Intro to Sports Betting Part 4: Steam, Line Shopping, and Arbitrage

In continuation with my previous posts, let's delve more into sports betting and understanding types of bets. In my first post, we covered the three major types of bets - Moneyline, Spread, and Over/Under - as well as reading and understanding odds and payouts. In my second post, we covered parlays and prop bets. In my third post, we covered futures, vig, and pushes. In this post, we will cover steam, line shopping, and arbitrage.

Steam

Steam refers to a phenomenon when betting lines change quickly due to heavy wagering. Since oddsmakers are outcome agnostic and seek to receive equal weighted volume and payouts on both sides of the bets to capture maximum vig, high volumes can push lines. For example, say the spread is Team A -1.5 and Team B + 1.5. If there is a sudden influx of bets all on Team B with very little volume on Team A, the odds makers need to move the line to make a bet on Team B less favorable and for a bet on Team A to be more attractive. If the line moves to Team A +1.5 and Team B -1.5, then all of a sudden a bet on Team A is significantly more attractive and volumes should equalize. However, if volumes persist heavily for Team B, the line may move to Team A +3.5 and Team B - 3.5. Many times, this can be due to an injury to a key player becoming known to the market, but sometimes it can simply be because of prolific betting volume on a Team. Bets can also be placed during live matches, and therefore if a team scores the line will move. For example, if the line is Team A +1.5 and Team B - 1.5 but Team A scores a touchdown to go up 7 points, the line may jump from +1.5 to -7.5 in an instant. 

Line Shopping

Since oddsmakers set lines to balance the wagers on both sides of the bets, lines can vary between different oddsmakers. For example, let's say Team A opens as -7.5 favorites over Team B at sportsbooks 1 and 2. However, sportsbook 1 receives heavy volume for Team A while sportsbook 2 receives heavy volume for Team B. Sportsbook 1 will then try to balance their books by moving the odds less in favor of Team A to -8. Meanwhile, sportsbook 2 will try to balance their own books by moving the odds in favor of Team A to -7. These movements are not based on whether sportsbook 1 or 2 favors Team A any more or less, but are simply to balance the bet volume. Over time, the law of large numbers says that you would expect to see a normal distribution as the betting volume increases, but on the way, large bet volumes can move the averages apart. Therefore, it is important to "line shop" as in look at different sportsbooks to see if there is an option that is in favor of the bet you are looking to place.

Arbitrage

Arbitrage in normal markets is a strategy of simultaneously buying and selling the same security on two different markets at two different prices to take advantage of pricing differences between the markets. In the world of sports betting, this means placing opposite wagers on both sides of the same game at two sportsbooks simultaneously to take advantage of a mismatch in the lines. For example, say sportsbook 1 has Team A at -7.5 and Team B at +7.5 while sportsbook 2 has Team A at -8.5 and Team B at +8.5. This means that if you place a bet on Team A with sportsbook 1 and a bet on Team B with sportsbook 2, you will win on sportsbook 1 if Team A wins by more than 7 points and you will win on sportsbook 2 if Team B loses by less than 9 points. This means that you will win on at least one of the bets, and if Team A wins by exactly 8 points you will win both bets.  Arbitrage is more successful with Moneyline bets. In this scenario, if the lines at sportsbook 1 are Team A -600 and Team B +550 while on sportsbook 2 the lines are Team A -500 and Team B +400, then it is more advantageous to place a bet on Team B at sportsbook 1 at +550 while placing a bet on Team A at sportsbook 2 at -500. This will ensure that you capture a guaranteed payout. However, these opportunities only appear when the lines are different at separate sportsbooks and may not exist for very long. This is because many people try to find these opportunities and submit such bets. As more betters bet on Team B at sportsbook 1 and on Team A at sportsbook 2, the lines will adjust until they match.

Next Steps

If you would like to learn more about betting on sports, many sportsbook apps offer good tutorials on betting strategies and advanced types of bets while also offering promotions to receive free bets to try it out betting for yourself risk-free. At many of these platforms you will also receive bonuses matching any deposits you make.

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