Bookmakers price independently, so occasionally two of them disagree enough that backing both sides of the same market returns a profit no matter what happens. That is an arbitrage, and it is the same arithmetic as bookmaker hold with the sign flipped.
Spotting one
Convert the best price on each side to implied probability and add them up. Above 100% is a normal market and the excess is the margin you pay. Below 100% is an arb.
Best home price $2.10 at one book, best away price $2.05 at another:
- 1 ÷ 2.10 = 0.4762
- 1 ÷ 2.05 = 0.4878
- Total = 0.9640, which is under 1
The gap is 3.6%, and that is roughly your return on the total staked — regardless of the result.
Splitting the stakes
The profit only exists if both outcomes return the same. Stake each side in proportion to its implied probability divided by the total:
- Home: $1,000 × (0.4762 ÷ 0.9640) = $494
- Away: $1,000 × (0.4878 ÷ 0.9640) = $506
Home wins: $494 × 2.10 = $1,037. Away wins: $506 × 2.05 = $1,037. Either way you get $1,037 back on $1,000 staked. Guess the split instead and you are no longer arbitraging — you have taken a position on one side.
Why the one you found is probably gone
This is the part most explanations skip, and it is the difference between the theory and what actually happens.
- They close in minutes. An arb exists because one book is slow. When it catches up the gap vanishes, and the price you are looking at may already be stale.
- Exchange prices are quoted before commission. Betfair takes around 5% of net winnings, so a $2.10 exchange price really pays about $2.045. A 1–2% arb with an exchange leg is frequently a guaranteed loss once that comes out.
- Stake limits. The book with the mispriced side is often the one that will accept the least, and an arb you can only get $40 down on is not worth the effort.
- Accounts get restricted. Bookmakers monitor for this. Consistent arbitraging tends to attract limits or account closure, which is a real cost of the strategy rather than a rumour.
A price that looks wildly out of line — a 25%+ “arb” — is almost always a data error rather than an opportunity, such as a feed returning $11.00 instead of $1.10. Treat those as bugs, not gifts.
Is it legal in Australia?
Arbitrage itself is not illegal — you are placing ordinary bets with licensed operators. But bookmakers are private businesses and their terms generally allow them to limit or close accounts at their discretion, which they do. Nothing here is legal or financial advice, and no strategy on this page removes the risk of losing money.