Arbitrage Betting Opportunity Explained — Full Breakdown & Transcript

[00:01] under rock this year's australian open men's tournament has been a little bit different to what is normally the case and that's to do with all the uncertainties surrounding novak djokovic and his visa and whether he can actually

[00:14] play in australia or not but because of the situation and novak minister alex hawk the judges and the whole situation this presented a very juicy arbitrage opportunity for betters out there most

[00:29] generally only about two to three percent but this one was about 10 to 20 percent and in this video i'll be going over how this arbitrage opportunity came about and all the details behind this

[00:43] arbitrage opportunity and some of the key takeaways and lessons that you guys can learn from this experience and use for your own betting in the future so this opportunity was a very unique

[00:55] situation and occurred in the 2022 australian open men's winner market on betfair which we can see over here australian open men's winner

[01:07] for any individual games it's for the winner of the whole entire tournament so the main unique situation was and the catalyst behind it was the uncertainty around whether novak djokovic the world number one and favorite for the

[01:22] tournament was actually going to be playing or not because of his vaccination status and because he had actually already been let into australia actually already been let into australia on the 13th of january thursday so

[01:34] started that was after novak djokovic had just won his court case the first one and now it was just before minister hawk was about to cancel his visa for the second time

[01:48] so to understand this opportunity first we need to understand the betfair exchange and what is also implied probability so betfair is essentially just like a stock market we can choose to back

[02:01] players which is in this column here or you can just delay which means bet against players in this column here and we can choose the prices ourselves we don't need to be using the given prices but we just put in orders and if

[02:14] they match across to someone else who's also putting in orders then it gets filled and we would essentially trade against them for example i traded here daniel medvedev i backed him at 3.32 on average

[02:29] someone was willing to bet against medvedev at odds of 3.32 and that encoded trade and and the size or the amount of that was so for the backing odds

[02:43] bookmaker and we can work out from this the happening so the implied probability for daniel is at the moment

[02:58] at the moment 1 over the average of 2.84 and 2.88 so 2.86 and that gives us about and that gives us about 34.96 or about a 35

[03:11] so it's saying that medvedev has a roughly 35 chance of winning and the neat trick about using these implied probabilities is we can work out and find arbitrage opportunities from them if we sum up the implied

[03:26] probabilities of all the back column in here all the way down to every single player who's in the market that has to be greater than 100 in total

[03:38] opportunity where we can back all these players no matter who wins now for the low column the sum of the implied probability has to be less than a hundred percent

[03:52] has to be less than a hundred percent as you can see here it's currently 93.4 and if it was greater than 100 then in most cases there would be an arbitrage every single player and

[04:06] wins in the end now for a more detailed explanation i recommend you check out my previous video on purely arbitrage betting and you can find out more about what implied probability is and some more

[04:20] basic calculations and examples over over there so now let's get into the juicy stuff of this arbitrage opportunity so i've taken a screenshot of the market or of the first few players what it was

[04:35] like on thursday the 13th of january now this was when fight against the border security and now it

[04:47] was just before the minister was about to announce that he was going to cancel drokovich's visa for the second time so so here we can see

[05:03] 115 and for the back side that's for the and for the back side that's for the back side and for the lay side it's 98.9 so this is less than 100 which is what it's supposed to be this

[05:16] is greater than 100 which is what's supposed to be so at first glance there isn't actually an arbitrage opportunity here at all no opportunity in the market to get an arbitrage

[05:33] interesting and you can also see that i've kind of worked out here so for novak um the implied probability at the time um the implied probability at the time when i was checking it it was also 3.05

[05:46] so the implied probability was 1 divided by 3.05 or 32 percent uh medvedev was based on his back odds and i've worked out for everyone

[05:58] and in total i got 119. uh 112 was the total percentage uh that also confirms that since it's greater than 100 there isn't actually an arbitrage opportunity or so it seems like it

[06:17] here's where it gets interesting and if you go to the winner's market for example here we can see a little icon called rules and most people do not read these rules

[06:31] which is very dangerous if you do not read the rules but it states if a player does not start a tournament then all bets on that player will be void qualifying is not considered part of a

[06:45] tournament this means or this is what i interpreted as if djokovic doesn't play the first game so he's either deported or he's withdrawn from tennis australia because

[06:59] of his visa situation or whatever which was seeming highly likely then it means he does not start the tournament and all bets on that player will be void so all bets on djokovic will be void an avoid bet means that bet

[07:14] is refunded entirely so if i bet a thousand dollars on trucker richard whatever odds if he doesn't play i get my one thousand dollars back and that's the end of it so this is just like in horse racing

[07:26] for the horse races if there's a horse that at the start of the race it gets injured or something and it can't run then that horse is removed and any bets you placed or bet against that horse are just scrapped and all your steak is just

[07:42] returned to you and basically it's as if nothing happened at all this just helps to like keep everything fair you wouldn't feel like great if your horse that was the favorite and it just instead of not it doesn't even

[07:55] run it just doesn't even participate in the race you'd feel like you've just been cheated of your money so it's just to help keep everything fair the bet is refunded and nothing happens however for normal races

[08:09] let's say go to an example let's just take a look at the race here at chepstow if for example mayhem mia is removed

[08:21] then the odds of all the other horses since mayhem mia is the favorite here then the odds for twilight glory jen's georgie and all these other horses

[08:36] now stronger since the favorite is horses will actually win and we can see this there's a statement in the rules where so for non-runners basically what this

[08:50] stuff says if a horse doesn't run then the odds will change and it basically reduces the odds that you get accordingly because now your horses has a much higher chance of winning so the odds should in fairness get reduced

[09:06] horse which helps to keep everything fair but since this market for the tennis the australian open men's tournament

[09:18] the outright winner market did not is not actually a horse race event it's actually just the normal winter market for a sport event there is no such thing as reduction factor and this is what is

[09:32] difference and this is why the opportunity existed so what this means if we go back to what we had here if i bet on novak djokovic

[09:46] at about 2.98 odds let's say i bet a thousand dollars on him and let's say i bet a thousand dollars and let's say i bet a thousand dollars on metal dev

[10:02] my one thousand dollars from betting on djokovic gets fully refunded djokovic gets fully refunded so i lose nothing here

[10:19] djokovic is removed it means medvedev is much more likely now to win the entire tournament and his odds are going to go down and his odds are going to go down so i had a thousand dollars backing him

[10:38] now his odds have gone down probably to like have gone down probably to like 2.7 against medvedev at 2.7 odds

[10:52] and i can guarantee your profit that way it's basically like buying low it's basically like buying low by backing at high odds and which is betting against or laying or selling

[11:06] so that's where the arbitrage opportunity is and you can roughly drock rich has about 30 percent of the implied probability

[11:18] that it's going to significantly affect the market since it's such a big the odds of other players it will swing it dramatically since novak is such a so let's say we have the same bat 1000 on

[11:33] djokovic 1001 medvedev so if djokovic does play then he need to know a bit more about tenants but his odds would probably decrease to about 2.5

[11:45] and mediva dev might increase to about 3.5 so one goes up you gain one goes 3.5 so one goes up you gain one goes down you gain r you lose all but this means you don't make any money

[11:59] if you make nothing if djokovic plays then that's not good so we want to still make money if djokovic plays and here's how we do it we bet more on drock [ __ ] than we do on the other players so we could bet two

[12:13] thousand on djokovic and one thousand on medvedev then when djokovic is confirmed to be playing his odds because he's such a strong favorite and he's normally odds are about two point

[12:28] five and measures odds will go up which means we lose money here but we gain money here so that means since we've bet more on drug rich we're

[12:40] going to be making more money than we are losing money on red for dev or the other players so now here's the mathematics of why this arbitrage opportunity actually exists so we said that if

[12:54] the total implied probability is less than 100 on the back side is less than 100 on the back side then there's an arbitrage

[13:06] now if novak doesn't play then this 105.7 percent or 112 percent that i calculated earlier is significantly reduced since he's is significantly reduced since he's about 33 of the implied probability

[13:19] about 33 of the implied probability and if we work that out

[13:31] 33 percent the total i worked out for the total implied probability was percent without djokovic that's only eighty

[13:43] percent so jokovic doesn't play we can get an arbitrage by betting on all the other players but it's not kind of worth it to do that because

[14:00] there is also all these other players at 1 000 odds which we can kind of see at the bottom so all these players who actually really don't have any chance of pretty much winning they're still counted as 0.01

[14:14] because that is the maximum size 1000 of the highest odds that can be possibly offered on betfair but these are probably closer to like 10 000 or something like maybe even a million for the players who have like no

[14:27] but that still has to count in the implied probability so we can get rid of that and say that was eight point seven percent we can say that was only instead of

[14:41] actually 0.01 percent 0.1 for each person we can say that was only 3 in total that means we have a huge edge now 74 percent is the total implied

[14:54] probability that means we're getting a 26 arbitrage opportunity 26 arbitrage opportunity if novak doesn't play but it's still a bit hard to back all these players with like 900 something on

[15:09] point so what we can do is back the few strongest plays most impact once novak is removed from the fair once novak is removed from the fair market

[15:32] about tennis medvedev is on the other side of the but he will likely is a second favorite favorite as he will likely face struck witch in the final

[15:47] zverev and rafa will face djokovic potentially in the 70s they have an easier route now once they get into the semis against an easier opponent so their odds should also drop and another one is actually rubled

[16:02] because if djokovic is removed rubella will take his spot in the draw and djokovic's draw is a lot easier than what he's in currently so his odds will also drop so these players

[16:16] these three plus also sid surpass and rublev will likely have the most impact so these are the people we are going to bet on so what i ended up doing was i used this column to work out how

[16:30] these players including djokovic because remember if ends up staying his odds are going to go down and we're going to be losing money on the other players like medvedev rafa

[16:44] so that's why we need novak we still need to bet on novak to keep to offset the losses and still make money once the other players prices go down

[16:56] here i wanted to work out how much we should bet on each player we want the payout to be roughly the same so i can bet let's say two thousand

[17:08] to be six thousand so i need something appropriate for me eighteen hundred so that's also close to six thousand do

[17:21] was rare i might do maybe eleven hundred eleven forty eleven fifty it's got close to 6100 for rougher i might do

[17:37] maybe 450 450 420

[17:49] and for surpass because it's odd so high you only need about you only need about 100 and

[18:01] higher we only need about so that would be the amount we bet on each of these phase

[18:14] and you can see from my screenshots later what i've done and i've done something similar to the and i've done something similar to the amount i said i would kind of from here

[18:32] on [Music] medvedev i put 1950 on zverev i put 1080 on dial i put 200 plus i have another 200 bonus bets on my bookmakers account

[18:49] and since if i started 120 rube lev i went a bit more at 187 but that's opportunity so this is like kind of what i actually at 3.05 watts i put 1700 on djokovic

[19:06] 1550 on medvedev to keep the payoffs roughly the same zero i had 975 ralphide 200 plus some bonus bets 6 percent 120 and rubella also had 120. now what happened after djokovic got removed from the market

[19:23] but now in the actual one now in the actual one novak djokovic is gone daniel medvedev is the only one well the only favorite now still remaining followed by

[19:37] zverev so what happened was i got medved up at average odds of three point three two zeroes was five point three nadal was fourteen point five six percent and the moment djokovic got confirmed he was

[19:51] removed from the market this was the outcome of the event that i was banking on and djokovic got room from the market so he's now out which means

[20:05] we've now hit our 75 percent and that can't happen which means bettors will keep backing until the odds of all these players now shifts back down and that was what happened

[20:21] when struggling which got removed and since these players are now more likely to win because i'm no djokovic their odds dramatically went down so medvedev is now 2.84

[20:33] instead of 3.32 3.32 0 is 4.8 rather than 5.3 0 is 4.8 rather than 5.3 and i was half 7.2 instead of 14.5

[20:45] sits first and ruber have also gone down a little bit the consequence of this so the moment that

[20:58] dracula was moved i got refund the amount i had in djokovic and now i can cash out or trade out of my position so now at first i've bought these

[21:10] features on medvedev zverev nadal certifies rublev at low prices relatively because their odds were so high high odds means a lower price and now i can sell out of these so i can

[21:22] them for high and i can accept the profit as shown and i can accept the profit as shown here 737

[21:35] to 630 but that's because the market's not too liquid at the moment there's not many people in there and it means i have to pay a bit extra to trade out buying trade out manually and probably get about 700 or so

[21:49] so that was the outcome of the arbitrage opportunity i put in about 5 000 for 700 of profit that's about 14 15 which is pretty solid and you're not going to find this very commonly

[22:05] size restriction for this so you could bet as much as you wanted but i only put in 5 000 because that was how much i had in the bank at the moment how much i had in the bank at the moment but you could have put in a lot more

[22:19] already i've bought metadata at 3.32 odds which is quite the higher odds means it's a cheaper price and i've sold medivh at 2.85 watts so lower it's more expensive

[22:34] it's kind of counterintuitive because it's the opposite of what it seems but it's the other way around and i back them at high odds and i've bet against them at low odds so i traded out a rafa 11 so that wasn't

[22:48] and since first i've got him in at 44 i bet against him at 29 so all these players shifted in my favor and in the end i can cash out now for 634 which means

[23:05] accordingly and in the end no matter who wins i can make 634 in profit in the other outcome when djokovic is not deported

[23:23] i can trade out there i would have backed him for about three i can bet against him for about 2.5 probably and i'll lose a bit on the other players but overall since i bet a lot more on drug rich it would offset my losses that

[23:36] i make on the other players so now why was this opportunity possible and what are some key takeaways we can get out of this and this is going to be now the djokovic opportunity is

[23:49] obviously gone now since he's no longer in the country the tournaments also so there's no opportunity here but what can we learn from this to be able to find these opportunities ourselves in the future

[24:03] so the first most important thing is reading the rules properly you have to know what it means but if player does not are void it means if you've been on truck rich it

[24:17] gets refunded if he doesn't play it doesn't mean he settles as a loser doesn't mean he settles as a loser so so for example when people thought well oh the ministers just cancelled his visa a second time his

[24:31] odds should not be changing at all his odds should be his odds assuming that he plays otherwise it's just a mistake and you're otherwise it's just a mistake and you're getting in at the wrong price

[24:49] odds are not very clear and i've made mistakes before in the past when i haven't read the rules carefully i'm guilty of this myself and it was only from my experience in horse betting that i kind of knew

[25:03] that if a player if a horse doesn't run the bets get avoided so i thought it was glad i checked didn't say anything the difference was there was no reduction factor

[25:20] created this arbitrage opportunity if people aren't familiar with the they don't know the rules then they're going to get completely obliterated

[25:36] understand a bit about the sport itself if something doesn't seem right you can know a bit more easily if you don't know anything about tennis you don't even know who drokovich is you might see him at three odds you think

[25:49] it but you want to be knowing that you if you've been watching tennis for a while you know he's in very good form he was in the fight on the us opens and he won three grand slams last year

[26:05] so his fair rides from normally in the australian open on a hard chord is a lot less than three so something didn't feel quite right there

[26:19] also understand what you're exposed to and what outcomes you are hoping to achieve and what position your bets are putting you into djokovic at all i only bet on medvedev's very raphapass

[26:34] rubler then i am very exposed drock rich does play i'm going to get completely destroyed shoot up and now i have to sell out at a lower

[26:50] price after i backed them at a low odds and now i'm betting against them at high odds if i don't want to cash out if i don't want to ride the risk which means i'm going to be losing quite a bit of money

[27:03] but that's why you have to realize by betting on truck ridge that offsets that because it's going to get refunded anyways and you're going to be making money either way

[27:21] outside the box about what could possibly happen opportunity generally in most cases if an is so even for this one where i was like

[27:34] checking the mass for a few hours i still wasn't very 100 certain that this was an arbor charge and the reasoning for that is what am i still exposed to you've got to think

[27:48] wrong and that is again in the rules any player starting a tournament but withdrawing or being disqualified before the end will be settled as a loser

[28:01] so how does this affect me if i bet two thousand on truck rich he plays the first game while the court situation and situation and then after that it's determined that

[28:14] drockwich needs to leave the country and he gets the squalified or withdrawn from the tournament but after he's played the first game then he'll be settled as a loser i'm not going to get my refund on djokovic

[28:26] and i could potentially lose everything that i bet on him which is quite a lot that i bet on him which is quite a lot of money reduction factor it might also be introduced

[28:41] you never want to just assume that the rules that aren't there are going to be what you want so that was still something i was and that's why i even though this was a guaranteed 10

[28:55] it wasn't a hundred percent guarantee it was probably i would say 99.5 that's why i wouldn't like put all my life savings into just this finally again last thing is you want to be very

[29:09] you need to understand implied probabilities and what this 114.5 95 and you can work out you can see that i spend a lot of time working on the

[29:24] implied probability for backing and working out how much i could get if working out how much i could get if djakovic didn't play drakovic then it's not an arbitrage and you need to be able to work that out on

[29:39] the spot either using excel or some mathematical models and a calculator so hopefully that gives you some insight into this specific arbitrage opportunity that was found in the australian open

[29:51] men's tournament winner market and the whole thing surrounding drock pitch and how that presented an opportunity in the hopefully you guys learned something you can take away for your own betting make

[30:03] sure to like and subscribe if you found this interesting and i'll see you guys this interesting and i'll see you guys in the next video