Risk Consideration in NFL Q1 Arbitrage (ROI: 9.3%)

Analyzing a Potential Arbitrage Opportunity in NFL First Quarter Betting

Based on the information provided, we'll assess whether this represents a valid and risk-free arbitrage opportunity for the upcoming NFL game between the New England Patriots and the Los Angeles Chargers on December 28, 2024. We'll examine the bets in detail to determine potential outcomes and identify any associated risks.

Bet Details

Bet 1:

• Bookmaker: DraftKings
• Market: First Quarter Moneyline (h2h_q1)
• Outcome: New England Patriots
• Odds: +350
• Stake: $242.99

Bet 2:

• Bookmaker: BetMGM
• Market: First Quarter Moneyline (h2h_q1)
• Outcome: Los Angeles Chargers
• Odds: -225
• Stake: $757.01

Total Stake: $1,000 ($242.99 + $757.01)

Understanding the Bets

Odds Interpretation:

• +350 Odds: For every $100 wagered, potential profit is $350.
• -225 Odds: A $225 wager is needed to potentially win $100 in profit.

Market Explanation:

• First Quarter Moneyline (h2h_q1): Betting on which team will lead at the end of the first quarter.

Potential Outcomes

1. Patriots Lead at End of Q1
2. Chargers Lead at End of Q1
3. First Quarter Ends in a Tie

Note: The possibility of a tie in the first quarter is a critical factor in this analysis, as it impacts the risk associated with the bets.

Outcome Analysis

1. Patriots Lead at End of Q1

• Bet 1 Profit: $242.99 * 3.5 = $850.47 (Profit)
• Bet 2 Loss: -$757.01 (Stake lost)
• Total Return: $850.47 (Profit from Bet 1) + $242.99 (Stake from Bet 1) = $1,093.46
• Net Profit: $1,093.46 - $1,000 (Total Stake) = $93.46

2. Chargers Lead at End of Q1

• Bet 1 Loss: -$242.99 (Stake lost)
• Bet 2 Profit Calculation:
  • Profit per dollar: $100 profit for every $225 wagered.
  • Profit: ($757.01 / $225) * $100 = $336.45
  • Total Return: $336.45 (Profit from Bet 2) + $757.01 (Stake from Bet 2) = $1,093.46
• Net Profit: $1,093.46 - $1,000 (Total Stake) = $93.46

3. First Quarter Ends in a Tie

The handling of a tie in the first quarter by each bookmaker is crucial:

• Option A - Tie Results in a Push: Stakes are returned.
  • Total Return: $242.99 (Bet 1 Stake) + $757.01 (Bet 2 Stake) = $1,000
  • Net Profit: $1,000 - $1,000 (Total Stake) = $0
• Option B - Tie Results in a Loss: Both bets are lost.
  • Total Return: $0
  • Net Loss: $0 - $1,000 (Total Stake) = -$1,000

Important: The actual outcome depends on each bookmaker's specific rules regarding ties in the first quarter moneyline market.

Key Considerations

Possibility of a Tie: Ties can and do occur in NFL first quarters, making this a significant risk factor.

Bookmakers' Rules on Ties:

• DraftKings and BetMGM: May have different policies on handling ties.
• Potential Scenarios:
  • If both consider a tie as a push, stakes are returned, and no profit or loss occurs.
  • If a tie results in a loss, both stakes are lost, leading to a significant loss.
• Action Required: Verify the rules for the h2h_q1 market with both bookmakers.

Is This a Valid and Risk-Free Arbitrage Bet?

For an arbitrage opportunity to be genuinely risk-free, all possible outcomes must be accounted for, ensuring a profit regardless of the result. In this case:

• Tie Outcome Not Covered: The potential tie introduces risk that is not mitigated by the current bets.
• Bookmakers' Rules: Without confirmation of how ties are handled, it's impossible to assess the true risk.

Conclusion: This is not a valid and risk-free arbitrage opportunity in its current form due to the unaccounted tie outcome.

Discussion on Potential Outcomes

Addressing the Tie Outcome:

• Include a Bet on the Tie: If a tie option is available in a three-way market, placing a bet on this outcome can cover all possibilities.
• Recalculating Stakes: Incorporating the tie outcome requires adjusting stakes to ensure profitability across all scenarios, which may diminish or eliminate the arbitrage margin.

Market Inefficiencies: The initial apparent arbitrage arises from differing odds between bookmakers, but it does not account for all outcomes, specifically ties, which undermines the risk-free aspect of the strategy.

Recommendations

1. Verify Bookmakers' Policies: Contact DraftKings and BetMGM to confirm how they handle ties in the first quarter moneyline market.
2. Consider All Outcomes: Explore the availability of a bet on the tie outcome to cover all possibilities.
3. Reevaluate the Opportunity: Adjust the calculations to include the tie and determine if arbitrage is still feasible.
4. Review Terms and Conditions: Thoroughly read the betting rules on both bookmakers' platforms to understand all potential risks.

Conclusion

While the initial analysis suggests a potential for profit if either team leads at the end of the first quarter, the risk of a tie cannot be ignored. Without accounting for this outcome or confirming that both bookmakers treat a tie as a push, the bets carry an inherent risk that disqualifies them from being a true arbitrage opportunity.

Next Steps:

• Do Not Proceed: Avoid placing these bets until all uncertainties are resolved.
• Gather Information: Obtain definitive answers regarding tie rules from both bookmakers.
• Recalculate Accordingly: Adjust your strategy based on this information to ensure all outcomes are covered.

By meticulously considering all possible scenarios and understanding the specific rules of each bookmaker, you can make informed decisions and identify genuine arbitrage opportunities in sports betting.

Disclaimer

This analysis is provided for informational and educational purposes only. It does not constitute financial or betting advice. Always gamble responsibly and ensure compliance with all local laws and regulations.