Strategy & Theory: Arbitrage

A legendary investor named George Soros has been one of the most successful investors of a generation.  He gained extensive notoriety in the FOREX (Foreign Currency) markets taking advantage of market inefficiencies.  This practice, called Arbitrage, is where price disparity is exploited.  It is considered a risk-free strategy.

Is this possible for sports bettors to take advantage of?  And if so, how can sports bettors utilize the same strategy? The answer to the first question is yes.  The answer to the second question largely comes down to futures.  You will need access to multiple sports books to be able to put this practice into play.  

While it is possible, although highly difficult to find, different books having the opposite sides of game lines at the same spread that both pay plus-money occasionally occurs in tight line games (ie football and basketball games where the line is close to -1).  For example: let’s assume USC is playing UCLA.  One sports book may have USC -1 at +105.  Another sports book may have UCLA +1 at +105.  We can’t emphasize enough how rare this is.  But it has happened.

The futures markets, as mentioned above, are where the more frequent opportunities are for Arbitrage.  The same strategy applies, which is taking both sides of an event at plus-money.  This locks in a profit (unless it is a push) and is a risk-free proposition.  Examples where you can find these opportunities include season win totals, player performance totals (ie points scored, number of strikeouts, etc), and draft positions, just to name a few.  

One additional item to consider with Arbitrage: Bet size.  The longer the duration (think season win totals) the less of your bankroll you should commit because your funds will be tied up for months.  You may be ok with this.  But it severely limits your ability to earn more ROI.  The shorter the duration (think pitcher strike outs the day of the game) the more you should commit because the return will be measured in hours, not months.

While finding these opportunities requires extra effort, the results are worth it.  There are very few guarantees in this business, but this is one of them.  

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