Explain in your own words how arbitrage betting ensures a profit for the bettor regardless of event outcomes.

eesh Wrote:
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> Explain in your own words how arbitrage betting
> ensures a profit for the bettor regardless of
> event outcomes.
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room full of... Wrote:
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> eesh Wrote:
> --------------------------------------------------
> -----
> > Explain in your own words how arbitrage betting
> > ensures a profit for the bettor regardless of
> > event outcomes.
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eesh Wrote:
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> Explain in your own words how arbitrage betting
> ensures a profit for the bettor regardless of
> event outcomes.


Gambling is for dummies.

Gambling for dummies Wrote:
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> Gambling is for dummies.


That may be true but arbitrage betting is NOT gambling.

Admittedly, I copied and pasted “arbitrage betting” into a Google search and came to Wikipedia’s entry on it. Here it is in my own words:
Simply put, arbitrage betting is finding two different bookmakers who are offering different odds on the same event and betting on both outcomes but still being guaranteed to win due to the different odds being offered. Assume an Ali vs Frazier fight: I will look to place a bet on Ali where $1.00 bet pays out $1.10 with bookmaker A (plus my initial $1.00 investment of course).

Bookmaker B on the other hand thinks Ali is more likely to win (or he needs to balance his own books) AND is offering differing odds….say; $1.20 payout for $1.00 bet made on Frazier.

I place $1.00 bets with bookmakers A and B at different odds and betting on opposite outcomes at the above stated odds. There are two possible outcomes to the fight:

Ali wins: Bookmaker A pays me my initial $1.00 back + $1.10 that I won. I now have $2.10. Of course bookmaker B keeps my $1.00. In the end I have made 10 cents or a 5% gain on my money.

Frazier wins: Same basic idea. I lose my $1.00 placed with bookmaker A but bookmaker B pays me back my initial $1.00 + $1.20=$2.20. In the end I am up 20 cents or 10%.

None of this works if all bookmakers offer the same odds of course. And presumably people who profit off “arbitrage betting” are placing huge amounts of money on both sides because the payout, while guaranteed, is still relatively small. Nevertheless, for somebody who has the bankroll, this seems like a sure thing. It almost seems too good to be true. Still, it's an interesting concept.

TheNorthman Wrote:
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> Gambling for dummies Wrote:
> --------------------------------------------------
> -----
> > Gambling is for dummies.
>
>
> That may be true but arbitrage betting is NOT
> gambling.

Sounds like gambling to me. Maybe it's the word "betting" that's throwing me off.

> for somebody who has the
> bankroll, this seems like a sure thing.

Until he finds a dead horse in his bed.

Thanks Northman.


Alias....just keep doing your thing.

eesh Wrote:
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> Alias....just keep doing your thing.

ok

Hey, Northman... could you look up loan sharking and give me the pros and cons?

Thanks.

Alias Wrote:
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> TheNorthman Wrote:
> --------------------------------------------------
That may be true but arbitrage betting is NOT
> > gambling.
>
> Sounds like gambling to me. Maybe it's the word
> "betting" that's throwing me off.


Replace the word bet with investment. Now think of each bet as an investment where each investment acts as a hedge for the other (or against..depending on how you want to look at it). In an arbitrage bet investment, you invest equal money on both possible outcomes. Imagine Coke vs Pepsi. Instead of trying to figure out which one will come out ahead, an arbitrage investor would invest equal money in both assuming that he was certain that his gains in one would be greater than his losses in the other.

Imagine a hypothetical situation where you have $200.00 to invest in stock in Cola companies and will cash out your stock in 6 months after annual sales reports are released and the stock moves accordingly. An arbitrage investor would not choose between Coke or Pepsi; he/she would do something like this.

$100.00 worth of Coke stock will be worth $110.00 if Coke has better sales but your pepsi stock will only drop to $95.00

$100.00 worth of Pepsi stock will be worth $110.00 if Pepsi has better sales but your Coke stock will only drop to $95.00.

In the above case you can't lose if you split your investment 50/50. You just have to be able to accurately predict how the market will react. Of course that is VERY hard to do because Hurricane Katrina could fuck everything up or a new study comes out saying that people who drink soda get brain cancer (or a million other unpredictable variables that alter the payout scheme)

Sports betting is one place where all of those factors are not only easily predictable but the risk reward ratios are previously agreed upon making it an attractive place for this this. No outside factors can alter the prearranged risk/reward ratios once a bet is placed on a game.

Alias Wrote:
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> eesh Wrote:
> --------------------------------------------------
> -----
> > Alias....just keep doing your thing.
>
> ok
>
> Hey, Northman... could you look up loan sharking
> and give me the pros and cons?
>
> Thanks.

I don't have to look it up. I can do it off the top of my head.

Pros:
* HUGE interest rates bring greater return on investment

* your capitol is tied up (on loan) for a relatively short period of time. This allows you to repeat the profitable investment more often generating more money...

Cons:
* HUGE rate of investments going bust. ie you lend money to some degenerate gambler who goes broke or some guy invests it in a business that fails

* Illegal

* Pain in the ass to collect even if they have the money. Nobody would pay Tony Soprano 5 points per week interest unless they know Furio will break their knee caps if they don't. Of course Tony has to pay Furio to do this which cuts into his profits.

* Dangerous. You probably get involved with some desperate people. Desperate people are often irrational and unpredictable. Couple that with the fact that there is usually no legally enforceable contract in place and you have a recipe for violence!

TheNorthman Wrote:
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> Alias Wrote:
> --------------------------------------------------
> -----
> > eesh Wrote:
> >
> --------------------------------------------------
>
> > -----
> > > Alias....just keep doing your thing.
> >
> > ok
> >
> > Hey, Northman... could you look up loan
> sharking
> > and give me the pros and cons?
> >
> > Thanks.
>
> I don't have to look it up. I can do it off the
> top of my head.
>
> Pros:
> * HUGE interest rates bring greater return on
> investment
>
> * your capitol is tied up (on loan) for a
> relatively short period of time. This allows you
> to repeat the profitable investment more often
> generating more money...
>
> Cons:
> * HUGE rate of investments going bust. ie you
> lend money to some degenerate gambler who goes
> broke or some guy invests it in a business that
> fails
>
> * Illegal
>
> * Pain in the ass to collect even if they have the
> money. Nobody would pay Tony Soprano 5 points per
> week interest unless they know Furio will break
> their knee caps if they don't. Of course Tony has
> to pay Furio to do this which cuts into his
> profits.
>
> * Dangerous. You probably get involved with some
> desperate people. Desperate people are often
> irrational and unpredictable. Couple that with
> the fact that there is usually no legally
> enforceable contract in place and you have a
> recipe for violence!


Thank you, Northman.

I hope eesh is listening.

Alias Wrote:
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>
> I hope eesh is listening.


eesh is always listening.
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