Why do humans love to put a personal financial stake into a sporting event? For some sports fans, it might just involve placing an occasional single bet on their favorite team as a tangible show of support. Other people may be addicted to the minutia of sports trivia and are really betting on what they consider to be their own superior knowledge.
I can only imagine that the placing of bets has gone hand in hand with athletic events for as long as their have been athletic events.
Did you know that the modern insurance industry arose from what was at first essentially a form of betting? Lloyds of London had its start as a coffee house where rich men essentially had ongoing bets with each other over whether merchant ships would be successful in their journeys. The system became more and more refined and covered more and more possible calamities until it became a form of business.
Obviously, sports arbitrage is limited in its scope and will not become what the insurance industry is now. It is technically gambling. It's interesting to note that stock investments can sometimes be a higher risk than most arbitrage strategies. I guess that's why brokers have to be licensed and such.
Some people use a system to exploit the vast odds making system in such a way that they are making what they feel is more of a relatively low risk investment. The range of return on investment may be from 2% up to as much as 20%.
What are the risks? They include price changes midway through the arbitrage bet, bookmakers refusing to honour the wager, or even bookmakers being unable to remain solvent.
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They feature and example where you are placing a lot of money with two betting agencies and regardless of the outcome, you win between $10 and $18. That is basically what arbitrage is.
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