## How to beat the bookies

This is my story about how I became unwanted by bookies (sports betting websites such as Unibet). I go well in-depth about the approach and theory first, followed by what I would recommend others to do. Or not to do.

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**Theory**

*Efficient market hypothesis (EMH)*

EMH suggests that all information is taken into account in the share price and beating the market is impossible. When we translate this to the bookies it means that the odds reflect the real probabilities. i.e. Real Madrid plays Barcelona in the Champions League final and a bookie displays the odds as 1.9 for Real Madrid and 1.9 for Barcelona, the expected real probabilities of either team to win is:

*Arbitrage*

The gambling market is highly competitive. Because of this, bookies are constantly challenged to set quotes that are higher than that of the competitor’s while keeping the odds lower than the “real” probability (based on the efficient market hypothesis). Because of the competition, bookies sometimes promote a quote higher than the real probability. In the El Clásico case, that would mean that Bookie A would pay 2.1 for Real Madrid to win while Bookie B would pay 2.1 for Barcelona to win. By betting on both outcomes you can guarantee yourself a profit, this is a form of arbitrage.

**Approach**

*Source*

Some websites (i.e. Oddsportal.com) present the quotes for many bookies. These websites form a great source to scan arbitrage opportunities. By summing the presented probabilities of an event and filter outcomes that are below 100%, you are left with a list of arbitrage opportunities.

*How much to bet?*

When the odds of all outcomes are equal, the bet is simple: You bet an equal amount on all outcomes. When they are not, you need to spread the bet.

Assuming that Real Madrid to win pays 1.5 and Barcelona to win pays 3.5, the following questions should pop-up:

If you would have € 100 to bet, you would need to bet € 70 on Real Madrid and € 30 on Barcelona which will hold a value of € 5.

*Action*

A 5% return is tremendous with current saving rate hovering just over the 0% per year. There are a few downsides though that make 5% sound a bit better than it is. One of them is a bet maximum, you can put as much on a savings account as you’d like, but can often only bet a limited amount on a match. If the max bet is € 100 you will be making € 5 (5% of € 50) on a bet that takes 15 minutes to setup, an hourly rate of € 20 for repetitive work does not sound attractive to many people capable of making the calculations to take these arbitrage opportunities.

**Increase hourly rate**

*Concentrated bets*

There is a way to increase your expected value of your bets and thus increase your hourly rate. This is by estimating which of the two bookies seems to be undervaluing the probability the most and only bet on that.

Going back on the Real Madrid – Barcelona example and assuming the Bookie A bets 2.1 for Real Madrid and Bookie B pays 2.1 for Barcelona.

Assume there are 25 bookies that have the following spread.

To benefit most from these events, it would be recommended to bet the max amount on Bookie B instead of spreading between the two bookies. Since probability for Barcelona to win is 53.6%. Assuming the Efficient Market Hypothesis holds I calculated the “real probability” by taking the average of all the other bookies.

*Value of a spread bet:*

If you would have EUR 100 to bet, you would need to bet EUR 50 on Real Madrid and EUR 50 on Barcelona.

*Value of a concentrated bet*

By making a concentrated bet, I increased the Expected ROI from 5% to 12.14% and my hourly rate from € 20 to almost € 50.

**Learnings**

*There’s no such thing as a free lunch*

However, bookies monitor this type of behavior and I was soon blocked or had a forced maximum bet of EUR 1. It also caused stress because I had thousands spread over dozens of bookies and wasn’t sure whether I could withdraw the funds. Luckily I could.

*Learnings*

I undervalued whether my presence was flagged by the bookies. And I got greedy by betting on local events. Such as 3rd league Ice Hockey in Sweden or 2nd league handball in Hungary.

It’s impossible to know how active you can be to still not be flagged by the bookies. My assumption is that you can stay under the radar as long as you stick to big events – i.e. broadcast events with overn 100K spectators. However, I did not pursue this strategy because it would mean participating in an environment where you play against something that can alter the rules in their favor, overnight, without warning.

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