Key takeaways

• An arb's math is fixed once the prices are, so arb losses come from execution: a leg that didn't fill at the price you checked.

• A prediction market fee can erase a thin arb. On a $16.80 arb, a Kalshi taker fee leaves a $1.02 loss, while a Novig pre-game straight carries no fee.

• Rounding stakes to $10 can give up 43% of the profit on a 1.7% arb. Whole dollars cost cents.

• Check that both legs settle on the same event, including overtime and postponements, before you place either one.

Where arbs go wrong

An arb is only risk-free once both legs are placed at the prices you calculated. Between spotting the prices and confirming the second bet, a lot can change: a line moves, an order fills short, a fee you didn't count shows up, or a book cancels a bet. The mistakes below are the ones that turn a locked profit into a position on one side.

Mistake 1: Ignoring the fee on a prediction market leg

Sportsbooks build their margin into the price, but prediction markets usually charge a per-contract fee. On a 1.7% arb, that fee decides the result. Put one leg of a $1,000 arb on a prediction market at 49.5¢ and the outcome depends on where it goes: Kalshi's taker fee turns $16.80 into a $1.02 loss, Polymarket US leaves a $0.89 loss, and a Novig pre-game straight keeps the full $16.80.

Fix: add the fee to the contract price before you run the 100% test. The stake sizing guide has the full fee table.

Mistake 2: Rounding stakes too coarsely

Exact stakes like $496.31 stand out at a sportsbook, so arbers round. The cost depends on the increment. On a $1,000 arb at +105 and +102, whole dollars cost 64 cents, while $10 increments cost $7.44, or 43% of the profit.

Fix: round to whole dollars or $5, and check the worst-case profit on the rounded stakes before placing anything.

Mistake 3: Leaving one leg stranded

If the first leg goes in and the second price moves before you place it, you're holding a normal bet on one side. Prices on popular markets can move within minutes.

Fix: place first the leg most likely to move or fill short, and have the second book open and funded before you start. If a leg does get stranded, the hedge calculator shows the stake on the other side that limits the damage at the new price.

Mistake 4: Not checking settlement rules

A sportsbook grades bets under its house rules, and a prediction market settles each contract under the contract's own terms. If one leg counts overtime and the other doesn't, or one voids a postponed game and the other doesn't, the two legs can settle on different outcomes.

Sportsbook terms also allow cancellations. FanDuel's Iowa house rules say it "reserves the right in its sole discretion, to refuse, limit or cancel any wager or series of wagers." A cancelled leg leaves the other one standing alone.

Fix: read the market rules on both legs before the first bet, especially for overtime, postponements and player props.

Mistake 5: Trusting the price without checking the depth

A prediction market price is only good for the contracts resting on the book at that price. A large order can fill partly at the quoted price and the rest at worse ones, which shrinks or erases the arb.

Fix: check the order book depth before you commit the sportsbook leg, and size the arb to what's actually available at the price.

Mistake 6: Reading the wrong percentage

Arb tools quote either the margin (100% minus the total implied probability) or the return on stake (1 / total minus 1), and they aren't the same number. A 98.02% total is a 1.98% margin and a 2.02% return. Comparing one tool's margin with another's return makes arbs look better or worse than they are.

Fix: check which number a scanner reports. The arbitrage math guide covers both.

Mistake 7: Making the account easy to limit

Every bet an arber places at a sportsbook is one the book priced worse than the market, and books act on that. When the Massachusetts Gaming Commission reviewed operator data, its staff found that "players who demonstrated a tendency to win had their limit decreased." Odd stake amounts, bets placed seconds after a price goes stale and a history of only off-market bets are the patterns risk tools look for.

Fix: round stakes, spread action across books, and put one leg on a prediction market where you can. Novig, Kalshi and Polymarket US are required by federal rules to offer impartial access, so only the sportsbook leg carries the risk of a limit. The account limits guide covers the details.

Mistake 8: Opening accounts that break the terms

A second account at the same book, or an account in someone else's name, breaks sportsbook terms. DraftKings' New Jersey terms let it "suspend or close your Account at any time in DraftKings' sole and absolute discretion, for any reason or no reason," and a duplicate account gives a book an easy reason to use that clause.

Fix: one account per person per book, in your own name.

Arbitrage mistake questions

Why do arbs lose money?

A leg that didn't get placed at the price that was checked. The math is fixed once both prices are, so a price change between the legs, a short fill or a cancelled bet is where the loss comes from.

Can a sportsbook cancel one leg of an arb after it's placed?

Their house rules allow it. FanDuel's Iowa rules reserve the right to "cancel any wager or series of wagers," which is why both legs should be confirmed before you treat the arb as locked.

Do arbers need a lot of capital?

Enough to keep funded accounts at several books and platforms at once, since both legs need money in place before the prices move. Capital also sits in open bets until they settle.

Check before you bet

Run every arb through the arbitrage calculator with the rounded stakes you plan to place, and add any prediction market fee to the price first.