How To Become A Successful Sports Arbitrage Trader

Sports Arbitrage World

Trader Tim: Series 1 | Episode 4:The Calculations

The gaming industry is one of the largest, and fastest growing, industries
in the world. Its growth has mushroomed in the past decade thanks to
the Internet. For the most part, it remains true that in the long-run, the
house always wins. However, for some time now, a few individuals have
been taking advantage of little-known anomalies in the global sports-
betting markets in order to make guaranteed, risk-free profits at the
expense of the bookmakers.
These individuals are sports-arbitrage traders

Hi! I’m Tim; UK: 2/1 | EU: 3.00 | US: +200

cartoon character
and sports The examples above are all equivalent to
arbitrage trader! each other.

These days, In each case, if you bet £100 at the price,

sports arbitrage
traders have
software to do
almost everything. You don’t need to work
manually with any formulae because
specialised calculators will do this for you.
However, I still think it’s a good idea to
know and understand the mathematics
behind the trades; if you agree then stick
around for the next few minutes and I’ll
work through the calculations with you….
The first thing to get to grips with is the way
bookmakers express their prices.
They come in 3 formats:
UK style odds: these look like fractions
EU style odds: these look like decimals
US style odds: these look like + or -
numbers.
1
you stand to win £200. The total amount
you will receive, if the bets wins, is your
original stake plus your winnings: £300
Stake = £100
Win = £200
Return = £300
But if that’s true, then why are the prices so
different to each other?
It’s simply because they represent slightly
different information.
The UK bookmaker, when he offers 2 to 1, is
telling you how much you’ll win if the bet is
successful: 2 multiplied by your stake. Of
course, he’ll give you the stake back too,
but his price represents the amount you’ll
win
How To Become A Successful Sports Arbitrage Trader

The European bookie, on the other hand, [Martin, note, this is a pun based on the visual on
the right so you may want to sound slightly apologetic as you say it], tells you how much he’ll
return to you in total if you win: 2 multiplied by your stake plus your stake.

As you can see, the results are exactly the same whether you bet at 2 to 1 or at 3 point oh
oh.

You’ve probably realized that it’s easy to covert UK odds into European prices. All you do is
turn the fraction into a decimal and then add 1. The ‘1’ that you add simply represents your
original stake.

Here are some examples. Of course, the Here are some examples.
opposite is also true,
EU Price = UK Price + 1 so to convert a UK Price = EU Price - 1
European price into
1/1 => 2.00 1.25 => 1/4
the UK format, you
5/4 => 2.25 just minus 1 and turn 1.73 => 8/11
the result into a
6/4 => 2.50 2.00 => 1/1

3/1 => 4.00 5.00 => 4/1

US style prices follow a different convention. When the price is positive, for example, +200, it
represents the amount you’ll win assuming a £100 bet.

£100 at +200 Wins £200

£100 at +300 Wins £300

However, when the price is negative, for example -200, it represents the amount you have to
bet in order to win £100

£200 at -200 Wins £100

£300 at -300 Wins £100

Converting these US prices to European format is not difficult.

That’s good because the convention for traders is to work with
European prices throughout because these are the most widely
offered by bookmakers and it’s easy to convert any other style of
price into the EU format

Sports Arbitrage World provides professional tools

for sports arbitrage traders around the world.
Click here to try out our complete range of
software, guides & videos for free
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2
How To Become A Successful Sports Arbitrage Trader

To convert positive US prices into the European equivalent, just divide by 100 and then add 1

EU Price = (Positive US price/100) + 1

+200 => (200/100) + 1 => 2/1 + 1 => 3.00

To convert a negative US price into the European style, divide by 100 and multiply the result
by -1. Then put 1 over the result and add 1.

EU Price = 1/ [ (Negative US price/100) x -1] +1

e-200 => 1/ [(-200/100) x -1] +1 => 1/2 + 1 = 1.50

Don’t worry, it’s easier than it sounds and your arbitrage software will take care of it
automatically.

Now for the interesting part; finding

the arbs hidden amongst the prices…

Every price that a bookmaker sets has a corresponding percentage. As traders, we use these
percentages to work out quickly and easily whether or not there is an arb, and if there is how
much it’s worth to us. To convert a European price into a percentage, simply put 1 over the
price and multiply the result by 100
EU Price => Percentage %

(1 / EU Price) x 100

Here are some examples

2.00 => (1/2) x 100 = 50%

2.50 => (1/2.50) x 100 = 40%

3.00 => (1/3) x 100 = 33.3%

4.00 => (1/4) x 100 = 25%

Once you’ve converted a set of prices into percentages, just add the results together. If the
total percentage comes to less than 100%, you’ve got an arb! It’s as simple as that. Let’s go
back to the example we glossed over in the first lesson and this time let’s look at the detail...

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for sports arbitrage traders around the world.
Click here to try out our complete range of
software, guides & videos for free
Click here to contact our professional Trader
Support Desk at any time for any type of
assistance or guidance with your trading

3
How To Become A Successful Sports Arbitrage Trader

We’re looking at Lleyton Hewitt vs Fernando Gonzalez and we’re going to take William Hill’s 5
to 4 on Gonzalez together with Stan James’ price of 9 to 10 on Hewitt.

STAN JAMES: HEWITT 9/10 | GONZALEZ 9/10

WILLIAM HILL: HEWITT 4/7 | GONZALEZ 5/4

Let’s first convert the UK prices into their European equivalents.

5 to 4 converts to 1 and ¼ which is the same as 1.25. Add 1 to turn it into the European price
and we’ve got 2.25
EU Price = UK Price + 1

5/4 => 1 ¼ => 1.25

EU Price = 1.25 + 1 = 2.25

9 to 10 is the same as 0.9. Add 1 to this and we’ve got a European price of 1.90

EU Price = UK Price + 1

9/10 => 0.90

EU Price = 0.90 + 1 = 1.90

Now let’s convert these prices into percentages:

(1 / 2.25) x 100 = 44.4444%

(1 / 1.90) x 100 = 52.6316%

Add these two percentages up and we get a total of 97.076%

This is less than 100% so we have a profitable arbitrage trade on our hands!

Calculating the stakes you need to place on each bet is simple.

First, decide how much you want to invest in the total trade. In this example, I’m going to
use a round figure of £1000

Now just take this figure, multiply it by the individual bet’s percentage and then divide the
result by the total percentage

Stake = (Investment x Bet Percentage) / Total Percentage

Sports Arbitrage World provides professional tools

for sports arbitrage traders around the world.
Click here to try out our complete range of
software, guides & videos for free
Click here to contact our professional Trader
Support Desk at any time for any type of
assistance or guidance with your trading

4
How To Become A Successful Sports Arbitrage Trader

At William Hill, the bet on Gonzalez is at 5 to4, which we’ve converted to 44.4444%.

So our stake here will be

£1000 x 44.4444 divided by 97.076: £457.83

A similar calculation for the bet at Stan James gives us

£1000 x 52.6316 divided by 97.076: £542.17

By the way, I’ve used precise figures in this example

to make sure that when you work through the
numbers yourself, you’ll get the same answers.

However, in practice, before placing the bets you’d

normally round your stakes up or down to the nearest
pound, 5 pounds or 10 pounds.

Let’s put this all together now to see how this trade would look:

A bet of £457.83 on Gonzalez at 5 to 4 with William Hill.

You’ll receive £1030.12 from the bookmaker if the bet wins

Plus

A bet of £542.17 on Hewitt at 9 to 10 with Stan James.

If this bet wins, you’ll receive £1030.12 from the bookmaker

£457.83 x 2.25 = £1030.12

£542.17 x 1.90 = £1030.12

Your investment of £1000 pays back £1030.12 no matter which player wins.

You could, if you wanted to favour a particular player, skew your stakes in his favour. The
result would be a larger win if he wins, and less profit (or maybe a break-even) if the other
player wins.

Don’t worry too much if these formulae have

your head spinning. Your sports arbitrage
software will calculate everything you need
automatically so you’ll be left to focus on
placing the bets quickly & accurately.

Sports Arbitrage World provides professional tools

for sports arbitrage traders around the world.
Click here to try out our complete range of
software, guides & videos for free
Click here to contact our professional Trader
Support Desk at any time for any type of
assistance or guidance with your trading