The Effects of Arbitrage on Affiliates

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Sports betting arbitrage is a hot topic at the moment and websites “guaranteeing” players 100% risk-free profits seem to be flooding the online space, painting quite a rosy picture. Surely this should beg the question, “Is this too good to be true?” defines ‘arbitrage’ as: “the simultaneous purchase and sale of the same securities, commodities, or foreign exchange in different markets to profit from unequal prices.” In the context of sportsbooks, arbitrage is the act of hedging bets on opposite outcomes of a market with two (or more) sportsbooks to ensure that a profit is yielded regardless of the outcome; While not ‘illegal’, many sportsbooks prohibit arbitrage behavior, so make sure to always read the T&Cs.

While sporting arbitrage can have positive benefits for affiliates, particularly if they are earning a CPA revenue share, or are only interested in making a quick profit, what are the negative effects?Make sure to consider the impact of the following before promoting arbitrage activity on your website:-Any high quality affiliate experiencing long-term profitability can tell you that success does not happen overnight, or without a great deal of work. Good affiliate relationships should be built on long-term, mutual profitability between affiliates and operators. Sportsbooks who have outlawed arbitrage activity on their website are attentive to knowing their traffic, and will often inquire about the origin of questionable traffic, the affiliate’s promotional efforts, where traffic is being purchased from etc. If one or more merchants flag an affiliate as sending ‘arb’ traffic, it could damage that affiliate’s reputation with other operators who have barred arbitrage.

-Potential for decreased affiliate commission earnings – keep in mind that arbitrage involves staking very high/low wagers, and will result in losses just as often as it does winnings. When a player takes a large loss, the affiliate tracked to that player will earn a negative revenue commission for that player activity. In addition, some operators have outlined in their T&Cs that commission earned on what is deemed ‘fraudulent traffic’ will not be paid out.Affiliates need also consider potential pit-falls from a player perspective. These include:-Player Inexperience/Error – Whether placing incorrect bets while rushed, or taking too long to place an opposing bet, there is no fail-safe when trying to beat the system

-Bookmaker Error – Some bookmakers have clauses listed in their T&Cs stating that if ‘obvious’ errors are made on their part, they reserve the right to cancel a bet, thus leaving a player with one extremely large bet which could result in a terrible loss.

-Maximum Stake Restrictions – Keep in mind that some sportsbooks set maximum betting thresholds.

-Risk of the Unexpected – It would be an easy oversight not to explore what happens in the event that a game ends in a draw, a game does not finish, etc. Some bookmakers may honour the bet while others may return a player’s bet.

Most important to consider is the fact that players, affiliates, operators, affiliate networks, affiliate software providers, affiliate management teams and the iGaming community at large are equally important components in a system that relies on the activities of each to function harmoniously.