Betting arbitrage, surebets, sports arbitraging is a particular case of arbitrage arising on betting markets due to either bookmakers' different opinions on event outcomes or plain errors. By placing one bet per each outcome with different betting companies, the bettor can make a profit. As long as different Bookmakers are used for arbitrage betting the Bookmakers do not have a problem with this. Each Bookmaker will still make profit due to their calculations.

In the bettors' slang an arbitrage is often referred to as an arb; people who use arbitrage are called arbers. A typical arb is around 2%, often less, however 4%-5% are also normal and during some special events they might reach 20%.

Arbitrage Betting involves relatively large sums of money (stakes are bigger than in normal betting) while another variety, betting investment, means placing relatively small bets systematically on overvalued odds most of which will lose but some win thus making a profit.

There are a number of potential arbitrage deals. Below is an explanation of some of them including formulas and risks associated with these arbitrage deals.

There are two major types of Surebets, "All-back" Surebets, where you make sure to win by betting on all possible outcomes of an event, and "back/lay" Surebets, where you make sure to win by simultaneously backing (buying) and laying (selling) the same outcome at different prices.

This type of arbitrage takes advantage of different odds offered by different bookmakers. The idea is to find odds at different bookmakers, where the sum of the inverse of all the outcomes are below 1.

Assume the following situation:Consider a tennis match between Nadal and Federer, where two bookmakers, Book 1 and Book 2, offer odds like this:

	Nadal	Federer
Book1	3.00	1.40
Book2	2.65	1.55

The bookmakers here operate with odds that are somewhat different. The 2 bookmakers have different ideas of who has the best chances of winning. They offer the following Fixed-odds gambling on the outcomes of the event. These differences in their views lead to an arbitrage opportunity by betting at both outcomes.

Assume you want to get a payout of £100 no matter what happens. By betting £100 / 3 (£33.33) for Nadal with Book 1 and £100 / 1.55 (£64.52) for Federer with Book 2, you will achieve it. Your total stakes will be :

£100 / 3 + £100 / 1.55 = £33.33 + £64.52 = £97.85.

At the end of the day, one of the bets is won and one is lost, but irrespective which one comes through, you will realize a profit of £100 - £97.85 = £2.15. Making £2.15 on an amount of £97.85 is a return of 2.2%.

We consider an event with 2 possible outcomes (e.g. a tennis match - either Federer wins or Nadal wins), the idea can be generalized to events with more outcomes, but we use this as an example.

Betting exchanges have opened up a new range of arbitrage possibilities since on the exchanges it is possible to lay (i.e. to bet against) as well as to back an outcome. Arbitrage using only the back or lay side might occur on betting exchanges. It is in principle the same as the arbitrage using different bookmakers. Arbitrage using back and lay side is possible if a lay bet on one exchange provides shorter odds than a back bet on another exchange or bookmaker. However, the commission charged by the bookmakers and exchanges must be included into calculations.

Back-lay sports arbitrage is often called scalping or trading. Scalping is not actually arbitrage, but short term trading. In the context of sports arbitrage betting a scalping trader or scalper looks to make lots of small profits, which in time can add up. In theory a trader could turn a small investment into large profits by re-investing his earlier profits into future bets so as to generate exponential growth. Scalping relies on liquidity in the markets and that the odds fill flucuate around a mean point. A key advantage to scalping on one exchange is that most exchanges charge commission only on the net winnings in a particular event, thus ensuring that even the smallest favourable difference in the odds will guarantee some profit.

Let us look at one outcome of the same example, but now with a betting exchange (after deduction of exchange commissions ). The odds are like this:

Nadal
Book1		3.00
Exch	Back	2.60
	Lay	2.80

The Lay odds of 2.80 means that it's possible for you to take a bet of Nadal to win and, net of commission, you'll be required to pay out 1.80 times the stake in case Nadal defeats Federer, but will receive the stake if he doesn't.

Now assume that you place £100 for Nadal to win with Book 1 and at the same time lay £100 at the exchange. There are two possible outcomes:

Federer wins. In this case you lose your bet at Book 1, but you receive the stake for the £100 bet you accepted at Exch. Your net profit is £0.

Nadal wins. In this case you have to do a payment of (2.8 - 1) x £100 at the exchange, a net loss of £180. At Book 1 however, you are paid 3 x £100, resulting in a net win of £200 at Book 1. In total, you have a net profit of £20.

In this way you cannot lose and you'll win as much as £20. As with the all-back Surebets, it is possible place the two bets in such a way, that your profit is the same irrespective of what happens.

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