Arbitrage betting — or “arbing” — is one of the most debated strategies in the betting industry. The principle is simple: by exploiting discrepancies in odds across different platforms, a bettor can cover all possible outcomes of an event and lock in a guaranteed profit.
But this raises an important question: can arbitrage betting work on a betting exchange like Betfair, Smarkets, or Matchbook? The short answer is yes — but with caveats. Betting exchanges open new opportunities for arbing, but they also introduce risks, liquidity concerns, and detection challenges for both players and operators.
In this article, we’ll explore how arbitrage betting works on exchanges, why it’s different from bookmakers, what the risks are, and how iGaming operators can leverage Gamingsoft’s technology to minimize revenue leakage while ensuring a fair, scalable ecosystem.
What Is a Betting Exchange?
Unlike traditional bookmakers, which set odds themselves, a betting exchange is a marketplace where players bet against each other. The exchange simply acts as the middleman, charging a commission (typically 2–5%) on winnings.
Key features:
- Back bets: Betting for an outcome (e.g., Team A wins).
- Lay bets: Betting against an outcome (e.g., Team A does not win).
- Peer-to-peer structure: Players match each other’s bets, creating dynamic odds.
Because odds are driven by supply and demand, they often diverge from bookmaker prices — and that’s where arbitrage opportunities appear.
How Arbitrage Works on an Exchange
Arbitrage on exchanges typically falls into two categories:
- Exchange vs. Bookmaker Arbitrage
Example:- Bookmaker offers 2.10 on Manchester United to win.
- Betfair Exchange offers 2.00 to lay Manchester United.
By combining both bets with the correct stake sizes, a bettor guarantees a profit regardless of the outcome.
- Cross-Exchange Arbitrage
Example:- Betfair offers 2.05 on Nadal to win.
- Smarkets offers 2.15 on Djokovic.
By splitting stakes, a bettor profits no matter who wins.
According to a 2024 market analysis by Smart Betting Club, odds discrepancies between exchanges and bookmakers occur in 3–5% of major football matches and 8–10% of fast-moving in-play tennis markets.
Why Betting Exchanges Are Attractive for Arbing
Exchanges bring unique advantages for arbitrageurs:
- Lay betting flexibility – The ability to bet against outcomes creates more combinations.
- Dynamic markets – Odds shift rapidly, especially in-play, generating more gaps.
- Transparency – Odds are visible in real time with full depth of market.
This makes exchanges especially popular with professional arbers and syndicates.
The Risks of Arbitrage on Exchanges
However, betting exchanges are not a guaranteed goldmine. There are significant risks:
- Liquidity constraints – If there’s not enough money available at the odds, you may not be able to place your full stake.
- Example: Odds of 2.10 might look profitable, but only $50 is available at that price.
- Commission fees – With 2–5% commissions, the arbitrage margin can be wiped out.
- Timing and volatility – Odds can change in seconds, leaving one side unmatched.
- Detection and account limits – While exchanges are more tolerant than bookmakers, unusual patterns may still trigger reviews.
A Betfair study found that 85% of retail traders attempting arbitrage fail due to unmatched bets or poor stake balancing.
Regional Legality and Compliance
Legality depends heavily on jurisdiction:
- UK & EU – Arbitrage betting is legal but discouraged by operators.
- Asia – Some markets, like Singapore, treat arbitrage as exploitative under gambling restrictions.
- US – Regulations vary state by state, with some exchanges under strict compliance.
Operators must ensure compliance-ready monitoring tools to balance player freedom with platform integrity.
How Operators Can Manage Arbitrage Risks
For iGaming operators, arbitrage is a double-edged sword. While it attracts liquidity and trading-style players, unchecked arbitrage can erode margins and destabilize odds markets.
This is where Gamingsoft comes in.
Gamingsoft’s Tools Against Arbitrage Abuse
At Gamingsoft, we deliver a full-stack ecosystem that helps operators balance innovation with control:
- AI White Label Platform – Your casino and sportsbook ready in just 10 minutes, with AI Agent, AI KOL, and AI Assistant modules. These detect betting anomalies, automate user segmentation, and flag arbitrage patterns in real time.
- GS Connect+ API Aggregator – Integrates 8,000+ games from 200+ providers, with smart odds monitoring and bonus abuse prevention built-in.
- AI Chatbot & AI Voice – Provide multilingual, 24/7 player support while detecting suspicious betting activity without manual overhead.
- GSPay Payment Gateway – Supports multi-currency and crypto with real-time fraud and wallet abuse detection — critical for identifying arbers using multiple accounts.
Together, this ecosystem ensures operators can scale safely, block arbitrage abuse, and protect profitability.
Conclusion
Arbitrage betting will always exist as long as odds differ between platforms. For bettors, it’s a strategy of speed, precision, and risk. For operators, it’s a wake-up call: without AI-powered monitoring and integration, profits can leak quickly.
At Gamingsoft, with over 15 years of expertise, 8,000+ API integrations, and 410+ partners worldwide, we help operators launch, scale, and protect their iGaming platforms.
Want to explore your iGaming business? Visit www.gamingsoft.com or contact [email protected] today.
About Gamingsoft
Gamingsoft is a leading provider of online casino solutions, offering a comprehensive suite of services, including a white-label solution, API integration, payment solutions, game development, and more, to iGaming operators worldwide. With over years of experience, Gamingsoft has earned a reputation for delivering innovative and reliable solutions, helping clients succeed in the competitive iGaming industry.
