Green up formula, accounting for arbitrage and commission

Don't do it. Just take the bookie bet. It is nearly a certainty that over time, the bookie bets will be in profit and laying off on Betfair will return a loss.

'Locking in a profit' might feel comfortable but if you can put up with swings of profits and losses, you will make more money. Not only that, you never have to worry about getting the arbing calculations wrong!

Cheers, Mr Magoo

I get your point and take it on board. If the market is efficient and I can get a bet in with a bookie at lower than current market price then it will make a profit in the long run. However, if the arb spread is big enough then that will cover the cost of betfair commission and create small but consistent returns rather than the peaks and troughs of just bookie backing.

In short, it's the formula I need. Cheers.

I wouldn't worry about any formula just make it a bet to nothing to recover your stake.
  The only taking the bookie side of the bet is true and works...in Theory......in practice you can have horrendous losing runs that can wipe you out.  The key to success in arbing is getting the maximum amount on with the bookies....thats if you can actually keep your accounts open.

Thanks, thin and crispy.

My aim is to reduce the peaks and troughs and create a marginal, yet profitable, consistent return.

In short, it's the green up formula I need to create. Cheers.

(Haven't really checked this, sorry if there are terrible errors...)

If you have backed a selection for £x at decimal odds of p
And now want to lay it for £y at decimal odds of q
And you have a commission rate c (from 0-1, so 5% is 0.05)
Then £y = xp/(q-c)

e.g. if you've backed something for £100 at 4.0, and now have the chance of laying it at 2.5, you should lay 100 x 4.0 / ( 2.5 - 0.05 ) = £163.27

Your profit will be y( 1 - c ) - x, which is £55.10 in this example.

Cheers, Mr Magoo, but that only works if commission is 0. Any other value for c and if doesn't green equally :(

Don't do it. Just take the bookie bet. It is nearly a certainty that over time, the bookie bets will be in profit and laying off on Betfair will return a loss.

If you happen to do this when the markets are perfectly formed and all movements have settled, then this would be correct. In all other cases it's total bollocks.

There are spreadsheets available that will do this for you. You should be able to get them through Google - but keeping your accounts open will be your biggest challenge. What you propose will work for a finite period of time.

Cheers, Mr Magoo, but that only works if commission is 0. Any other value for c and if doesn't green equally :(

In the example I gave, it works on my calculator with c = 0.05 for 5%?

If you happen to do this when the markets are perfectly formed and all movements have settled, then this would be correct.

So... if the markets are perfectly formed and settled, taking the lays on Betfair will be profitable...
(let's gloss over how you decide if the market is perfectly formed... after all, if you knew that, then you can already spot all out-of-line prices and back/lay them until you are a millionaire...)

In all other cases it's total bollocks.

So... if they aren't perfectly formed, taking the lays loses money, in your opinion. Well, then you have worked out the magic money making system! Find arbs on Betfair, and then *back* the Betfair price. Genius

Anyway, here are some arbs for you that won't even need you to leave Betfair's site, thanks to their new 'fixed odds' service on the beta:

Olympics 2012/Athletics/Men/400m Hurdles/Gold Medal Winner
Lay David Greene at 14.5, back at fixed odds of 15.0

Olympics 2012/Cycling/Track/Men/Keirin/Gold Medal Winner
Lay Chris Hoy at 1.55, back at 1.57

Olympics 2012/Diving/Men/10m Platform/Gold Medal Winner
Lay Bo Qiu at 1.54, back at 1.57

Olympics 2012/Boxing/Men/Super Heavy (+91kg)/Gold Medal Winner
Lay Roberto Cammarelle at 5.2, back at 5.5

Olympics 2012/Boxing/Women/Light (60kg)/Gold Medal Winner
Lay Katie Taylor at 1.30, back at 1.33

Once again, you are better off not laying off (commission will be a massive problem given the slim arbs). And good luck getting a decent bet on!

Oh Magoo, you've done it again!

If you happen to do this when the markets are perfectly formed and all movements have settled, then this would be correct.

So... if the markets are perfectly formed and settled, taking the lays on Betfair will be profitable...
(let's gloss over how you decide if the market is perfectly formed... after all, if you knew that, then you can already spot all out-of-line prices and back/lay them until you are a millionaire...)

In all other cases it's total bollocks.

So... if they aren't perfectly formed, taking the lays loses money, in your opinion. Well, then you have worked out the magic money making system! Find arbs on Betfair, and then *back* the Betfair price. Genius Laugh

The example was showing how ridiculous your assertion was, not how to do it.
I never said taking the lays would be profitable, I said IF by some magical way you were able to conjure that scenario, the backs would be profitable at the bookies, like you suggested. But this isn't the case, as you rightly point out, because it's impossible to know the right price unless you have another way of determining it. And as you say you'd be a millionaire.

Your response and conclusions to my response only indicates you certainly have no idea what you're on about, so please don't encourage others to just back at the bookies, because they will lose in a big way.
THe OP wanted to know how to arb, not how to gamble and your instructions on how to lose money were clear. The OP wants a no risk, no lose situation counting for commission, not a risky will lose situation. That's why my response was so harsh. There is no way taking your advice to "let it ride" works nor is it appropriate.

Compared to your intelligence I must be some kind of genius, because how you could draw the conclusion that if the markets aren't fully formed, taking the lays loses money is beyond me!

It's a pity that so many believe that getting anything better than the betfair price at any time is a cash machine, it isn't.
I could give thousands of examples where the bookie price is greater than the Betfair price, but taking the bookie price alone is disaster.

For example:

Take a race where the prices move like this,

Bookie $3.25, $3.50, $3.75, $4.00, $4.50

Betfair $3.50, $3.25, $3.50, $4.00, $5.00

This is an example only, back at $3.50 bookies, lay at $3.25 Betfair.
lay value at betfair, poor back value at bookies.

Take another race where the prices move like this,

Bookie $3.25, $3.50, $3.00, $2.80, $2.50

Betfair $3.50, $3.75, $3.00, $2.50, $2.50

This is another example only, back at $3.00 bookies, lay at $2.50 Betfair.
poor value at betfair, back value at bookies.

It will even out over time, there is no value either way.
The value comes in arbing, not losing out when there is no value in one direction or the other.

Unless you have a magic wand, there is no way to tell that the bookie price is value.
To assert that all your winnings will accumulate in the bookie account is totally ludicrous bordering on irresponsible and uninformed advice.

In answer to the OP question here is the link you need to an easy to use calculator.

http://www.trickybet.net/lay-calculator-basic

Just plug in your bets and commision rate.

Hi again, Mr Magoo

Your example works for c=0.05 in the respect that you have two green contenders, but they're not equal values, which is what I'm after but, to be fair, didn't specifically state.

back £100 at 4.0 = 300 if win, -100 if lose
lay £163.27 at 2.5 = -244.90 if win, 163.27 if lose

win: 300 - 244.90 = 55.10
lose: 163.27 - 100 = 63.27

Is there a way of having the two green values equal?

Cheers

Hurrah !!!!

And apologies. I wasn't taking off the commission on the lay. DOH !!

Many, many thanks. That twisted my head and it appears it's much easier than I was convoluting it to be. It helps if I understand my own question!!

Thanks, Donnie Brasco.

Although I actually needed the formula in this example (I'm a programmer,) that is a very useful page :)

Hi Mr Magoo,
Just a quastion. How can you find arbs Fixed Odds x Spostsbook? Do you find them manually or do you have any sofware to find them? Thanks!

A1=0.95 (commision rate)
B2=Bookie Odds
C2=betfair Lay price
D2=((b2-((c2-1)/$AS1+1)/((c2-1)/$AS1)*100
If D2 is positive ,it a arb

Hope this help..