Arbitrage betting Australia: how arbs work and the real risks

Key facts

Arbitrage betting backs every outcome of an event at different bookmakers when the best prices imply less than 100% in total, so you profit whichever outcome wins.
One bookmaker's market is always over 100%. With one side at $1.90, the other side needs to be $2.12 or longer somewhere else before an arb exists.
$1.75 and $2.45 add up to 97.96%: $175 and $125 return $306.25 either way, a $6.25 profit on $300.
The TAB's Conditions of Use let it refuse a bet without reasons (34.1), limit the bets you can buy (16.1) and close an account on 30 days' notice (22.3).
Online in-play sports betting is prohibited in Australia, so arbs during a game are not available online.

What arbitrage betting is

Arbitrage betting, or arb betting, means backing every possible outcome of an event across different bookmakers, with stakes sized so you get the same amount back whatever happens. It only works when the best available prices, taken together, imply less than a 100% chance. Then the total you get back is bigger than the total you staked, and the result of the game does not matter.

Arbing is about prices, not predictions. You never need an opinion on who wins.

Why arbs exist, and why they are rare

An arb needs two bookmakers to disagree by more than both of their margins combined. A single bookmaker's market always adds up to more than 100%: two teams at $1.90 each is 105.26%. For a two-way arb with one side at $1.90 (52.63%), the other side has to be longer than 1 / (1 - 0.5263) = $2.11 somewhere else, so $2.12 or better.

One bookmaker has Team B at	Team A must be at least	Market total at that price
$1.90	$2.12	99.80%
$1.80	$2.26	99.80%
$1.65	$2.54	99.98%

Gaps like that can open when one bookmaker moves its price and another has not yet, or when two bookmakers rate a game differently. The gap closes as soon as either price moves back into line, and the table shows how thin the profit is even at the minimum price.

Arb maths with two bookmakers

Here is an AFL head to head example. Bookmaker 1 has Team A at $1.75 and Bookmaker 2 has Team B at $2.45.

Market total: 1 / 1.75 + 1 / 2.45 = 57.14% + 40.82% = 97.96%.
Return on $300 = $300 / 0.9796 = $306.25.
Stake on Team A = $300 x 57.14% / 97.96% = $175.00.
Stake on Team B = $300 x 40.82% / 97.96% = $125.00.

Result	Bookmaker 1 ($175 at $1.75)	Bookmaker 2 ($125 at $2.45)	Net
Team A wins	+$131.25	-$125.00	+$6.25
Team B wins	-$175.00	+$181.25	+$6.25

That is a 2.08% return on the money staked, for two bets and two accounts. The arbitrage calculator works out stakes for two or three outcomes, and the implied probability calculator shows each bookmaker's own margin.

Arbs with a betting exchange

You can also back an outcome with a bookmaker and lay the same outcome on an exchange. The exchange's commission comes off your lay winnings, so the condition for an arb is: back odds x (1 - commission) > lay odds - commission.

Betfair's guide says its market base rate is 6% on most sports and 10% on NRL. Back $100 at $2.30 with a bookmaker and lay at $2.20 with 6% commission: 2.30 x 0.94 = 2.162 is more than 2.20 - 0.06 = 2.14, so it is an arb. The lay stake is $100 x 2.30 / 2.14 = $107.48, with a liability of $128.97, and you lock in about $1.03 either way. The lay bet calculator shows the liability and the profit after commission. On an NRL market at 10%, the same prices are not an arb: 2.30 x 0.90 = 2.07 is less than 2.20 - 0.10 = 2.10. The same back and lay maths powers matched betting.

Why bookmakers restrict arbitrage accounts

Bookmakers write wide powers into their terms. The TAB's Conditions of Use are a good example of what Australian punters sign up to.

Clause	What the TAB's terms allow
16.1	Placing limits on the bets you can buy over a period of time
34.1	Refusing a proposed bet "at our discretion and without giving notice or reasons"
22.3	Suspending or closing an account at any time with at least 30 days' notice
5.3	One account per approved jurisdiction unless authorised
63.2	Promo benefits are for recreational gamblers only

The part of the TAB terms we read does not use the word arbitrage. It does not need to: a bookmaker that wants to stop taking your bets can cut your stakes or refuse them without explaining why. Treat every bookmaker account as one that can be limited at any time.

What turns an arb into a loss

The maths only holds if both bets go on at the prices you planned and settle the same way.

Risk	What happens	Example
A price moves	You are left with one unmatched bet	Team B shortens from $2.45 before your second bet
A stake is cut	Only part of your second bet is accepted	Second bet limited to $50: Team A wins +$81.25, Team B wins -$102.50
Rules differ	The two bets settle on different results	One market includes extra time (TAB rule 10.8), the other offers a draw and excludes it (rule 10.9)
A draw or dead heat	A two-way bet is paid at half under a dead heat rule	TAB rule 12.5 divides the payout by the number of tied teams
Racing scratchings	Fixed prices change after a late scratching	The TAB says fixed prices stand subject to scratchings and dead heats

The stake cut row shows the problem: an arb planned as $175 and $125 becomes a straight $175 bet with a $50 hedge, and you are gambling again. Always place the bet most likely to be limited first.

Pundit tip: keep a log of every arb: both prices, both stakes, and the time each bet went on. If the log shows more partial fills and moved prices than clean arbs, the profit is not there.

No live arbs online

Arbs during a match are off the table online. Online in-play sports betting is prohibited in Australia, and ACMA says the phone exception only covers bets where the selection, type, amount and confirmation are given wholly by phone. Any arb you take online has to be placed before the game starts. Our AFL betting guide explains how the main pre-game markets are settled.

The law, offshore sites and tax

We found no Australian law that names arbitrage betting. Licensed sports and racing wagering is allowed under the Interactive Gambling Act when the provider holds an Australian state or territory licence. Using an unlicensed offshore bookmaker to find a better price adds a different risk: ACMA warns that if you gamble online with a company operating illegally, you risk losing your money.

On tax, the ATO lists betting and gambling wins as not assessable unless you operate a betting or gambling business. Arbing with systems, records and large volumes can raise that question, so get advice from a registered tax agent if it applies to you.

For the stakes on any single market, use the dutching calculator if you only want to cover some outcomes, or browse all our bet calculators. If one side of an arb is already on and the other price has gone, the hedge bet calculator shows what a hedge can still lock in. An arb profits whatever happens; a value bet only wins on average. Every other bet type is explained in our bet types guide.

Frequently asked questions

Is arbitrage betting legal in Australia?

We found no Australian law that names or bans arbitrage betting. Betting with licensed Australian bookmakers is legal for adults. Bookmakers can still refuse bets, limit stakes and close accounts under their own terms.

How much can you make from arb betting in Australia?

Each arb usually returns a small share of the total staked. A market at 97.96% returns 2.08%, or $6.25 on $300. Profits depend on how many arbs you find before prices move or accounts are limited.

Why do bookmakers limit arbitrage bettors?

Their terms give them the right to. The TAB's Conditions of Use say it may refuse a proposed bet at its discretion without notice or reasons, place limits on the bets you can buy over a period, and suspend or close an account with 30 days' notice. The part of the terms we read does not mention arbitrage by name.

Do you pay tax on arbitrage betting winnings?

The ATO says betting and gambling wins are not assessable unless you operate a betting or gambling business. Arbing at scale, with systems and records, can raise that question, so get advice from a registered tax agent if you bet heavily.

Can I arb between a bookmaker and Betfair?

Yes, by backing at a bookmaker and laying the same outcome on the exchange. It only works if back odds x (1 - commission) is more than lay odds - commission. At $2.30 back, $2.20 lay and 6% commission, $100 locks in about $1.03.