Too good to be true?
I have always found the challenge of beating the bookie at their own game quite interesting. Over the years I’ve done a lot of work in trying to come up with betting models which give enough of an edge to beat the bookies and gamble my way to a fortune. I’m yet to succeed and I doubt I ever will, but I do find it fun. Realistically for an average Joe punter, they can never profit from sports betting through knowing the odds better than a bookmaker…The bookies get their odds from a range of sources and usually incorporate sophisticated mathematical models, probability distributions and a panel of sporting experts to arrive at numbers, which reflect the true probabilities quite well. The bookmaker always has a built-in advantage – the house edge – called the over-round. It is generally at least 3% and can be up to 10%, which represents a huge disadvantage to a willing gambler. Although an average Joe cannot beat a bookmaker by knowing the odds better, they can beat them through exploiting the promotional offers made by them. Many people are learning how to profit through exploiting the promotional offers offered by bookies as part of their relentless advertising campaigns they run to drum up business. It’s called matched betting and presents profit that is risk-free and tax-free and can be quite substantial with some successful proponents claiming it’s possible to earn thousands
Is matched betting legit?
To be honest I first heard of matched betting a couple of years ago. Back then I didn’t really think much of it. The author of the article demonstrated how to quickly make $20 from it within the space of about half an hour. To me it just seemed like a lot of mucking about to make $20 and that it didn’t really present a long-term income stream. I also thought it might be illegal. Surely a bookie wouldn’t let you take their money that easily? Furthermore, there are companies such as oddsmonkey and profit accumulator that sell software for making money off bookies through matched betting and promised generous returns through doing so with testimonials to boot. Initially I thought that this might be some kind of scam.
After doing some research, I found that matched betting is completely legal. Services that make this process simple are completely legal and not a scam – I can attest that it is indeed profitable having made a couple of hundred in just a couple of weeks.
Laying and betting exchanges
Although, the bookie is technically giving you money as part of their promotions, you’ll probably find you don’t make much profit with them and in fact lose money over time. Before you stop reading and think this doesn’t make sense, let me explain…. The idea with matched betting is to place a free or bonus bet which is handed to you by the bookmaker just for signing up or as part of some other promotion and place a bet with it. This bet may win or lose, but the outcome is irrelevant because the idea is to the take up the role of bookmaker on the betting exchange and offer a bet to some other punter to generate a risk-free profit. The exchange is where your balance rises long-term and it more than compensates for any loses made with bookmakers.
To illustrate how it works, let’s say you’ve been given a bonus bet of $ 50 and put a bet on with the bookmaker of $3.50 odds for Chelsea to beat Manchester United in the EPL. Right now, if Chelsea wins, you get $125 and $ 0 if they lose – since it’s a free bet. Since the odds are $3.50, there’s about a 100/3.5 = 28 % chance that you get $125 and a 72% chance that you get nothing. This is not too bad but it can be improved.
What we do is make a lay bet – a bet that Chelsea loses on the exchange. The idea is to make the stake such that we profit regardless the outcome. Generally, we expect to have to lay for a bit more than what we backed with the bookmakers – say the odds for the lay are 3.60 on the exchange. Without delving into the math lets consider what would happen if we bet $ 35 against Chelsea at $3.60 and exclude the exchange commission which doesn’t affect the results too much. If Chelsea lose, we get $35, and if they win, we lose 2.6*35 = $ 91
Back bet -lay bet = $125 – $91 = $34 approx.
Lay bet -back bet = $35 – $0 = $35 approx.
In either case we retain about 70% of the bonus bet given to us and this is in essence what matched betting is all about. It’s all to do with nabbing free bets and bonuses from bookies and converting them into relatively low risk profit using the betting exchange(s).
One of the best side hustles now
What made me change mind about matched betting and decide to give it a go was seeing how many proponents there are of it in the financial independence online community. Many bloggers such as TFS have had amazing results with it as a side hustle. Right now, I’m looking for side-hustles and passive income streams to generate at least 10% of my yearly wage by end of 2019 as a step forward to FIRE. I feel that matched betting will be a large contributor to this and after comparing to other side hustles it seems like the $ per unit time is much higher than anything else out there online. Compare this to one very common idea of completing surveys and it basically leaves it for dead. Surveys generally earn about $5 per hour of work completed. With matched betting, profits of $1000s can earnt with only a few hours spent per month.
Results so far
I’ve only recently started with matched betting but I’m already really excited about what potential it has. It’s probably not for everyone and I can see why some people shy away from it. There is the initial outlay for an oddsmatcher like oddsmonkey or something similar. These are generally $20 / month. Furthermore, money needs to be put up front into gambling accounts and into betting exchanges. Generally, for lay bets, a large sum may be needed to cover betting liabilities, especially if odds are high. Also, with other types of bonus bets you’re more open to variance but you still have a long-term edge. Some people may also get turned off by gambling as a side hustle – they may just find it unethical or have other reasons why it doesn’t interest them and that’s fair enough.
Despite this it’s quite a profitable activity as long as you follow the mathematical rules of it. I think it is important to keep track of how much money is deposited and what the account balances on all the betting accounts sum too. Due to the nature of matched betting some accounts may be down while others will be up, but overall as a whole there should be a net increase over time. Matched betting software can do this for you.
As far as my exploits go with matched betting – I intend to stick with this and see how it pans out over then next year. My goal is to generate about 5k out of this by the end of 2019. This would more than cover the loses I’ve made with the bookies and other gambling activities (POKER!) throughout my life and be a big step towards FIRE by 40. I’ll continue to give regular updates on how it progresses and test out whether it really can be leveraged to generate the income that some claim it is capable of.
Liability vs profitability balance
For those who are interested I also had a look at how the odds affect how profitable a matched bet is. I constructed a graph showing odds vs profit on a $ 100 free bet with matched betting. I assumed no commission from the exchange and that the odds for back and lay were equal. In practice this is not the case but it illustrates the general idea of the relationship.
There’s basically little point putting bets on games with short odds – the profitability is low, you ideally want odds as high as possible.
The flip side of course, is that if the odds are high, so too is generally the spread between the bookie and the exchange. More importantly the liability increases linearly and you need far more tied up in the exchange account just in case a long-odds outcome occurs.
This is why the optimum is in the $ 3-5 range – it’s a good balance of % profitability (70-80) and liability. A matched betting software will generally sort this out for you by finding the best selections amongst all of the events out there.