Sports Arbitrage Trading
Author: William Tan
Sports arbitrage trading is one of the hottest things out there today in the money-making scene in the Internet. There are the HYIPs and the autosurf programs, but all of these things are very high risk endeavors. Sports arbitrage trading offers risk-free profits through sports betting.
Arbitrage
Arbitrage in general has been used in economics for a long time. In the world of economics, the word "arbitrage" is in reference to the practice of getting advantage through a state of imbalance in between two or more than two markets. Arbitrage is all about taking advantage of the market imbalance that is created. The person who is involved in arbitrage is called arbitrageur. Arbitrage trading is actually done in trading financial instruments like stocks, derivatives, bonds and currencies.
What is sports arbitrage?
Sports arbitrage is possible when there is discrepancy between the prices that would allow those who are betting to bet on different players or teams and still recover the money that they invested and make money out of the transaction. To be able to make money out of sports arbitrage trading, one must be able to bet in more than one bookmaker. Of course, if a person would bet on the different teams with the same bookmaker, he would not be making any money at all and he would end up losing the amount that he bet on the losing side.
The basics of arbitrage trading tells us that the price difference between bookmakers will make it possible for people to make money out of betting for two opposite sides of a bet. The different bookmakers create different odds for different sporting events. The secret in arbitrage is to exploit these so called loopholes and spot them like an eagle spotting its prey. Bookmakers are careful not to give such opportunities to the betters, however, because of the diversity and the numerous sporting events today, the loopholes or what we might call as investment opportunities are always out there, week by week, day by day.
Risks
Is sports arbitrage trading really zero-risk? This may be the claim of many people out there, especially in the Internet, to be able to attract people to joing their so-called pools and groups. If this is so, then, the ultimate financial solution has already been found. This is the holy grail, the ultimate investment. But really, what are the risks that are associated to arbitrage sports trading? The first and foremost thing to consider in sports arbitrage trading is the stake size of the bet. Most of the opportunities out there are only good for a few percent. The problem comes if the bookmaker imposes a certain maximum for a certain bet. Another thing to consider is the costs of withdrawing and depositing to these so-called betting accounts. The additional costs that these activities generate are usually 1 to 5 percent of the total money size that is to be deposited or withdrawn. Another problem may arise from the use of a single currency in accepting bets. This is usually avoided if a better goes to the big time book makers. The postponement of sporting events may also post risks.
There are a lot of risks that are associated with sports arbitrage trading, however, it is possible to earn from the transaction. It is indeed comparable to the holy grail but there are certain factors that need to be taken cared of first to be able to generate money out of this endeavor.
Question for Canadians about gambling taxes?
I’ve heard that Canadians aren’t taxed on gambling winnings. But what if you’re a business? Suppose you have a business that consists of a computer running an arbitrage sports betting program. The business makes money, but via making online sports wagers. Would that still be untaxed? Or is it only for individuals? And are there any attorneys that specialize in this aspect of the Canadian tax law? Thanks.
I believe the tax exemption applies to personal, individual winnings.
Does anyone know tax laws for sports arbitrage in Canada and the USA?
Hey-
I was interested in getting into sports arbitrage, so does anyone know the tax laws for that in Canada and the USA? Is there a limit on how much one can make or be taxed on? Any advice, tips or contacts would be greatly appreciated. Sports betting is totally legal in Canada at least. I just made a bet on hockey last night at the lottery website. thanks so much everyone
Sports betting -online at least- is illegal in the States, but the IRS has a place on your tax return to claim illegally made money, so if you choose to claim it, I guess you could. I think Canada is the same way the UK is and it’s tax free.
Why would u invest in the stock market when u can bet on sports?
seriously, the best traders make about 15% return a year,
while some people make the same return on a 3 hours tennis match betting on the favorite (federer)!!
besides, you pay no taxes on betting winnings and you really understand what you’re putting your money into, and the crowd expectations have no effect on the outcome (contrarily to the stock market where a rumor can make you lose money)
My question: why many people still invest on stock markets? how much do they really make? and do their return outweigh the brokerage fees???
n.b: while arbitrage opportunities on stock are almost inexistent (may last for a few seconds), they may occur on sports betting once in a while!!
thanks for your professional answers,
n.b: i have a great knowledge about options trading strategies and forex markets, so feel free to go technical!
by the way , I’m from France and lately, sports betting has become legal and there is no taxation on your gains!
Good question. I think skill and knowledge play a much larger roll in success in trading stocks than in sports betting. I view the stock market as having maybe 90% perfect information. The Western countries public companies are highly transparent – the more research you do and the more you know, you have a good chance to succeed. On the other hand, I think sports has about 50% perfect information. Since there are human beings involved, you don’t know if Roger Federer had a late night the evening before a big match, or in the US if Terrell Owens took his anti-depression medication that morning. Put it another way – when the Yankees and Rays place a baseball game, it is very difficult to predict the outcome – the exact same players on the field in four games may have four entirely different outcomes. In stocks that would not be the case.
I like the no tax on betting wins. In the US, you must declare winnings and can only offset that income with gambling losses.