Predicting market arbitrage opportunities isn't that mysterious, especially for three-outcome markets (common in sports events like win/loss/draw), where the arbitrage logic is straightforward.

**How to arbitrage in a three-choice market**

Imagine a game where Team A faces Team B. If there's a price imbalance in the market—where the combined odds of A winning and B winning are less than the odds for a draw—then there's an opportunity.

How to operate? It's simple:

Simultaneously buy the "A win" and "B win" outcomes, and sell the "Draw" outcome separately. What will happen? No matter what occurs, you can make a profit. Because the three outcomes are mutually exclusive and one must happen, if either of your two positions wins, minus the loss on the draw position, your net profit is positive.

Such arbitrage opportunities occasionally appear on various prediction market platforms. The key is to quickly identify moments when prices are asymmetric. Markets with fewer participants and lower liquidity tend to offer more of these opportunities. Of course, you need to calculate the costs of fees and slippage before executing to ensure the arbitrage space truly exists.

This is just the first lesson in prediction market arbitrage; more complex multi-market linkage arbitrage strategies are coming.