Exchange Arbitrage Guide

Cross-exchange arbitrage involves taking advantage of price differences between two different betting exchanges. For example, you might back a selection on Betfair at 2.10 and lay the same selection on Betdaq at 2.15.

Example:

Manchester United vs Liverpool:

• Back Manchester United on Betfair at 2.10
• Lay Manchester United on Betdaq at 2.15
• Profit: ~2.3% (before commission)

This strategy requires accounts with multiple exchanges and often specialized software to identify opportunities quickly.

Back/lay arbitrage involves backing a selection on one exchange and laying the same selection on another exchange or the same exchange. This is the most common form of arbitrage and can be executed on a single exchange.

Example:

Rafael Nadal vs Novak Djokovic:

• Back Nadal on Betfair at 1.95
• Lay Nadal on the same exchange at 1.98
• Profit: ~1.5% (before commission)

This strategy is particularly effective when there's a significant price movement in a short period, creating a discrepancy between the back and lay prices.

Exchange-to-bookmaker arbitrage involves taking a position on a traditional bookmaker and the opposite position on an exchange. This can be particularly profitable when bookmakers offer promotional odds or when there are significant price discrepancies.

Example:

Golden State Warriors vs LA Lakers:

• Back Warriors on Pinnacle at 1.85
• Lay Warriors on Betfair at 1.90
• Profit: ~2.7% (before commission)

This strategy requires accounts with both traditional bookmakers and exchanges, and often a broker to access restricted bookmakers.

Multi-way arbitrage involves taking advantage of price discrepancies across multiple outcomes of the same event. This is more complex but can be more profitable, especially in markets with three or more possible outcomes.

Example:

Football match (Home Win/Draw/Away Win):

• Back Home Win on Exchange A at 2.20
• Back Draw on Exchange B at 3.50
• Back Away Win on Exchange C at 3.80
• Total implied probability: 97.5%
• Profit: ~2.5% (before commission)

This strategy requires more sophisticated calculations and often specialized software to identify opportunities.

Lay-to-back arbitrage involves laying a selection at higher odds before an event, then backing it at lower odds as the market moves in your favor. This strategy can be particularly effective in volatile markets.

Example:

Football match:

1. Lay Team A at 2.20 before the match
2. Team A scores an early goal, odds drop to 1.50
3. Back Team A at 1.50
4. Lock in a profit regardless of the final result

This strategy requires good timing and an understanding of how odds move during an event.

Dutching is a form of arbitrage where you back multiple selections to ensure a profit regardless of which one wins. It's particularly useful in markets with many possible outcomes.

Example:

Horse race with 10 runners:

1. Identify the 3 horses with the best value odds
2. Calculate stakes to ensure the same profit regardless of which horse wins
3. Place the bets
4. Profit if any of your selections win

Dutching requires careful calculation and can be more profitable than backing a single selection when the odds are favorable.

Scalping involves making small, quick profits by taking advantage of small price movements. It's a form of arbitrage that requires very fast execution and is often automated.

Example:

Tennis match:

1. Back Player A at 1.95
2. Wait for odds to move to 1.93
3. Lay Player A at 1.93
4. Lock in a small profit
5. Repeat as opportunities arise

Scalping requires excellent timing and often specialized software to execute trades quickly enough to capture small price movements.

Hedging involves taking an opposing position to lock in a profit or minimize a loss. While not strictly arbitrage, it's a related strategy that can be used to secure profits.

Example:

You've backed Team A at 2.00 with $100:

1. Team A is winning, and odds have dropped to 1.20
2. Lay Team A at 1.20 for an appropriate stake
3. Lock in a profit regardless of the final result

Hedging is particularly useful when your initial bet is in a strong position, and you want to secure profits rather than risk losing your potential winnings.