection with the same bookmaker. You may find an arb where you would back two selections in a 3-way event with one bookmaker. Avoid doing this because few "normal" punters would do so and your bets will stick out a mile.
- Don't withdraw all your funds after each bet. It's tempting to get all your money out after each winning bet so that you can use it immediately somewhere else. Bookmakers know this pattern of betting and withdrawing and will start to restrict your bets.
Long-term arbs
Try to avoid these because it's more profitable in the long run if you bet on a greater number of less profitable arbs in the time that you money would be tied up with a more profitable long-term arb.
Transaction fees
Try to use a debit card (e.g. Switch) whenever possible because virtually nobody charges fees for their use. Or use NETeller if you can because there are not usually any fees for this, although currency conversion charges may apply.

If it's not possible to avoid fees, leave your money with that bookmaker for the next arb so that you don't have to make another deposit in future, thereby avoiding the fees.

Another clever option is to "arb your money out" of a bookmaker that charges fees. This is simply finding an arb (even a tiny one) so that your winnings will be paid into a bookmaker who doesn't charge for withdrawals.

Sports arbitrage scams

The following are knows scams that either involve, or are related to arbitrage:

Sports Arbitrage Review / Alan Seymour - www.sportsarbitragereview.com
This website first surfaced around October 2003 when "Alan Seymour" claimed to offer impartial and unaffiliated documentation of the exploits of a retired arb trader and his experiences with various arb alert services. However it soon became obvious that "Alan Seymour" was nothing but a shill for Zero-Risk-Arbitrage ("ZRA"). The ensuing debate could be followed on the Arbbest forum.

Update 12th March 2005

Now that the exposé of Alan Seymour as nothing but a fraud on Arbbest has been lost (see above Arbbest details), "Sports Arbitrage Review" is advertising on Google again.

Alan Seymour claims that this advertising is paid for by free AdWords vouchers from his host, but in reality he's been advertising for over a year. That's one heck of a lot of free vouchers!

It appears that "Alan Seymour" is actually one of the people behind ZRA (rather than just a shill or affiliate). Take what he says with a large pinch of salt!

Sports Arbitrage Investor - www.sportsarbitrageinvestor.com
This is one of those sports arbitrage investment programme scams that you should avoid like the plague! They promise a 5% return on your "investment" every day. This is impossible to deliver. And if any more proof was needed, their website design is copied directly from a bookmaker and their results are copied from a well-known arb service provider!
Arbloan.com - www.arbloan.com
Another arbitrage investment programme promising a 20% return on your "investment" every 10 days. Yet another scam. Again their results are copied from the same arb service provider as above.
Arbbest - www.arbbest.com
Recent events on the Arbbest forum (www.arbbest.com/forum/) indicate that the whole thing is yet another elaborate hoax marketing ploy by ZRA. Any derogatory comments towards ZRA are rebutted by a number of shill for the company and then removed when they think people have forgotten about the posts.

And more recently, certain members have found that their Private Messages ("PMs") have been intercepted by forum moderators and again any comments against ZRA never reached the recipient.

Like Alan Seymour / Sports Arbitrage Review, this is one website to take with a large pinch of salt!

Learn about sports arbitrage alert services in Part 6

Continue to the arbitrage alert services page to learn more.

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