Curb Your Enthusiasm: Four Reasons Why Sports Betting Arbitrage Probably Won't Work For U.S. Gamblers

The removal of the federal ban on sports gambling is inevitably going to lead to an explosion of online betting opportunities across the United States. It was already legal in Nevada, it was very quickly legalized in New Jersey, and it's right on the doorstep in several other states.

Sports Betting Screens

This explosion of interest is going to be accompanied by an equal explosion of promotion of betting systems and strategies. One that you'll almost certainly be hearing about is arbitrage. The core concept is pretty simple; you place two different bets on the same game, but at different odds such that you can't possibly lose money.

Here's the simplest possible example. Say you're betting on a game with a clear favorite. You go to one bookmaker and place a relatively small moneyline bet on the underdog. You then go to another bookmaker (who is offering different odds) and place a much larger moneyline bet on the favorite.

The way the payouts work out, you wind up with a small profit with either result. If the favorite wins, your payout covers the relatively small loss from your bet on the underdog with a little profit left over. Likewise, if the underdog wins, the large win you get covers the other loss and leaves you with a bit of money. It's a small return in most cases, but there is essentially no risk.

Unlike nearly all other betting systems, arbitrage actually works. So why isn't everyone doing it? It's because there are a few very big obstacles to success.

1) It Takes a Lot of Liquidity to Make a Little Money 

While there is no risk when it is done right, you'll need a whole lot of cash on hand just to make a little bit of money.

Think roughly $1,000 tied up in two wagers to make an expected profit of about $25.

2) Bookmakers Really Don't Like It 

An arbitrage bet is never actually 100% guaranteed. That's because a bookmaker could cancel one end of the bet at any time.

Most have policies against arbitrage and are well within their rights to cancel a bet if they suspect it. You might even find yourself 86'd over it.

3) It's Practically A Full-Time Job 

The internet does make scanning for arbitrage conditions much easier (this used to be the exclusive province of "syndicates" who monitored casino sportsbooks in person), but it's still difficult to get exactly the right pair of bets together. Sportsbooks are constantly moving their lines based on betting activity.

Due to the action of other people engaging in arbitrage, a favorable bet can be gone in as little as a few minutes after posting thanks to everyone else jumping all over it.

4) One Mistake Can Wipe You Out 

As mentioned earlier, you're tying up a lot of funds just to guarantee a small win. A momentary lapse of attention can put you in a guaranteed loss situation that wipes hundreds, even thousands of dollars out of your bankroll.

Same story if a casino decides to suddenly ban your account with a bunch of bet pairs already locked in.

Arbitrage betting is something that is tough to get right under optimal conditions. It becomes impossible if sportsbooks opt to share player data.

With geographic restrictions and relatively few sportsbooks operating in each state, it's likely to be too tough for the average bettor to regularly pull off.