Once you have set yourself up for sports arbitrage, you will be able to

• Supplement your income by acting on a part time basis
• Generate your main income from home by acting on a full-time basis
• Generate a regular, tax-free, income for your pension plan
• Make your savings earn far more than is possible with a bank account
  
  So there are some good reasons to get started!

Preparation

You will need at least a medium specification PC, preferably with CD read/write capabilities or some other media for backups. A printer can be useful and a broadband connection to the internet is essential.

To start with, you may be able to use a dial-up connection, however, once you begin to get more involved, you will almost certainly need broadband connection. This makes it much quicker to access bookies sites and therefore gives you a better chance of placing your bets before the odds change.

It's worth having a reference book. There are quite a few of these that have come on to the market since the one I first purchased and most tend to be the pretty much the same. Unfortunately, many of the books on sale do not contain any more useful information than is available on this website for free. I think that you will find my journals provide the most complete information although, of course, I may be biased :-)

However, if you would like to own a hard copy reference book on sports-arbitrage, there is none more comprehensive than the excellent
'Sports Arbitrage - How To place Riskless bets & Create Tax-Free Investments' which is available from Amazon & other book stores.

Now would also be a good time to begin the slightly daunting task of setting up all of your bookmaker accounts. There are absolutely hundreds of bookmakers on the web, so you need to exercise some discretion and probably end up with a list of 30 to 50 accounts. I could put up a list of bookmakers here but the fact is, this topic is well covered on many other sites. I personally use the list provided in ArbSurfer Pro and the free demo version of ArbSurfer Pro is well worth downloading as it will more or less automate your job of setting up all these new accounts.

Alternatively, I recommend Bookmaker Reviews if you prefer an online list of bookmakers

Organisation

I can't emphasise enough the importance of being properly organised. You will find yourself involved in more transactions that you would ever imagine - credits and debits on your bank account, credit card accounts and bookmaker accounts. I recommend that you open a new bank account and a couple of credit card accounts specifically for your betting and do not allow any other domestic entries on them. This is, after all, a business and having the week's grocery bill on your statements simply adds to the amount of work you will have to do to reconcile your accounts. Best to keep it all separate if possible.

You will need to keep a record of all of the transactions. You shouldn't rely just on your bank and card statements and you definitely should not rely upon the bookmakers to tell you what you have done and what money you have coming in and going out. I started out using a simple spreadsheet to log all of my activity but this became unworkable after a while. Now I use a dedicated accounts program called Microsoft Money but I believe that you could use any other one with similar results.

Finding Arbs

This is the fun bit...or not!

When I first started out, I was left pretty much to my own devices as far as finding arbs was concerned. However, the company who sold me the first book, Streetwise, then offered me a service where they would find the arbs and email them to me, leaving me to just place the bets and count the profits. Sounds perfect, doesn't it? Well, it's not quite the bliss that it may sound like but the review section of this site contains the details of my adventures with this and other services so I won't repeat it all here.

However, my advice, is that you do not splash out on any of the services immediately. If you can get a free trial, then by all means, take advantage. But to begin with, you will be better off spending some time familiarising yourself with the bookmakers' sites and the sports and events that usually throw up arbs. At the end of the day, part of the reason you're doing this is to generate some independent income - and relying on an arb service from the very start will make it hard for you ever to go it alone.

It's well worth visiting the various discussion sites about sports arbitrage which have sprung up over recent times. I personally find them good to read but I don't get involved in discussions as they often have a tendency to get nasty.

One of the first things you will notice as you scan the various forums is that there is a lot of negativity - much more so than on forums about other subjects. The reason for this is that, ultimately, every trader is in competition with every other trader. Some of the older hands in the game deliberately post disinformation on boards in order to put to entrants off. Others take every opportunity to criticise the various arb services and warn people off even though they may secretly use the same services themselves. Basically, anyone who speaks positively about a service will be called a "shill" or have their credibility doubted in some way because existing traders have a vested interest in reducing the number of people that start trading as novices. This is what has happened to me because of my website.

I happen to disagree with the "received wisdom" that showing people the realities of trading, good and bad, goes against traders' interests. I know from first-hand experience that it takes more than just money and a little information to make a success of arbitrage trading. There is so much to learn that can only be gathered from experience and it takes some real commitment and perseverance to get to the other side where it all starts to seem easy. A good service can be of enormous benefit because you get to see for yourself where and when arbs appear.

Some forums are better than others, but all offer something. The mixed signals on the chat forums seem to be to be a combination of deliberate attempts by some traders to put new entrants off and complaints by naive novices who were expecting an easy ride with money for nothing, so remember to try to read between the lines.

A forum which is focussed on sports arbitrage trading and generally seems to be quite friendly & populated by some very knowledgeable and experienced traders is Sports Arbitrage Forum

The Basics

Here's a brief explanation of how to go about calculating arbitrage and placing profitable bets.

First off, I recommend that you get used to the European style of quoting odds, rather than the UK style of 2/1, 10/3 etc. It becomes a bit easier to compare them, and it's probably the most-commonly supported method at international bookie sites.

In Europe, the odds are expressed as a single figure representing how much you get back (including your stake) for every £1 stake. So 5/1 would be expressed as 6.0, 3/2 as 2.5, 1/4 as 1.25 etc

Ok, the best way to explain this is to use an example.

These are odds on who will win Group 9 of Football's Euro 2004 qualifiers. At the time of writing, these odds were:

Italy: 2.25 (5/4) (William Hill & Intertops)
Wales: 4.00 (61/20) (Nordic Bet)
Yugoslavia: 4.50 (7/2) (William Hill)
Finland: 100.00 (99/1) (Nordic Bet)
Azerbaijan: 5000.00 (4999/1)(Nordic Bet)

You can see that bookie Nordic Bet tends to rate Italy and Yugoslavia's chances higher than most bookies do, and so is giving more generous odds on the remaining teams.

Using rounded-up numbers, if you placed bets on these teams of £480, £270, £240, £11 and £0.25 respectively you would be guaranteed to get £1080 back whoever won the group for a total outlay of £1000. In other words, 7% risk-free and tax-free

Potential problems

Timescale

This event is quite long-term (settling months from the time of this writing). Although one could argue that the return is far better than the rate of interest your money may earn elsewhere, the fact is that if you concentrated on events which settle sooner, you will be able to turn your money over several times in the same period. This turnover equates to profit so think carefully before investing in long-term arbs.

Odds Changing

This is the classic problem for all of us. Prices change and can sometimes leave us hanging. This is especially true when arbs are published by one of the services so you really must work hard to become truly efficient with your time when betting.

As well as being properly organised - bookmaker accounts open (& funded, if possible), website addresses set up in your Favourites folder, spreadsheets and accounting software at hand - a good way to minimise the chances of losing out when a price changes is to place the bets in the right order. All things remaining equal, it's best to start with the favourite and work down. The reason is that if the odds change on the favourites, it makes a bigger difference to how much total stake you need (and whether the arb is still viable) than if the odds change on one of the outsiders. For example, if the odds on Italy drop from 2.25 to 2, you need to place an extra £30 on them AND the overall return drops from 7% to 2%. The odds on Azerbaijan could make a huge drop from 5000 to 1000, and it only makes £4 difference.

The other thing to take into account is the 'next best bet' on each outcome. If (before you can place your bet) William Hill stops offering 2.25 on Italy, you have Intertops as a fallback. And if they change their odds too, there are other bookies offering 2.20. Now look at Wales; if you can't get that bet on at 4 with Nordic Bet, the next best is 3.4. That brings the return down to 3%. So in this case, you'd be better off placing the Wales bet first. This might seem very complicated, but with a bit of practice you'll be able to spot the right order.

Transaction fees

Nordic Bet charges 2.75% on credit card deposits. This seems to be the only practical deposit method for UK customers, and this would add £36 to your total stake. With bookies that don't deal in pounds sterling you might have currency conversion costs too, though Neteller is often a great way to fund dollar-based accounts. If you're using a betting exchange, remember to take account of the commission they subtract from your winnings and adjust your stakes accordingly.

One important thing to grasp, though, is that if you are placing lots of arbs each month, you may only need to fund your account once. If some of your bets win, you will effectively have some "free" money to place more bets with. So try not to get too hung up about the fees as they will take your eye of the long-term earnings.

Stake Limits

Bookies set different maximum amounts that you can place on any single bet. Most are quite high, but make sure that your bet limit is going to be high enough at each one before starting to place your 'arb' bets. Again, it helps to start with the favourite as that's where you'll be betting the largest amount.

There are other small issues which crop up from time to time and you'll be able to read all about the ones I have suffered from over the last 2 years in my journal. But, to be honest, I look at the problems as a good thing because they prevent many people from joining in. If it was totally hassle-free, there would be too many people doing it and the opportunities would dry up!

Bookmaker Responses

Bookmakers as a group don't seem to like arbitrage traders very much. I found this out quite early on as I started finding that my staking limits were being agressively cut after about 4 months of serious trading.

My solution was to set up entirely new accounts in the name of my son-in-law - different name, different address. I don't use my own accounts at all now, one advantage being that I can put my name on my website without fearing a reprisal. But the best thing to do is to try to avoid your accounts being limited in the first place, especially if you do not have a friendly relative or a trusting friend to lend you their name!

Among the most important points to remember are:

- don't bet maximum stakes - try to stick to around 75% or less of the maximum
- always bet round numbers - never pennies. Round up the nearest £5 whenever possible
- don't go back to a bookmaker for more of the same bet. Bet once and move on.
- don't place 2 bets at the same bookmaker - for example in a football arb, don't bet the draw and one team at the same bookmaker.
- try not to withdraw all of your funds in one go and certainly don't withdraw after every bet.

The thing to remember, though, is that even with all of these precautions, there are some bookmakers who will still limit you. The ones that seem particularly bad are bet and win, easybets, playit and skybet.