The sports industry is tempting for gamblers: in the U.S. gambling market, sports betting constitutes an impressive 48%. This is one reason why players come up with strategies to get an edge over their competitors.
Arbitrage betting, or arbing, is an intelligent strategy when a gambler bets on all possible game results, thereby making profits regardless of the outcomes. Although this strategy is considered legal, it can be risky to bookmakers’ businesses; therefore, they take measures to detect and limit it.
Indeed, arbing can pose threats to betting companies. If someone takes deliberate actions to hack their systems, it can even lead to bankruptcy. So, how does arbing occur, and how do betting firms detect arbers? The article explores the details.
How does Arbitrage Betting Work?
Arbitrage betting is a gambling strategy that involves calculating all possible results of an event and placing bets on each.
Thus, bettors guarantee a profit by making every outcome win for them. Every game requires its calculation of chances. For instance, a tennis match would require two bets: one on each player. Gamblers would have to place three bets in a football match: one on each team to win and the third on a draw. Therefore, in arbitrage betting, players should identify the proper combinations of odds and bets to make profitable stakes. Such combinations are called arbitrage opportunities.
Where do Arbitrage Opportunities Come From?
Arbitrage opportunities basically take place when bookmakers make mistakes in calculating probabilities.
Such occurrences typically happen under the following circumstances:
- A bookmaker doesn’t react to live events in real-time. Many sports games, such as basketball, are incredibly dynamic, making odds change every minute. Therefore, bookmakers must continually track the situation and correspondingly change the odds. However, sometimes they may fail to do it timely.
- A bookmaker sets too high odds. Booking companies are fighting for their clients in the severely competitive betting market. They aim to retain existing players and acquire new ones. This leads to a sequential raising of odds to make chances more enticing for the audience.
Arbitrage opportunities can take their origin in a particular bookmaker and a difference in odds for a single event among various bookmakers. To take advantage of such opportunities, bettors should monitor either the odds of one booking company or several bookmakers and carefully calculate their potential income.
How do Betting Companies Prevent Arbing?
Notably, not all bookmakers choose to counter arbitrage betting. In fact, some encourage this strategy as it helps sharpen their odds and facilitate modeling. Still, many companies try to prevent arbing by initiating penalties against such players.
The respective measures include:
- Limited bets. This is the case when a bookmaker either bans the gambler from increasing bets or limits the gambler’s bets to a fixed amount.
- Canceled bets. In this situation, a betting company can void all the current bets of a user they identify as an arber. The funds in such accounts are usually returned.
- Closed account. This is the most stringent measure against arbing. Bookmakers block the users’ accounts with or without a further refund.
All these measures take place for a reason, since arbing, in its essence, is a threat to the betting companies’ profits. Therefore, companies protect their businesses with such preventative techniques.
How do Bookmakers Identify Arbers?
Arbitrage detection is the task of the security departments of betting companies. They utilize unique algorithms to identify arbers based on the following parameters:
- The large bet sizes. High stakes that approach the maximum threshold.
- Repeated bets. The bettor continues repeating the same bets.
- Consistent account status. The bettor continually keeps the same balance level.
- Frequent money withdrawal. The bettor withdraws funds too often.
- Unpopular event choice. The bettor chooses unlikely events.
The listed triggers are part of standard monitoring. However, betting businesses can reinforce the process of revealing arbers by implementing AML/KYC procedures.
AML/KYC Tools to Streamline Arbitrage Detection
Know Your Customer (KYC) aims to protect organizations from being involved in fraudulent activities, to help them comply with international rules such as Anti-Money Laundering (AML) regulations, and welcome only reliable customers. Advanced KYC solutions automate most verification processes to save users’ time and resources.
These tools are applicable in various spheres, while the primary techniques for arbitrage detection include the following:
- Liveness. This solution verifies users based on biometric data and confirms account ownership. It also prevents numerous accounts per one customer.
- AML Screening. The method implies checking a user against external databases to reveal whether or not they are involved in illegal activities.
- Bank card verification. As an extra security measure, bookmakers can identify and verify users by a bank card, allowing a bettor to use only preliminary approved payment methods.
Final Thoughts
Although arbitrage betting is not illegal so far, many betting businesses discourage this strategy. They do that for a reason since arbing can lead to financial losses or even bankruptcy of a bookmaker.
To ward off arbers, betting companies should basically detect multiple accounts and monitor triggers that can indicate an arbing attempt. KYC & AML solution by KYCAID can significantly help in this regard. It automates verification procedures and provides a seamless customer experience.