It has been debated for a decade whether there is a large overabundance of strongly lensed arcs in galaxyclusters, compared to expectations from Λ cold dark matter cosmology. We perform ray tracing through the most massive haloes of the Millennium simulation at several redshifts in their evolution, using the Hubble Ultra Deep Field as a source image, to produce realistic simulated lensed images. We compare the lensed arc statistics measured from the simulations to those of a sample of 45 X-ray selected clusters, observed with the Hubble Space Telescope, that we have analysed in Horesh et al. The observations and the simulations are matched in cluster masses, redshifts, observational effects, and the algorithmic arc detection and selection. At z= 0.6, there are too few massive-enough clusters in the Millennium volume for a proper statistical comparison with the observations. At redshifts 0.3 < z < 0.5, however, we have large numbers of simulated and observed clusters, and the latter are an unbiased selection from a complete sample. For these redshifts, we find excellent agreement between the observed and simulated arc statistics, in terms of the mean number of arcs per cluster, the distribution of number of arcs per cluster and the angular separation distribution. At z≈ 0.2 some conflict remains, with real clusters being ∼3 times more efficient arc producers than their simulated counterparts. This may arise due to selection biases in the observed subsample at this redshift, to some mismatch in masses between the observed and simulated clusters or to physical effects that arise at low redshift and enhance the lensing efficiency, but which are not represented by the simulations.