How Arbitrage Betting Works: A Worked Example
Every bookmaker prices a sporting event slightly differently. Most of the time that difference is nothing, a rounding error buried inside the bookmaker's own margin. Every so often, two bookmakers disagree enough that betting on every outcome across both of them pays off regardless of what actually happens on the pitch. That's an arbitrage opportunity, and the easiest way to understand it is to walk through one, slowly, with actual numbers.
The core idea: implied probability
Every set of decimal odds implies a probability. Divide 1 by the odds. Odds of 2.00 imply a 50% chance; odds of 4.00 imply 25%. Add up a bookmaker's own odds across a full market and the total always comes to slightly more than 100%. That extra bit is their margin, and it's how they stay in business.
An arbitrage opportunity is the mirror image of that: take the best available odds for each outcome from different bookmakers, and if those best odds add up to less than 100%, the gap now works in your favour instead of theirs.
Worked example: a two-way market
Imagine a tennis match between Team A and Team B, a simple two-way market with no draw possible. Two different bookmakers are pricing it slightly differently:
| Bookmaker | Selection | Odds | Implied probability |
|---|---|---|---|
| Bookmaker Alpha | Team A to win | 2.12 | 47.17% |
| Bookmaker Beta | Team B to win | 2.08 | 48.08% |
Add the two implied probabilities together: 47.17% + 48.08% = 95.25%. That's under 100%, so an arbitrage exists, and the size of the gap (4.75 percentage points) is where the profit comes from.
Splitting the stake correctly
The trick isn't just betting on both sides, anyone can do that and lose money badly. It's betting the right amount on each side so the payout lands roughly the same no matter who wins. Each stake is sized proportionally to its own implied probability, relative to the combined 95.25%.
With a total stake of R1,000:
| Bookmaker | Selection | Odds | Stake | Payout if this side wins |
|---|---|---|---|---|
| Bookmaker Alpha | Team A to win | 2.12 | R495.24 | R1,049.91 |
| Bookmaker Beta | Team B to win | 2.08 | R504.76 | R1,049.90 |
Whichever team wins, the payout lands at essentially the same figure, around R1,049.90, against a total outlay of R1,000. That's about R49.90, or 4.99%, locked in the moment both bets are placed, no matter who wins on the day. Nobody's taking that away from you except a slow internet connection, fat fingers, or a bookmaker that moved its price before you clicked. (The one-cent gap between the two payouts is just stake rounding to the nearest cent. Perfectly normal, not a mistake.)
Here's what placing each side of that bet would actually look like on each bookmaker's own betslip:
Two-way vs three-way markets
The example above is a two-way market with no draw. Football's 1X2 market, home win, draw, away win, works exactly the same way across three bookmakers instead of two: take the best odds for each of the three outcomes, check whether the implied probabilities add up to under 100%, and split the stake proportionally across all three.
Try it yourself
Bored of these made-up numbers? Our free arbitrage calculator runs this exact calculation for both two-way and three-way markets. Enter real odds and a real stake, and it works out the split and the return for you, instantly, in your browser.
Before you get too excited about a number that sounds too good to be true, it's worth understanding what this actually costs in practice. See our full breakdown of the risks first.