Horse Racing Arbitrage Explained

Ok, so now we know how to create a winning bet regardless of the outcome of a race.

Now let’s look at how to create a free bet.

There are two ways of achieving this.

Here’s the first:

From the above examples, we can see that a profit can be made, regardless of whether or not the horse wins the race, provided that the attempted arbitrage succeeds.

We now simply place the amount won on another horse, either in the same race or in a different race.

If the bet loses, nothing will be lost since all we will lose is the amount that was won on the previous bet.

However, if the second bet wins, we can look forward to adding to the amount that was won on the first bet through the successful arbitraging of our selection.

And here’s the second (which is a little more complex):

To explain this method, we need to go back to the 3:30 race at Southdown and our old friend Arbit.

Let us suppose that the odds on Arbit at 3 pm are 5.0 and that a £5 bet is placed on Arbit to lose the race.

The odds on Arbit then begin to increase until, at 3:15, they reach 11.0.

At this point, a £2 bet is placed on Arbit to win the race.

Now let us look at the maths:

Bet 1 (3:00 pm):

If Arbit wins the race, the liability is £5 x (5.0 – 1) = £5 x 4 = £20.

If Arbit loses the race, we will win £5 (the stake).

Bet 2 (3:15 pm):

If Arbit wins the race, the profit would be £2 x (11.0 – 1) = £2 x 10 = £20.

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If Arbit loses the race, the liability is £2 (the stake).

Now let’s look at the net effect of the two bets based upon the race outcome:

Arbit wins the race:

Loss on bet 1 = £20.

Profit on bet 2 = £20.

Net profit = £20 – £20 = £0.

Arbit loses the race:

Profit on bet 1 = £5 (the stake)

Loss on bet 2 = £2 (the stake).

Net profit = £5 – £2 = £3.

What have we achieved in placing the two bets?

The second bet nullified the liability of the first bet at a cost of £3 less than that of the initial bet.

As a result, if Arbit wins the race, we will break even.

If Arbit loses the race, we will win £3.

What we have actually achieved in placing the two bets is to totally nullify the initial lay bet and leave ourselves with a potential profit of £3 that will be won if Arbit loses the race.

In other words, we have created a free bet on Arbit.

We will break even if Arbit wins and will make a £3 profit if Arbit loses.

We have seen how to arbitrage a selection in order to secure a guaranteed profit, regardless of the outcome of a race, provided that its odds change.

We have also seen how to arbitrage a selection in order to create a free bet.

Is there anything else that we can achieve by arbitraging our selections?

Well, yes there is.