Finding Arbitrage Between Sportsbooks and Prediction Markets

Finding Arbitrage Between Sportsbooks and Prediction Markets

Arbitrage — or "arbing" — is the practice of exploiting price differences between two or more platforms to guarantee a profit regardless of the outcome. With the rise of prediction markets alongside traditional sportsbooks, a new category of arbitrage opportunities has emerged.

How Cross-Platform Arbitrage Works

The concept is straightforward: if one platform gives you better odds on "Yes" and another gives you better odds on "No" for the same event, you can bet both sides and lock in a profit.

Example: Will the Kansas City Chiefs win the Super Bowl?

• Kalshi: "Yes" contract trading at $0.18 (implies 18% probability)
• DraftKings: Chiefs to win Super Bowl at +600 (implies 14.3% probability)

In this case, the sportsbook thinks the Chiefs are less likely to win than the prediction market does. You could buy "No" on Kalshi at $0.82 and bet the Chiefs at +600 on DraftKings. If the Chiefs win, you profit on DraftKings. If they lose, you profit on Kalshi. If the prices diverge enough, both outcomes are profitable.

Step-by-Step Arb Calculation

1. Convert all prices to implied probabilities. 2. Sum the implied probabilities across your positions. If the total is less than 100%, an arbitrage exists. 3. Calculate the optimal stake for each side to equalize your profit.

Formula for two-outcome arb:

Let p1 = implied probability from Platform A, p2 = implied probability for the opposite outcome from Platform B.

If (1/decimal_odds_A) + (1/decimal_odds_B) < 1, an arb exists.

Your profit margin = 1 - [(1/decimal_odds_A) + (1/decimal_odds_B)]

Where to Find Arbs

The best arb opportunities tend to appear:

• Between prediction markets and sportsbooks: Different market structures mean prices do not always align.
• On less liquid markets: Niche events where one platform has not yet adjusted to new information.
• Around breaking news: When information hits, different platforms update at different speeds.
• Between Kalshi and Polymarket: Even within prediction markets, prices can differ.

Practical Considerations

Account limits: Sportsbooks may limit or ban accounts they suspect of arbing. Prediction markets generally do not.

Timing risk: Prices can move between when you place your first and second positions. Always execute both sides as quickly as possible.

Fees: Factor in any trading fees, withdrawal fees, or currency conversion costs.

Settlement differences: Make sure both platforms define the event outcome the same way. A subtle difference in settlement rules can turn a guaranteed profit into a loss.

Capital requirements: Arb margins are typically small (1-5%), so you need meaningful capital to make it worthwhile.

Tools for Finding Arbs

Manually scanning multiple platforms is time-consuming. At odds.guru, we are building tools to surface cross-platform price discrepancies in real time. Our comparison pages show odds from sportsbooks and prediction markets side by side, making it easy to spot when prices diverge.

Risk Management

• Never allocate more than 5-10% of your bankroll to a single arb.
• Keep funds on multiple platforms so you can execute quickly.
• Track all your arb trades in a spreadsheet to monitor your actual returns.
• Be aware of the tax implications — arb profits are taxable income.

Is Arbing Worth It?

For disciplined traders with sufficient capital and accounts on multiple platforms, cross-platform arbitrage can provide steady, low-risk returns. It is not a get-rich-quick strategy, but it is one of the few approaches in betting and trading that can offer a mathematical edge.

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