Let me give you an example:
Manchester United is facing Chelsea in a FA Cup final; United win is available at 2.10 with Sportpesa and Chelsea is also given a 2.10 win with BetPawa. This a perfect arbitrage opportunity. You simply place ksh 100 on United to win and ksh 100 on Chelsea to win, and you are guaranteed a profit, in this case a profit of Ksh 10.
The above however, is a simple, balanced example. Let us look at an unbalanced example.
Manchester United is facing Chelsea in a FA Cup final; United win is available at 1.20 with Sportpesa and Chelsea is given a 8.00 win with BetPawa.
United at odds of 1.20 has an implied probability of 1 / 1.20 = 0.833 = 83.3%
Chelsea at odds of 8.00 has an implied probability of 1 / 8.00 = 0.125 = 12.5%
This makes the market total, = 83.3% + 12.5% = 95.8%.
Thus, however you decide to place the bet, you will get something.
What happens in 1X2 situations?
In the above examples, we have only looked at situations where the match ends with a winner. Let us now look at what happens if there is a draw.
Let’s say we have a Premier League match between Manchester City and Arsenal soon. We are looking here at the 1X2 market. Here have three possible outcomes:
– Manchester City win, at odds of 2.80.
– Drawn match, at odds of 3.60.
– Arsenal win, at odds of 3.20.
Manchester City at odds of 2.80 has an implied probability of 1 / 2.80 = 0.3571 = 35.71%.
Drawn match at odds of 3.60 has an implied probability of 1 / 3.60 = 0.2778 = 27.78%
Arsenal win at odds of 3.20 has an implied probability = 1 / 3.20 = 0.3125 = 31.25%
We then add each probability to come up with our market total. Thus = 35.71% + 27.78% + 31.25% = 94.74%.
Whatever the outcome, you will get something.
Is this worth it?
Yes! If you ever see an opportunity to arb, take it. This is one of the easiest sure bets ever!