Question on Arbitrage

[Foals]

I'm really new to the concept of arbing, but it seems like a huge moneymaker when done correctly. My question is - how can you compute the optimal profit for an arb?

I'm going to give an example. Lets say Pinny has

Pacquiao -300
Mayweather +280

and a "square" book has

Pacquiao -250
Mayweather +220

Obviously there is an opportunity to arb with taking Pacquiao -250 and Mayweather +280 but how can you compute the amount needed to get the best profit

[vitalyo]

Foals SBR has all the tools you need .

http://sbrforum.com/Betting+Tools/Arbitrage+Calculator.aspx

[mathdotcom]

If you mean what is the bet size that guarantees you the highest profit no matter who wins, then use that calculator. I am guessing this is what you mean. In terms of expected value, you should just bet the bad line at the square book and not bet anything at Pinny.

[Pancho sanza]

I'm really new to the concept of arbing, but it seems like a huge moneymaker when done correctly. My question is - how can you compute the optimal profit for an arb?

I'm going to give an example. Lets say Pinny has

Pacquiao -300
Mayweather +280

and a "square" book has

Pacquiao -250
Mayweather +220

Obviously there is an opportunity to arb with taking Pacquiao -250 and Mayweather +280 but how can you compute the amount needed to get the best profit

The formula you want is = (Bankroll if Mayweather wins) * Log (Probability Mayweather wins) + (Bankroll if Pacquiao wins) * Log (Probability Paquiao wins)

Maximize this # using excel solver.

You would have to set up constraints up to the limits of the amounts you could get down as the formula will give you a massive bet size since you have a risk free profit here.

Assuming your limits were 2500 on each side, and using the probabilites implied in pinnacles prices, the proper wager for a 10k bankroll would be $874 on Mayweather at +280 and $2500 on Pacquaio at -250.

[Johnny 55]

Foals, I think you are on to something with this whole arbitrage thing, off market prices, what a concept.