April 26, 2020

Horse Racing Arbitrage Betting: Find and Profit from Sure Bets | Back & Lay Strategies

Horse racing is one of the oldest sports in arbitrage betting. Indeed, it is widely thought that Dutching (the precursor to online arbitrage betting) was invented at the racetrack.

More importantly, horse racing is one of the best sports for arbitrage betting, for the following reasons.

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Sheer Number of Arbs Possible

Horse racing occurs all over the globe, all year round, with multiple divisions, race lengths and types.

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Fast Payouts

In a matter of minutes horse races are over, bets are settled and winnings are deposited in your account.

One of the main factors impacting how much you can profit in arbitrage betting is how fast you can turnover your cash.

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Popularity

As we will be using betting exchanges as part of our arbitrage strategy, a high degree of liquidity is required.

The popularity of horse racing ensures that there are always plenty of punters keeping the betting markets liquid.

Read on to find out to locate and profit from sure bets in horse racing!

Horse Racing Betting Markets

Before we delve into some specific examples, let’s take a look at the typical betting markets available for horse racing:

Win

A bet on a horse to win the entire race outright

Place

A bet on a horse to come either 1st or 2nd in the race. A horse that ‘places’ is one that comes 2nd, but this type of bet pays out on 1st or 2nd.

Show

A bet on a horse to come either 1st, 2nd or 3rd in the race. A horse that ‘shows’ is one that comes 3rd, but this type of bet pays out on 1st, 2nd or 3rd.

As you would expect, the odds for a ‘win’ are much longer than for a ‘show’.

Arbitrage Horse Racing

Simple Horse Racing Arbitrage Betting Examples

As horse races typically have 8 - 10 horses running, it is nearly impossible to back each of them and form the traditional arbitrage opportunity that we are used to.

This is where betting exchanges really shine. A betting exchange is a market where punters can both back and lay outcomes with each other. The betting exchange makes money by charging a commission on the winnings. This commission is usually in the order of a few percent.

‘Backing’ an outcome at an exchange is the same as what we are used to doing with a bookmaker. We are ‘buying’ the right to receive winnings if our backed outcome comes to fruition.

‘Laying’ an outcome at an exchange is the same as acting as the bookmaker. That is, you are ‘selling’ someone the right to receive winnings if the outcome occurs. You make money when any other outcome than the one you have ‘laid’ occurs.

If you want more information, please refer to my guide to backing and laying at exchanges. It includes plenty of worked examples and quizzes for you to test your knowledge!

Backing at bookmakers and laying at exchanges?

Read my detailed summary of how betting exchanges work!

Here is a simple example of backing and laying the same horse to win outright on a race.


Back (Sportsbet)

Lay (Betfair)

Odds/Price

3.50

3.20

Stake

$200

$222.22

Liability


$488.88

Potential Winnings (w/out commission)

$700

$711.10

Commission (%)

 

5.0%

Commission ($)

 

$11.11

Potential Winnings (w/ commission)

$700

$699.99

Here are the potential outcomes.

The horse wins the race outright

Your bet with Bet365 pays out and you win $700, profiting $500 ($700 - $200 stake = $500).

Your lay with Betfair loses and you have to payout the winnings of $488.88 to your counterparty. Note that you don’t pay out (3.2 x $222.22), only (2.2 x $222.22), as the counterparty will have their stake returned to them by the exchange as the 1.0 in the decimal odds.

Net profit is $700 (Bet365 winnings) - $200 (Bet365 stake) - $488.88 (Lay bet liability) = $11.12.

Horse Racing Betting

The horse does not win the race outright

Your bet with Bet365 does not pay out and you lose your $200 stake.

Your lay with Betfair wins and your liability of $488.88 is returned to you. You win your counterparty’s stake of $222.22 minus the Betfair 5% commission ($11.11), meaning you win the net stake of $211.11.

Your total payout from Betfair is $699.99 ($488.88 + $211.11).

Net profit is $699.99 (Betfair payout) - $200 (Bet365 stake) - $488.88 (Lay bet liability) = $11.11.

So there you have it. $11.11 guaranteed profit on $700 staked. This is equivalent to a 1.6% arb.

If you are new to back and lay betting, it will take a while to get your head around it, so I recommend that you practice with the quizzes and examples in my back and lay betting guide.

If you are still following, read on to find out how to make use of some advanced horse racing arbitrage opportunities!

Horse Racing Back and Lay

Advanced Horse Racing Arbitrage Betting Examples

The advanced strategy I will reveal below requires a decent bit of experience and knowledge about the bookmakers and the exchanges.

It involves taking advantage of the Best Odds Guaranteed (BOG) promotion that a number of bookmakers offer.

It is a promotion that is designed to prevent hesitation in punters when they are placing bets before a race. If you back a horse a certain odds, and the odds at the start of the race (SP - starting price) are higher than the odds at which you backed the horse, your bet will be eligible for the higher odds automatically.

So, how can we use this to our advantage?

Well, the key is to find a horse where the back price at a BOG bookmaker is very similar to the lay price on an exchange (preferably an exchange with a low commission).

Horse Racing Gambling Strategy

Oddschecker.com is a great way to quickly find the best odds for a particular race across the bookmakers and the exchanges.

Note that not all BOG bookmakers apply the BOG promotion to all races. For example, Bet365 is a BOG bookmaker, but they do not apply the promotion to horse races in Australia, New Zealand, Japan, South Korea, Singapore and Hong Kong.

Once you find a horse and race that satisfies these conditions, you back the horse at the bookmaker and then lay the same horse at the exchange. Here’s an example:


Back (Bet365)

Lay (Matchbook)

Odds/Price

2.40

2.42

Stake

$200

$200

Liability


$284

Potential Winnings (w/out commission)

$480

$484

Commission (%)

 

2.0%

Commission ($)

 

$4

Potential Winnings (w/ commission)

$480

$480

Assuming the odds do not change leading up to the event, the following outcomes are possible:

The horse wins the race (same odds)

Your bet at Bet365 pays out for $480. Your net loss is $4 ($480 winnings - $200 Bet365 stake - $284 Matchbook liability = -$4).

The horse loses the race (same odds)

Your lay at Matchbook wins and pays out $484. Your net profit is $0 ($484 winnings - $200 Bet365 stake - $284 Matchbook liability = $0).

Not great outcomes by any means. Either lose $4 or lose $0.

Horse Racing Betting Exchanges

The real value in this method comes from the BOG. If the SP for the horse at Bet 365 drifted from 2.40 to 3.20 by the start of the race, the following outcomes would be possible:

The horse wins the race (odds drift)

Your bet at Bet365 pays out for $640. Your net profit is $156 ($640 winnings - $200 Bet365 stake - $284 Matchbook liability = $156).

The horse loses the race (odds drift)

Your lay at Matchbook wins and pays out $484. Your net profit is $0 ($484 winnings - $200 Bet365 stake - $284 Matchbook liability = $0).

So we have suddenly gone from either losing $4 or $0 to either winning $156 or $0.

Only $4 of your money was ever at risk, meaning that you are essentially getting a horse that was at odds of 2.40 for odds of 39.00.

It’s not a true arbitrage opportunity as there is a risk of loss, but the loss is heavily mitigated and potential upside is unlimited.

Horse Racing

The main risk is in deciding whether to back or lay your bet first. If you lay first and find that the bookmaker doesn’t accept your bet for whatever reason, or that the odds have shortened, you may expose yourself to further risk.

Conversely, after placing your bet with the bookmaker, the exchange price may drift, leaving you exposed on that leg.

The main upside to this is that the bookmaker is very unlikely to consider this a form of arbitrage, as arbitragers usually lock in a profit at the time that they place their bets, rather than relying on luck to ensure a profit later.

I’ll leave it up to you to decide whether this is a worthwhile opportunity.

Horse Racing Betting Rules

There are two main rules to be aware of in horse racing arbitrage betting.

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Tattersalls Rule

When you place your bet, the odds provided to you are predicated on all horses running. If a horse fails to start, it can have a big impact on the probability of the other horses winning (especially if it is a favourite).

Tattersalls rule allows the bookmakers to change the odds even after your bet has been placed based on the odds for the horse that was withdrawn.

The shorter the odds for the horse that has been withdrawn, the greater the deduction. See the full deduction rates at the Tattersalls Official Rules.

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Dead Heat Rule

If a horse (or group of horses) is deemed to have tied a race, the dead heat rule will apply.

This simply means that part of your bet will lose and part of your bet will win, based on the number of horses that are deemed to have tied the race.

As we are generally backing and laying the same horse, these rules usually don’t impact the profitability of our arbs.

Summary

Horse racing arbitrage betting is a diverse and lucrative way to make money.

The sheer number of races being run every day all over the world alone makes it difficult for a dedicated arbitrager to ignore.

The arbitrage examples I have provided above are just a few of the many, many ways possible to profit in horse racing arbitrage betting.

If you ​want to save yourself a lot of time, I recommend investing in some arbitrage betting software to help you find the arbitrage betting opportunities.

If you are interested in more detail, feel free to enrol in my 100% free video course on sports arbitrage betting.

100% Free Video Course For Earning Money Online​With ​Arbitrage Betting

​The most comprehensive, in-depth training on sports arbitrage betting available. ​Start earning an income ​online using the unique techniques in this free course.

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Louis


I'm an Australian guy who has used sports arbitrage betting to provide a decent side income (thousands of dollars per month!) for myself while working full-time. I've set up the The Arb Academy to teach others how to do the same and achieve financial security through a second income stream!

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