Arbitrage Betting Glossary
A quick glossary of the terms you'll meet in arbitrage betting and on betting exchanges — explained simply, with the English terms used internationally.
Terms A–Z
Arbitrage / Sure bet
A strategy where you cover every possible outcome of an event at odds that guarantee a profit regardless of the result. See what arbitrage is.
Back
Betting for an outcome — as at a normal bookmaker.
Lay
Betting against an outcome, on a betting exchange. You win if the outcome does not happen. See back & lay.
Betting exchange
A platform where you bet against other players instead of the bookmaker; it earns a commission.
Odds
The payout multiplier. Odds of 2.00 → an implied probability of 50% (1 / odds).
Liability
The risk amount on a lay bet: (odds − 1) × stake.
Commission
A small percentage (usually 2%–5%) the exchange keeps from net winnings.
Margin / Overround
The bookmaker's built-in margin — the sum of implied probabilities above 100%.
Value bet
A bet where the odds are higher than the true probability. See arbitrage vs value vs matched.
Matched betting
Exploiting offers and bonuses with a cover on the exchange, for low-risk profit.
Gubbing / Account limiting
When a bookmaker limits stakes or closes the account of a profitable player. See how to avoid it.
Stake
The amount you put on a bet.
Bankroll
The total capital you have available for betting.
Odds movement / Steam
The rapid change of odds; the main reason arbitrages disappear within seconds.
Palpable error
An obviously wrong odd the bookmaker is entitled to void — often behind margins that look “too good”.
Prediction market
An exchange where you buy and sell shares in the outcome of an event. Each share settles at $1 if the outcome happens and $0 if it does not. Polymarket and Kalshi are the largest.
Share (contract)
One unit of a prediction market position. It pays $1 on a YES resolution and $0 on a NO resolution, so its price is the market's implied probability.
Cents pricing
How prediction markets quote odds — a price between 1¢ and 99¢ rather than a decimal odd. Decimal odds are 1 divided by the price in dollars, so 33¢ equals 3.03.
Sell (sell to open)
Selling a share you do not hold — the prediction-market equivalent of a lay bet. Selling N shares at price P receives N × P and risks N × (1 − P).
Taker fee
The prediction-market charge for filling an existing order, calculated as coefficient × shares × price × (1 − price). It peaks at 50¢ and falls towards zero at the extremes.
Maker order
A resting limit order that adds liquidity rather than removing it. Makers generally pay reduced or zero fees, but a resting order may never fill — risky for arbitrage, which needs both legs placed.
Resolution
The settlement of a prediction market once the real-world outcome is known: YES shares pay $1, NO shares pay nothing.
Related: What are prediction markets · Prediction markets vs exchanges · back to all guides.