Why do arbitrage opportunities exist?
In order to understand why these opportunities exist, you must first understand how sportsbooks earn their money. Sportsbooks build a commission for themselves into each bet. This commission is called vigorish, but is more commonly called “vig” or “juice”. The sports book is not looking to profit from the outcome of the event. They simply earn their profit from the vig. The simplest example of this is American Football. Typically when betting on an American Football game you will win $100 for each $110 you bet. Let’s say Atlanta is playing Chicago this Sunday. I bet $110 on Atlanta and Anne bets $110 on Chicago, so the sports book collects $220. Atlanta wins and I am paid $210 (my $110 bet + $100 winnings). The sports book has paid me with Anne’s money and kept a $10 commission for themselves. In order for this to work the sportsbook must have the same amount of money bet on each side. If more money is being bet on one team the sports book will adjust the point spread to steer bettors
