How sports arbitrage works?
£500 on Balcells with bookmaker Stan James at odds of 1/1.
£400 on Hanescu with bookmaker Bet365 at odds of 6/4.
The total amount you have traded is £900.
If Balcells wins you get £1000 from bookmaker Stan James.
If Hanescu wins you get £1000 from bookmaker Bet365.
So your profit, no matter who wins, is £100 (£1000 - £900).
The key to arbitrage trading lies in converting a bookmakers odds into a percentage. If, after adding up the percentages for each leg of the event, your total percentage is less than 100, you have found an ARBITRAGE opportunity.
In this example:
Odds of 1/1 are equivalent to a percentage of 50 %.
Odds of 6/4 are equivalent to a percentage of 40 %.
The total percentage is 90 (50 + 40). You have landed an Arb because this percentage is less than 100.
Note: The arbitrage percentage is 100 minus the total percentage. In our example this is 10% (100 - 90). The greater this percentage, the larger your profits for the same amount staked.