Surprisingly, most physicists I've talked to also seem to have a healthy appetite for risk. Maybe this is a generational thing. The current generation has one eye on wall st and the other on startups.
Take a powerball/lotto game, where balls are drawn and punters win a prizes from a fixed size pool. Say the long term rate of return is 90%. The arbitrageur starts placing large volumes of bets, so they make sizeable portion of the pool of bets (say 30%) and have a significant chance of winning the jackpot. They also negotiate a rebate (say 15%) with whoever runs the game, so their long term rate of return is now greater than 100%. The gaming company wins, as they are bringing in an additional 30% revenue each week from the arbitrageur and only paying out a 15% rebate, and the size of the prize pool is fixed. The arbitrageur wins, as their long term payout is more than 100% due to their rebate. The mug punter (without a rebate) loses, as they are winning a smaller portion of the prize pool due to payouts to the arbitrageur. Meanwhile the lottery company is sucking in more mugs by advertising how many jackpots are going off (winners can be anonymous in Australia). In summary, the arbitrageur's rebate is legally transferring money away from those without power (the mug punters) back to those with power (the company running the game and the arbitrageur). Lose-win-win respectively.
They also negotiate a rebate.
As long as there aren't laws that prevent selling tickets below the nominal price, it's no different than going to a company and asking for a discount when buying bulk quantity of their product.
A rebate usually requires the full retail price to be paid up front, with the cost savings deferred to a seperate transaction, often paid by the vendor, when there’s a retail supply chain intervening between purchaser and the supplier.
Clearly it is the case that there are some sole proprietor firms which provide entertainment services. While this is generally not the world's most lucrative market, we have no reason to suspect that it is intrinsically a worse business than the least sustainable sustainable enterprise.
There exists a class of specialized entertainment service provider. They are called "professional poker players" and their job is to fill seats at a poker table so that recreational players like myself can get into a poker game [+]. They are compensated irregularly for providing this service; incompetent professionals are swiftly driven from the market. An incidental portion of their compensation comes directly from casinos; a majority of it comes from people like me.
[+] Unlike some forms of gambling in Las Vegas, poker games are not immediately expandable at all margins. A casino with one dealer and three players for a full-ring game is sad. A casino with one dealer and six players is less sad; the game starts and the casino starts making a (relatively nominal) amount of money.
(The economics of poker are not attractive to a casino by comparison to the other games in the casino; it is mostly treated as a loss-leader to bring people seeking entertainment into an environment designed to extract all money in their wallet and then some.)
...now I'm pondering how common the equivalent of this practice is for e-sports ladder tournaments.
There are billionaires who love playing really high stakes poker against the best players in the world. Doesn't surprise me, I'd love to run a race against Usain Bolt even though I can guess the outcome.