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Risks Associated with Arbitrage Betting
Due to the fact that betting markets can be quite volatile frequently, arbitrage betting opportunities can occur fairly regularly, too. However, you need to consider a number of risks if you’re intending to participate in an arbitrage bet. These include:
– Bankroll Risk. It can require you to have a large bankroll in both the and on the betting exchange, in order to ideally cover your liability requirements.
– Liquidity Risk. If there is a lack of liquidity (how much money is active in that particular market, which determines how much you can bet), this can also be a problem for anyone wanting to engage in arbitrage betting. If there isn’t sufficient liquidity, you won’t be able to complete your arbitrage bet, and this could result in you losing money.
– Speed Risk. often monitor their competitors to ensure they’re not falling out of line. Yet the consequence of this is that arbitrage betting opportunities may not be available to take advantage of for a long time period. Such bets must therefore be completed swiftly before a market is corrected.
– Small Returns Risk. Profits are generally quite low when it comes to arbitrage betting, despite the mathematics behind the process being ideal. While it’s possible to make larger profits, it’s more often the case that making an arbitrage bet will return a maximum of 5% of your original wager.
– Limitations Risk. Bookmakers aren’t interested in having arbitrage bettors, so in response to this, they can opt to close or limit the stakes if you’re identified as such. Betting exchanges, on the other hand, do frequently welcome such gamblers.