Horse Racing Arbitrage Explained

Most laying selection systems are profitable at the traditional bookmaker’s Starting Prices (SP).

However, as we have already seen, a selection cannot be layed to lose using a traditional bookmaker since they do not accept lay bets.

As such, lay bets can only be placed on a betting exchange.

The odds to lay a selection on a betting exchange are often higher than SP.

On average, the odds on betting exchanges are approximately 20% higher than SP.

Therefore, potential losses are 20% higher, on average.

In addition, betting exchanges levy a commission on all winning bets.

When the betting exchange’s higher odds and the commission on winning bets are taken into account, few laying systems are profitable.

The situation is made worse if the laying system, or the tips from one, are purchased from a third party since these additional costs only serve to reduce profits even further.

One way to overcome the above issue is to lay selections at either SP or better, odds.

If this could be achieved, potential losses would be reduced and, thus, profits would be increased.

So, how do we lay a selection at either SP or better, odds on a betting exchange?

Given that the topic of this chapter relates to arbitraging, it is a fair assumption that the answer has something to do with arbitraging.

If you were to assume this, then you would be perfectly correct.

Arbitraging isn’t just about creating a winning situation regardless of the outcome of a race.

It is also about reducing the odds of a selection which is to be layed to lose and increasing the odds of a selection which is to be backed to win.

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Thus far, all of the examples in this article relate to a type of arbitraging whose purpose it is to create a winning situation regardless of the outcome of a race.

This type is what I refer to as ‘fully’ arbitraging since the potential liability on the first bet is fully offset by the potential profit on the second bet and the potential liability on the second bet is fully offset by the potential profit on the first bet.

A second type of arbitraging exists, however. Its purpose is to reduce the odds of a selection which is to be layed to lose and to increase the odds of a selection which is to be backed to win.

The remainder of this article will concentrate on this topic which I refer to as ‘partially’ arbitraging.