How to Calculate Moneyline Arbitrage

Sophisticated investors often employ an arbitrage strategy. This strategy entails buying one asset at one price and selling another similar or identical higher priced asset on another exchange. The idea is that the two prices will converge so the investor will make money whether the price goes up or down. Similarly, sports betters can apply this logic to a moneyline for the same game at two different casinos.

Instructions

    • 1

      Find two moneylines for the same game which are priced substantially different. For example, New York and Chicago are playing a basketball game. The moneyline at casino A is that there will be 200 points scored, and the moneyline at casino B is that there will be 180 points scored in the game.

    • 2

      Take the under at casino B and the over at casino A. That means you are betting that more points than 180 will be scored with casino A and less than 200 will be scored with casino B.

    • 3

      Adjust your bet based on the payout odds. Assuming that the payout is even (or a return of double your money) at each of the casinos above, you would bet the same amount of money. Otherwise, adjust the bet in proportion to the odds of the payout. In this example, we will assume a bet of $100 on each casino moneyline.

    • 4

      Calculate your win based on the different scenarios of points scored. In each case, you either win or break even on your bets.

      > 200 points = win at A, lose at B and break even on the bets

      = 200 points = win at A, push at B result is $100 winning

      180 < points < 200 = win at A and B result is $200 winning

      = 180 points = push at A, win at B result in $100 winning

      < 180 points = lose at A, win at B and break even on the bets