Hedging Bets
The hedging technique has NOTHING to do with pricing discrepancies in the betting markets. As we mentioned earlier, the key to this technique is that we use it for existing wagers. The idea is simply that we back alternative outcomes when we want to change our position from a previous wager. Hedge your bets to protect yourself against loss by supporting more than one possible result or both sides in a competition: They're hedging their bets and keeping up contacts with both companies.
Hedging refers to the act of providing a safety net for your investments, whether that’s in the form of a wager, a purchase of securities, or trading forex. In other words, in any situation where things could go either in your favor or against it over a specific period of time, a hedge is considered a risk-reduction initiative.
In the world of sports betting, a hedge bet is usually a second bet that either reduces the risk of loss or guarantees some sort of win. This is something that the bettor does, not the bookmaker with whom the bet is placed. The bookmaker may offer other types of deal-sweeteners, such as bookmaker welcome offers, cash out options, accumulator bonuses, and so on in order to attract new users. Hedging, however, is entirely on the person placing the bet.
To be clear, hedge betting is very different from something known as arbitrage betting, although they do share some similarities and both are legal ways to secure your investments. However, arbitrage betting or arbing, as it is sometimes known, involves placing bets with two or more bookmakers to take advantage of the differences in odds they offer. This practice is usually frowned upon by most sportsbooks because it guarantees a win, as long as it’s done right and perfectly timed.
Hedge betting is different because you’re not playing bookmakers against each other. Instead, you’re playing two or more bets against each other. The outcome for you could still be a win-win situation, depending on how well you execute your hedging strategy
How to Hedge a Bet
There are several ways to hedge a bet, but it usually involves placing a larger bet on the opposite outcome to that of the original bet. To help explain how it works, we’ll show you a very straightforward example.
An Example of a Hedge Bet
Let’s say that Team A and Team B will be facing each other in the finals. Team A’s odds are 60/1 and Team B’s odds are 2/1. If you’ve bet X dollars on Team A to win, you’ll get 60X as winnings – if they win. That’s what the odds translate to. On the other hand, if they lose, you lose your entire wager of X dollars.
Let’s say the hedge bet is 10X dollars on Team B to win. That means you’re betting ten times the amount to back Team B as you did on Team A. If Team B wins, you get 20X because of the 2/1 odds.
You have now hedged your Team A bet with your Team B bet, or vice versa depending on how you look at the set-up. If the Team B bet is your main bet, then the Team A bet is your hedge. The relationship doesn’t matter but the amount you wager on each one – based on the odds for each team – does matter a great deal.
In this scenario, there are two possible outcomes of this set-up and how it affects your winnings:
Team A Wins – You get 60X from the first bet but lose 10X on the hedge – Your winnings are 50X
Team B Wins – You lose X from the first bet but win 20X from the hedge – Your winnings are 20X less your original wagers of X and 10X, which leaves you with 9X
As you can see, you win in both cases. Assuming the main bet was on Team A and the hedge on Team B, in the first scenario, you sacrifice some of your win toward the hedge; in the second, you save yourself a loss on the main bet and actually come out winning because of the hedge bet.
Hedging strategies can get really complex when there are multiple teams and bets involved. However, you can use hedge betting calculators and other software to tell you how much to bet and how to hedge that bet for the best possible outcome.
That said, it’s a good idea to read up on the best hedging strategies to know when to hedge a back bet or a lay bet depending on whether the odds are shortening or drifting (lengthening.)
Hedging is purely a math puzzle but, if you can crack it, you can effectively bet on sports, trade the stock market, dabble in forex, and engage in several other areas where a great degree of risk is involved.
In life, when someone hedges a situation they are limiting their exposure to the downside. In day to day life, someone can hedge many things.
When someone hedges in sports betting they are limiting their exposure to a potential financial loss. Hedging a bet is an advanced strategy used by sports bettors to either reduce the risk of a wager or to guarantee a profit of some kind from a wager.
Similar to middling a wager, hedging is a strategy that involves placing wagers on the opposite side of your original bet. As futures bettting has become more popular, so has hedging. New sports bettors might have heard about the sports betting risk management strategy in mainstream media.
Hedging Bets Meaning
If nothing else, hedging a bet has become a popular discussion point for any occasion when a sports bettor has a futures wager pending that could result in a large win. Hedging a bet is a way to guarantee at least some kind of win.
While there’s mainstream media coverage about hedging a wager, there isn’t much mainstream information on how to hedge a bet.
What is hedging a bet?
Hedging a bet is a strategy in which a bettor will place a second wager against the original bet when they’re unsure that the outcome of a wager will be a win.
Even if a bettor thinks they might win, they could decide to hedge a bet just to be safe and guarantee they walk away as a winner. The win won’t be as large but the additional wager is a way to create some kind of insurance if the original wager loses.
Hedging is a useful strategy even though betting on all sports isn’t the same. Futures wagers are long term bets that use a moneyline. Some individual games use a point spread while betting on other sports may involve a moneyline.
A bettor can hedge against any of these types of wagers. This strategy allows the bettor to walk away as a winner or less of a loser if they choose.
How to hedge a bet
Hedging a bet isn’t difficult. However, the concept isn’t at the forefront of everyone’s mind when placing a wager. Hedging a bet is protecting some kind profit that was — and still may be — possible from an original wager.
Hedging a bet is done by placing a second wager against the original wager that will guarantee that the bettor sees some kind of profit at the end of the event. A bettor can hedge a future bet or hedge individual games. Here’s an example of hedging a futures bet:
Original wager: $100 futures bet on the New York Jets to win the Super Bowl at 60-1.
- Potential win: $6,000 + original $100 wager.
- Hedge: $1,000 wager on Los Angeles Rams to win the Super Bowl at 2-1 when they face the Jets in the Big Game.
- Best result: Jets win the Super Bowl and bettor wins $6,000. The $1,000 hedge on the Rams for safety is a loss. The total win is $5,000 instead of $6,000.
- Hedge win result: Rams win and the bettor wins $2,000. After everything, the $1,000 hedge minus $100 original wager gives a final win of $900.
- Worst result: No hedge and Rams win. $100 wager and the potential $6,000 win is completely lost.
Hedging Bets Definition
This example shows that a hedge on a futures bet is still a profitable wager. The hedge protects the bettor from losing the entire potential profit from the wager.
Hedging a bet means the original bet isn’t as profitable as it could be. However, winning something is better than losing everything. That’s the purpose of hedging a wager.
This example also shows that everything risked (the original $100 wager and $6,000 potential win) is lost without hedging.
Some bettors don’t mind losing the $100 wager and potential profit. There are other bettors that prefer to walk away with some kind of profit after waiting an entire season.
Other times to hedge a bet
Hedging a futures bet used to be the only time this strategy was discussed. Sports betting trends in the US are changing and so is how bettors use this strategy.
In Play wagering makes it easier to hedge against an existing pre-game wager that looks shaky. In the past, bettors had to wait until the middle of a game to place a halftime wager.
Parlay betting continues to become more popular every year. Bettors are now using the hedging strategy to ensure a win. A bettor will place a hedge on the final game of a multi-leg parlay to ensure some kind of positive result from a wager.
Depending on the amount of the original wager, a bettor might choose to hedge a little so they can mitigate a loss. Losing is never fun but losing less is better than losing everything risked.
Hedging a bet is a useful tool for any sports bettor. Gambling on sports does not have to be about winning or losing a wager. There are multiple strategies to use where a bettor can guarantee some kind of profit on certain wagers.
ALSO READ: Sports Betting Lesson: When It’s Smart To Hedge Your Bet