The gaming industry is one of the largest, and fastest growing, industries
in the world. Its growth has mushroomed in the past decade thanks to
the Internet. For the most part, it remains true that in the long-run, the
house always wins. However, for some time now, a few individuals have
been taking advantage of little-known anomalies in the global sports-
betting markets in order to make guaranteed, risk-free profits at the
expense of the bookmakers.
These individuals are sports-arbitrage traders
The European bookie, on the other hand, [Martin, note, this is a pun based on the visual on
the right so you may want to sound slightly apologetic as you say it], tells you how much he’ll
return to you in total if you win: 2 multiplied by your stake plus your stake.
As you can see, the results are exactly the same whether you bet at 2 to 1 or at 3 point oh
oh.
You’ve probably realized that it’s easy to covert UK odds into European prices. All you do is
turn the fraction into a decimal and then add 1. The ‘1’ that you add simply represents your
original stake.
Here are some examples. Of course, the Here are some examples.
opposite is also true,
EU Price = UK Price + 1 so to convert a UK Price = EU Price - 1
European price into
1/1 => 2.00 1.25 => 1/4
the UK format, you
5/4 => 2.25 just minus 1 and turn 1.73 => 8/11
the result into a
6/4 => 2.50 2.00 => 1/1
US style prices follow a different convention. When the price is positive, for example, +200, it
represents the amount you’ll win assuming a £100 bet.
However, when the price is negative, for example -200, it represents the amount you have to
bet in order to win £100
2
How To Become A Successful Sports Arbitrage Trader
To convert positive US prices into the European equivalent, just divide by 100 and then add 1
To convert a negative US price into the European style, divide by 100 and multiply the result
by -1. Then put 1 over the result and add 1.
Don’t worry, it’s easier than it sounds and your arbitrage software will take care of it
automatically.
Every price that a bookmaker sets has a corresponding percentage. As traders, we use these
percentages to work out quickly and easily whether or not there is an arb, and if there is how
much it’s worth to us. To convert a European price into a percentage, simply put 1 over the
price and multiply the result by 100
EU Price => Percentage %
(1 / EU Price) x 100
Once you’ve converted a set of prices into percentages, just add the results together. If the
total percentage comes to less than 100%, you’ve got an arb! It’s as simple as that. Let’s go
back to the example we glossed over in the first lesson and this time let’s look at the detail...
3
How To Become A Successful Sports Arbitrage Trader
We’re looking at Lleyton Hewitt vs Fernando Gonzalez and we’re going to take William Hill’s 5
to 4 on Gonzalez together with Stan James’ price of 9 to 10 on Hewitt.
5 to 4 converts to 1 and ¼ which is the same as 1.25. Add 1 to turn it into the European price
and we’ve got 2.25
EU Price = UK Price + 1
9 to 10 is the same as 0.9. Add 1 to this and we’ve got a European price of 1.90
EU Price = UK Price + 1
This is less than 100% so we have a profitable arbitrage trade on our hands!
First, decide how much you want to invest in the total trade. In this example, I’m going to
use a round figure of £1000
Now just take this figure, multiply it by the individual bet’s percentage and then divide the
result by the total percentage
4
How To Become A Successful Sports Arbitrage Trader
At William Hill, the bet on Gonzalez is at 5 to4, which we’ve converted to 44.4444%.
Let’s put this all together now to see how this trade would look:
Plus
Your investment of £1000 pays back £1030.12 no matter which player wins.
You could, if you wanted to favour a particular player, skew your stakes in his favour. The
result would be a larger win if he wins, and less profit (or maybe a break-even) if the other
player wins.