A few weeks ago, some of us here in what has become Stacker Sports Territory started using freebitcoin for placing micro bets on NFL games. It took me a little while to fully understand the betting system used on the site, but once I did, I realized it's possible to get better-than-fair odds on the site.

Pooled Betting with an Early Wager Bonus I know the promise of better-than-fair odds sounds like a scam, so I'll explain their model and why it works. In contrast to most sportsbooks, freebitcoin is not setting odds for events. Rather, they collect bets on all possible outcomes of an event into a pool that will be divided amongst those who bet on the right outcome. It's from that pool that the site takes its payment.

If the site takes a payment, that must mean the expected payouts are worse than fair, right? Well, on average, yes they are worse than fair. However, the site offers a bonus for those who place bets early. They use a mechanism like that because otherwise there would be no incentive to place early bets and they need early bets to make the pool more attractive to potential betters. I haven't worked out the precise cutoff, but bets placed within a few hours of an event being posted have a sufficiently high bonus to generate a positive expected return on bets placed.

Risk Balanced Odds Arbitrage So, how do you take advantage of this better-than-fair feature? If you just bet on the outcome you expect, that might be what everyone else does too and there ends up being no upside to the bet. Many times, I've seen the current expected "odds" (payout ratio) swing wildly, such that I wished I had placed a bet on a different outcome than I did.

This is where we can appeal to outside information. The major sports books have done the work to set as accurate of odds as possible with the information available. By translating those odds into a percentage likelihood of each outcome, it's possible to bet in such a way that if the freebitcoin odds end up resembling the sports books, then every outcome will yield a net positive return. Specifically, you divvy up your bet in proportion to the odds of each outcome.

Thus far, the RBOA method has yielded a positive return in each of the past two NFL weeks and for about 20 soccer matches. Going forward, I'll make a post with RBOA suggestions whenever new events go up on the site.