Capitalizing Arbitrage Opportunities With Prophet Exchange

One of the more appealing aspects of betting exchanges for sports bettors is the ability to 'arb' or arbitrage bet. Arbitrage betting is a strategy where bettors place bets on every outcome of an event at odds that guarantee a profit regardless of the game or match outcome. The most common type of sports betting arbitrage is referred to as a 'back to lay'. This is more common in Europe, where betting exchanges like Prophet Exchange have been in business for years, but it's fairly straightforward. (Learn more about Prophet Exchange and how it's destined to be the future of peer-to-peer sports betting in North America.)

Arbitrage opportunities are easier to create on Prophet Exchange because you're not subjected to the -110 and -115 juice traditional sportsbooks place on each side of a bet. Let me explain.

Explaining Arbitrage Opportunities

Let's say I open my favorite sportsbook app, and I'm offered odds of -110 to bet on a side. That's an implied probability of 52.4%. The thing about that is you're betting on a spread or a total that should have an implied probability of 50%, meaning it should be, theoretically, +100 and not -110. Over time, that 2.4% difference adds up. Stretch it out to -115 (53.5%) or -120 (54.55%), which is common in the marketplace, and it's starting to get easier to see why a sportsbook is willing to throw crazy promotions around to get your business.

That is where Prophet Exchange comes into play. At its core, Prophet Exchange is a two-way market facilitating peer-to-peer betting. It eliminates the vig—that 2.4+%—that lines the pockets of every sportsbook every time you place a bet. It allows you to skip the middleman and bet against another person instead of against the sportsbook, allowing the bettor to dictate the odds and price, not the bookmaker.

How Arbitrage Opportunites are Advantageous

Let's use Jayson Tatum's prop of 29.5 points, priced at -115 by sportsbooks on both sides, as an example. The implied probability according to that bookmaker is north of 107%, and that 7+% is known as the hold. That hold creates a margin for the bookmaker to ensure profitability regardless of the outcome and how heavily they take action on one side or the other. On an exchange like Prophet Exchange, the implied probabilities total is 100%.

Let's say I don't like Tatum in this spot, and I take him at under 29.5 points and place a $115 bet to win $100. Shortly before tip-off, I hear Jaylen Brown is doubtful, which drastically changes Tatum's outlook in this matchup. Now, if I take the same position on Tatum and book him over 29.5 points on the same sportsbook, I'm losing money because I'm laying -115 again. I'm covered on both sides of the bet, but I'm out $30 regardless of the outcome, and the sportsbook wins regardless.

In this instance, I can go on Prophet Exchange and lay Tatum over 29.5 points for the same $115, and if someone else in the market takes the under, I'm essentially buying out of the original play for a small profit. Now, at higher stakes, this arbitrage opportunity can be a lot more lucrative than the hedging example I gave with Tatum, but it's not an option if sportsbooks are my only avenue.

Another huge appeal of Prophet Exchange is you won't be limited. That's right, no limits! Prophet Exchange doesn’t care how good a bettor is because you're not wagering against them like you are when placing bets at a sportsbook. Prophet Exchange makes money by taking a cut of transactions, far less than the 10-20% common at most books, not beating its customers.

Is Prophet Exchange Legal?

Yes, the Prophet Sports Betting Exchange is legal where available. New Jersey will be first to launch, with Indiana not far behind. Prophet Exchange is tied to Caesars' sports betting license in each of these states, and more states should roll out soon after. As part of the initial rollout, a Prophet Exchange promo code should be released with the Betprophet.co mobile app, available via web browser and mobile app for both iOS and Android. Currently, Prophet Exchange is running a pre-live promotion called “Exchange The Love.” Prophet Exchange will increase the go-live deposit match offer by $25 for every 500 people who pre-register before launch.