One of the most attractive aspects of betting exchanges for sports bettors is the ability to “arb” or arbitrage bet. Arbitrage betting is a strategy in which bettors place bets on each outcome of an event at odds that guarantee a profit regardless of the outcome of the game or match. The most common type of sports betting arbitrage is called “back to lay”. It’s more common in Europe, where betting exchanges like Prophet Exchange have been around for years, but it’s pretty straightforward. (Learn more about Prophet Exchange and how it is destined to be the future of peer-to-peer sports betting in North America.)
Arbitrage opportunities are easier to create on Prophet Exchange because you are not subject to the -110 and -115 juices that traditional sportsbooks place on either side of a bet. Let me explain.
Explain arbitrage opportunities
Let’s say I open my favorite sports betting app and I’m offered odds of -110 to bet on one side. This is an implied probability of 52.4%. The problem is that you are betting on a spread or total which should have an implied probability of 50%, which means it should, in theory, be +100 and not -110. Over time, that 2.4% difference adds up. Stretch it to -115 (53.5%) or -120 (54.55%), which is common in the market, and it starts to get easier to see why a bookie is willing to run crazy promotions for attract your business.
This is where Prophet Exchange comes in. At its core, Prophet Exchange is a two-way market that facilitates peer-to-peer betting. It eliminates the vig – that 2.4+% – that fills the pockets of every sportsbook every time you place a bet. It allows you to skip the middleman and bet against another person rather than the bookmaker, allowing the bettor to dictate the odds and price, not the bookmaker.
How Arbitrage Opportunities Are Beneficial
Let’s use Jayson Tatum’s prop of 29.5 points, priced at -115 by sports betting on both sides, as an example. The implied probability according to this bookmaker is north of 107%, and this 7+% is known as the hold. This holdback creates a margin for the bookmaker to ensure its profitability regardless of the outcome and magnitude of its actions on one side or the other. On an exchange like Prophet Exchange, the total implied odds are 100%.
Let’s say I don’t like Tatum there, and I take him under 29.5 points and place a $115 bet to win $100. Shortly before the whistleblower, I hear that Jaylen Brown doubts, which drastically changes Tatum’s outlook in this game. Now if I take the same position on Tatum and book him more than 29.5 points on the same sportsbook, I lose money because I’m down to -115 again. I’m covered on both sides of the bet, but I’m $30 regardless of the outcome, and the sportsbook wins regardless.
In this case, I can go to Prophet Exchange and put Tatum on 29.5 points for the same $115, and if someone else in the market takes the underside, I’m basically buying back the original game for a small profit. Now, at higher stakes, this arbitrage opportunity can be a lot more lucrative than the hedging example I gave with Tatum, but that’s not an option if sports betting is my only avenue.
Another great appeal of Prophet Exchange is that you won’t be limited. That’s right, no limits! Prophet Exchange does not care about the quality of a bettor because you are not betting against them like you do when placing bets at a bookmaker. Prophet Exchange makes money by taking a trade share, well below the 10-20% common in most books, without beating its customers.
Is Prophet Exchange legal?
Yes, the Prophet Sports Betting Exchange is legal where available. New Jersey will be the first to go, with Indiana not far behind. Prophet Exchange is tied to Caesars’ sports betting license in each of these states, with other states expected to roll out soon after. As part of the initial rollout, a Prophet Exchange promo code is expected to be released along with the Betprophet.co mobile app, available through a web browser and a mobile app for iOS and Android. Currently, Prophet Exchange is running a preview promotion called “Exchange The Love”. Prophet Exchange will increase the live deposit match offer by $25 for 500 people who pre-register before launch.