The Ups and Downs of Arbitrage Betting and TradingPosted by Jim Makos on Oct 10, 2013 in Gambling | 2 comments
Arbitrage betting is an almost risk-free way of betting on sports. Arbitrage trading is likewise an almost risk-free way of trading any kind of financial instrument. Noticed the word “almost”? That is because you still stand to lose some money. And that is not the worst thing it can happen in arbitrage.
But let’s just start from the advantages of arbitrage betting.
- People have made a lot of money in arbitrage. Some still make a lot of money. Thus, I think new arbitrageurs can be profitable even today.
- By the time arbitrageurs have placed their bets, their profit is guaranteed. No need to wait for the final whistle.
- There is zero chance that arbitrageurs will lose money from the particular game. That is because they have bet on every possible outcome of the game.
- Given the infinite number of sports events around the globe, new opportunities for arbitrage betting will constantly arise, especially as more and more people are introduced to betting or gambling in general.
These advantages apply as well to arbitrage trading. Much like arbitrage bettors are looking at sports events, arbitrage traders do the same when trading stocks, forex, bonds, commodities, derivatives and other financial instruments, looking at the markets worldwide.
Don’t dig into arbitrage betting before reading of the disadvantages
The reason I am talking today about arbitrage, is an email I received from a visitor of my gambling blog. They are considering a career in arbitrage trading in particular.
I myself haven’t spent more than a month taking advantage of fluctuating odds and prices when trying out arbitrage. That was almost 10 years ago! So, yes, I am far from the arbitrage expert you were expecting to be talking here. Yet, my little experience has taught be enough to recommend anyone against arbitrage betting or trading. Here is why:
- You must be quick to find arbitrage bets.
- You must be super quick to find arbitrage bets. Yes, so quick that I had to write it twice for emphasis!
- While there are services, which let you know when there is an arbitrage opportunity, they come at a cost. And I have heard that by the time you get to hear of that, it’s already too late.
- Many bookmakers do not welcome bettors, who follow an arbitrage betting pattern. As a result, they may limit the stakes they are accepting from you or even forbid you to continue betting with them. Worst case scenario? To confiscate your money. Yes, that’s happened before.
- An arbitrageur has to open accounts with several betting or trading companies. These accounts also need sufficient funding. This funding will probably max out your credit card(s).
- Constant money moving. You can’t expect the results to even out among the bookmakers. At one point, an account of yours will be full of money, while the rest will be depleted. Moving money around does not only mean extra commissions with banks, but may also arise suspicions.
- And last but not least, you can still lose big chunks of money if you don’t pay close attention when placing your arbitrage bets.
Let me tell you my short story about when I finally decided to quit arbitrage betting.
As I was getting really tired the past few weeks, surfing around looking for sure bets as they are commonly known, I had found a really generous one at a golf event. That was my first (and last) bet on a golf game.
Two golfers were competing at a golf course, when I noticed the divergence of the betting odds between Betfair and another online bookmaker. Usually the ROI of a sure bet is about 1 to 2%, although you may stand lucky occasionally and find a 4 or 5% gold mine!
In my case the guaranteed profit was even better than that!
As quickly as possible, I had my Excel spreadsheet calculate the stakes and I submitted my bets concurrently at the two betting operators. What a relief! My bets were both accepted and I just had to wait for the game’s result before I got paid. Because I was going to get paid for sure, I had just bet on both golfers.
Oh, wait. What’s that at Betfair? A third possible outcome you say?
And that is when the emotion of relief converts into panic in a matter of nanoseconds!
I spent the following 5 minutes deciding how to react. I could let the specific bets as is and make a profit, unless the games ends a draw. Because that is when I was going to lose a hefty amount of my total bankroll! As I am not used to gamble with my money (I know, it sounds peculiar, but by the time gambling becomes an investing, you stop gambling with your money), I reluctantly gave away some of my future profits to cover the losses of a likely draw.
Of course, my bets now resulted to a loss, no matter the final outcome of the golf game. And no, the game did not end a draw but it still was a great lesson for me. A lesson that made me withdraw all of my funds from all the bookmakers, except Betfair. And two months later I began sports trading, leaving my arbitrage betting days behind.
People usually focus on the bright side of any investment, like in arbitrage betting or trading. Their sole worry is just how much money they can make but they neglect the fact that they can also lose money, even in this advertised as risk-free investment.
If you are going to give arbitrage a shot after all, be very careful and begin betting or trading small. Lessons can come cheap. Keep your capital safe for when you are more experienced.