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Finding arbitrages is the easy bit. (Ok it's not that easy) The tricky bit is making sure you get both bets on before the arbitrage opportunity disappears. Th

Finding arbitrages is the easy bit. (Ok it's not that easy) The tricky bit is making sure you get both bets on before the arbitrage opportunity disappears. There are many bots already out there scooping up arbitrages, and the bookie price algorithms will rapidly close these as bets are made, leaving a small window of opportunity. Also, most price movements (and therefore arbitrages) are when events are in-running: in these cases bookies enforce a delay before your bet is processed, which makes it doubly hard that both bets of your arbitrage get successfully placed.

notahacker 16y ago
The other issue is the problem of successive gains being wiped out by a bookmaker reneging on the quoted odds; most bookies have a "palpable error" clause which allows them to void bets on inappropriate odds, at their own discretion Differences between bookmakers' rules in some markets regarding refunds for cancelled games, retirements, ties etc. can also leave you losing both sides of a bet in some instances. Human judgement is still better than algorithms at judging the risk of the above happening.
noname123 16y ago
This. Arbitrage is all about execution speed. Free-money by definition is scarce. Assume you just sold the put and need to buy the call on the other side, some one else may buy that cheap call and the next block of call's might be more expensive and force you to eat a loss on your trading. In options market, some brokers allows you to do a multi-leg execution although the execution might be poor and oftentimes you might just get the market price. A safer way to play sports betting is do a rebate arbitrage which is to find bookmakers with two different lines in really close games and ensure that you just break even. Most bookmakers have a 10% bonus that you could cash out if you bet more than 10 times (bonus for being a liquidity provider a la the stock exchange), but it's more tedious and you have to deal with parking your money in the Cayman Island's due to US ban on online sports betting.
- bryanh 16y ago
  Isn't it possible to require the "scarcer" or most off-priced resource to be the first resource to be acquired? Only then would you purchase the opposite, more common resource. Is that feasible? (Pardon my ignorance if not...)
Nezvanov 16y ago
The author of the blog post considered bookmakers as the ones laying the outcomes. What if one considers the layers as other bettors in a betting exchange? This scenario would be more interesting than trying to arbitrage bookies. Many bettors do bet based on emotion or some voodoo magic. Betting exchanges like BetFair are not laying anything, so they don't care. If some smart bettor is arbitraging the other bettors, the betting exchange is more than happy to collect a fee off the arbitrageur's profits.
- notahacker 16y ago
  Betting exchanges are also even more watched by people looking for arbitrage opportunities than the major bookmakers and more volatile in the short run (often they'll be used to form one side of an arbitrage bet). You're dealing with a more knowledgeable betting crowd and rates that are corrected more quickly by market forces (and a spread of unmatched bets/lay options that have already been placed). As the betting exchange fees/commissions still drive a wedge between effective market rates on the betting and laying side you have to be even quicker to snag the profit (or correctly predict the direction of the movement of odds between placing the bet and the lay)
dedward 16y ago
I dont' know about Europe - but "boookie price algorithms" is generally a few guys sitting behind some computers adjusting odds and prices to try to balance out their perceived risk against what the market wants to bet on - so they try ot balance the books and keep their customers.

notahacker 16y ago

The other issue is the problem of successive gains being wiped out by a bookmaker reneging on the quoted odds; most bookies have a "palpable error" clause which allows them to void bets on inappropriate odds, at their own discretion Differences between bookmakers' rules in some markets regarding refunds for cancelled games, retirements, ties etc. can also leave you losing both sides of a bet in some instances. Human judgement is still better than algorithms at judging the risk of the above happening.

noname123 16y ago

This. Arbitrage is all about execution speed. Free-money by definition is scarce. Assume you just sold the put and need to buy the call on the other side, some one else may buy that cheap call and the next block of call's might be more expensive and force you to eat a loss on your trading. In options market, some brokers allows you to do a multi-leg execution although the execution might be poor and oftentimes you might just get the market price. A safer way to play sports betting is do a rebate arbitrage which is to find bookmakers with two different lines in really close games and ensure that you just break even. Most bookmakers have a 10% bonus that you could cash out if you bet more than 10 times (bonus for being a liquidity provider a la the stock exchange), but it's more tedious and you have to deal with parking your money in the Cayman Island's due to US ban on online sports betting.

bryanh 16y ago
Isn't it possible to require the "scarcer" or most off-priced resource to be the first resource to be acquired? Only then would you purchase the opposite, more common resource. Is that feasible? (Pardon my ignorance if not...)

Nezvanov 16y ago

The author of the blog post considered bookmakers as the ones laying the outcomes. What if one considers the layers as other bettors in a betting exchange? This scenario would be more interesting than trying to arbitrage bookies. Many bettors do bet based on emotion or some voodoo magic. Betting exchanges like BetFair are not laying anything, so they don't care. If some smart bettor is arbitraging the other bettors, the betting exchange is more than happy to collect a fee off the arbitrageur's profits.

notahacker 16y ago
Betting exchanges are also even more watched by people looking for arbitrage opportunities than the major bookmakers and more volatile in the short run (often they'll be used to form one side of an arbitrage bet). You're dealing with a more knowledgeable betting crowd and rates that are corrected more quickly by market forces (and a spread of unmatched bets/lay options that have already been placed). As the betting exchange fees/commissions still drive a wedge between effective market rates on the betting and laying side you have to be even quicker to snag the profit (or correctly predict the direction of the movement of odds between placing the bet and the lay)

dedward 16y ago

I dont' know about Europe - but "boookie price algorithms" is generally a few guys sitting behind some computers adjusting odds and prices to try to balance out their perceived risk against what the market wants to bet on - so they try ot balance the books and keep their customers.