Minimising the impact of transaction fees

If you use a credit card to fund your account and you find that you have lost out due to an exchange rate difference, send a polite fax to the bookmaker involved, showing them your credit card statement with the relevant charge on it. Many will credit your betting account with the difference.

It is possible to circumvent exchange rate losses entirely if you are both organised and well-funded. Sending funds by bank transfer is usually free and your betting account will be credited with the exact amount of money that you send. Of course, the transfer may take up to 5 days so you will probably not want to have to do this too often, hence the requirement to be organised. As you will be sending cash to the bookmaker and not using credit, you will need to be well-funded.

The vast majority of bookmakers now accept payment via intermediaries such as NETELLER and MONEYBOOKERS. These facilities allow you to transfer funds between bookmakers almost instantly, with low relatively fees.

If you're unable or unwilling to use the methods above then the credit card transaction fees are leakages that you will have to accept for the time being. As time goes by, fewer sportsbooks will make these charges. In the first instance, whilst they charge a fee of between 1% and 3% for deposits, many of the same companies pay bonuses of between 10% and 40% upon deposit. The deposit fees are, therefore, more than offset by the deposit bonuses.

You can also take advantage of the many cashback deals offered by credit card companies - receiving a percentage of each and every deposit you make to fund your bets. As a moderately active trader, you will find that your total betting turnover can easily approach EUR1/2 million annually and credit card cashback can accumulate to a significant trading bonus.

Also, bear in mind that the percentage you make on an arb will be based on the total outlay - whereas the transaction fee you pay to the bookie will be based only on the deposit at that bookie, so the arb will usually still be profitable. (See example below)

Book 1 (charges 3%)

Book 2 (no charge)

Arb: 3%

Total outlay: EUR100

Return on arb: EUR103 (assuming proportionate staking)

If you are backing the favourite at Book 1, the likelihood is that you will stake approximately 70% of your total outlay there. This means that your transaction fee will be 3% of EUR70 i.e. EUR2.10

If, however, you are backing the outsider at Book 1, then the transaction fee will be 3% of EUR30 i.e. just EUR0.90

If the bet that you make with Book 1 is the winning one, then you will receive extra funds on that account which you have not had to pay a transaction fee for.

This means that you will be able to have a few "free" arbs on that account before paying any more transaction fees and this will enhance the profitability of future arbs involving that sportsbook.

There will be occasions (when an arb is very small), where the profits are wiped out by the transaction fees, but if this means that you have funds (i.e. your winnings) on that account for next time, then you are better off even though you did not make a profit on that particular transaction.

You may also choose to weight your stakes to compensate you for extra transaction fees, rather than weighting them just to give you an equal pay-off regardless of outcome. This means that you will win more if the bet at Book 2 wins - to compensate you for having to pay another transaction fee the next time you deal with Book 1.

One thing is certain: to make money with sports arbitrage, you must actively participate! Once you begin, and start to view the project as whole, rather than as a series of individual trades, the scope for profitability becomes very clear.

In my next article, you will learn a simple technique which you can start using immediately to take as much as EUR2000 in risk-free profit over the next 7 days...