arb is a method for small but sure profits from betting.
Companies don't allow it though and they may put limits on you or close your account.
We will see an arb in action with a simple example.
It is a betting event with two outcomes for the sake of simplicity and the odds are as follows:
book A 1.40 - 2.90 (rake = 5.6%)
book B 1.60 - 2.30 (rake = 5.6%)
If you split your money between the two versions in A you lose 5.6% and similarly if you split in B you lose 5.6% again
But if you take A's 2.90 and B's 1.60 and divide then you get a profit of 3.1%.
This is the arb.
But what is actually happening?
Why do the two bookies have different odds?
Sometimes we know the reason, sometimes we don't know exactly, but someone is right and someone is wrong.
Either 1.60 is too generous, or 2.90.
Which of the two?
Logically the correct one is later of the two.
If A is correct, then h chance of 1.40 is 67.4% ( = (1/1.40)/(1/1.40 + 1/2.9) ).
But we play it to 1.60 us and it comes out average profit = 0.674 x 1.60 - 1 = 7.84%.
If B is correct, then the probability of 2.30 is 41.0% ( = (1/2.3)/(1/1.60+1/2.30) ).
But we play it to 2.90 us and it comes out average profit = 0.410 x 2.90 - 1 = 18.90%.
The differences with arb are as you see big, much better results over time.
As long as good performance remains available.
The two points are firstly that the arb must be present and that the correct odds are those of the bet that came later. It is hard for this not to be the case, the later reacted to something.
So the problem shifts as follows:
a) to find the arb of the day
b) to tell us which of the two/three bookies is later
If someone does that, it's as much a warranty as arb and better.
Will it save you from the limits-exclusions?
Maybe because you don't do classic arb.
But since your capital will grow, you might get it again - since that's what the bookies basically do!
Companies don't allow it though and they may put limits on you or close your account.
We will see an arb in action with a simple example.
It is a betting event with two outcomes for the sake of simplicity and the odds are as follows:
book A 1.40 - 2.90 (rake = 5.6%)
book B 1.60 - 2.30 (rake = 5.6%)
If you split your money between the two versions in A you lose 5.6% and similarly if you split in B you lose 5.6% again
But if you take A's 2.90 and B's 1.60 and divide then you get a profit of 3.1%.
This is the arb.
But what is actually happening?
Why do the two bookies have different odds?
Sometimes we know the reason, sometimes we don't know exactly, but someone is right and someone is wrong.
Either 1.60 is too generous, or 2.90.
Which of the two?
Logically the correct one is later of the two.
If A is correct, then h chance of 1.40 is 67.4% ( = (1/1.40)/(1/1.40 + 1/2.9) ).
But we play it to 1.60 us and it comes out average profit = 0.674 x 1.60 - 1 = 7.84%.
If B is correct, then the probability of 2.30 is 41.0% ( = (1/2.3)/(1/1.60+1/2.30) ).
But we play it to 2.90 us and it comes out average profit = 0.410 x 2.90 - 1 = 18.90%.
The differences with arb are as you see big, much better results over time.
As long as good performance remains available.
The two points are firstly that the arb must be present and that the correct odds are those of the bet that came later. It is hard for this not to be the case, the later reacted to something.
So the problem shifts as follows:
a) to find the arb of the day
b) to tell us which of the two/three bookies is later
If someone does that, it's as much a warranty as arb and better.
Will it save you from the limits-exclusions?
Maybe because you don't do classic arb.
But since your capital will grow, you might get it again - since that's what the bookies basically do!
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