A: Great question! Here's my take.
I've never used sports arbitrage software, though I'm certainly aware of the existence of such products. After writing an article like Is Economics Autistic? Can it be Reformed? it would be incredibly hypocritical of me to suggest such software doesn't work without first at the very least trying it or interviewing dozens of people who have.
I can't say that such software doesn't work. It certainly could work, but I'm not certain it does. So mark me down as being skeptical.
How Sports Arbitrage WorksSports arbitrage exploits differences in "lines" that a casino offers for a sporting event. One type of sporting line is as follows:
Gremlins vs. Orcs -5.5The "-5.5" means that the Orcs are favoured by 5.5 points. So if you bet on the Gremlins, you win your bet if one of three things happen:
- The Gremlins win the game
- The Gremlins and Orcs tie the game
- The Gremlins lose, but they lose by less than 5.5 points.
Often the lines offered by casinos will vary from casino to casino. That means it can pay to shop around for the most favourable line. It also means that there's the potential for arbitrage opportunities. Consider the following lines, offered by two different casinos:
- Casino A: Chronics vs. Whippets -6.5
- Casino B: Chronics vs. Whippets -9.5
- Chronics win: You win at Casino B, lose at Casino A
- Chronics lose by 6 points of lose: You win at Casino B, lose at Casino A
- Chronics lose by 7, 8, or 9 points: You win both bets.
- Chronics lose by 10 or more: You win at Casino A, lose at Casino B
The obvious answer is the "fees" that you discussed earlier. Typically the bets at casino are not one dollar-for-one dollar; casinos need to make money. The normal bet is 11/10 - that is, you bet $11 on the Chronics, and if you win the bet, you gain $10. In that case, you would lose $1 in each of outcomes 1, 2, and 4 (You'd pay $11 to the casino you lost at, and gain only $10 at the casino you won at). You would still win $20 for outcome 3. Depending on how likely you think outcome 3 is, risking losing $1 to gain $20 may make a lot of sense. It's no longer riskless, though. There's a more fundamental reason why I believe such software is not likely to work. If someone has discovered a system where they can make a lot of money easily by betting on sporting events, why would they tell you about it? Sure, they make money from selling the software. But by letting the world know about their system, they'd end up killing the golden goose. The lines casinos use move (change) as people bet on one team or another. If a great many people are betting on the Whippets at Casino A and the Chronics at Casino B, the bookies will change the lines, to get more people betting on the other team. Casinos generally want an equal number of people betting on both teams, that way no matter what happens, they'll make money. This will push the two lines closer together, so the arbitrage opportunity goes away. If these pieces of software truly worked, the writers of such software would have to make an awful lot of money by selling the software, because by doing so, they're making it a lot more difficult to use the software for themselves to make easy money.
That's why I believe such software is not likely to work. If you've used such arbitrage software or would like to discuss the matter further, please contact me by using the feedback form.