Arbitrage, and its four failure modes

Arbitrage is real, the maths is simple, and almost everything written about it skips the part where it fails.

Arbitrage is backing every outcome of the same event at different sportsbooks, at prices that pay you whichever way it goes. The maths is simple, it is entirely real, and almost everything written about it skips the part where it fails.

How to spot one

Convert every side to implied probability and add them up. Above 100% is a normal market with a fee in it. Below 100% is an arbitrage.

A two-book arbitrage

Book A: Team X +120 → 45.45%.
Book B: Team Y +110 → 47.62%.
Total: 93.07%.
Under 100%, so a profit exists.

Stake in proportion to each side's implied probability and both outcomes return the same: about 7.4% more than you put in.

The stake split is what does the work. Divide the total outlay in proportion to each side's implied probability and every outcome returns an identical amount — which is what makes the profit guaranteed rather than merely likely.

The four ways it goes wrong

The line moves between legs. You place the first side, and the second has gone by the time you get there. You are now holding a one-sided bet you never wanted at a price you did not choose.
A limit stops you. The book with the good price accepts $40 of your intended $400. The other side is already on. The arbitrage becomes a small unbalanced position.
One leg is voided. A postponement, a scratched pitcher, a settled-differently rule. One side refunds, the other stands, and the hedge is gone.
The bonus terms bite. Arbitraging with a promotion often breaches its terms, and books do withhold winnings for it.

Every one of those turns a guaranteed 2% into an unhedged position. That is the real risk profile: not losing the arb, but ending up holding half of one.

It also gets you limited faster than anything else

Arbitrage is trivially detectable — matched stakes on opposite sides at two books, repeatedly. A recreational book will limit the account quickly, and the account you lose is often worth more than the arbitrage you found.

The practical rules

Place the side most likely to disappear first — the shorter-lived price, usually the soft book's.
Check the rules on both sides. Different void rules on the same event is how a hedge silently stops being one.
Do not chase tiny margins. A 0.5% arb does not survive one rounding error, let alone a moved line.
Count the account. Burning a book's goodwill for a few dollars is usually a bad trade.

The near-miss version is worth knowing too. A low-hold bet is two sides adding to slightly over 100% — a guaranteed small loss rather than a small profit. It is used to move money, meet rollover, or make an account look ordinary, and it is far more common in practice than a true arb.

Live two-way arbitrage across the books VigWatch prices, with the stake split done for you. Open the arbitrage finder.