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What is Hedging Bets in Sports Betting?
What Is Bet Hedging?
In the simplest terms, hedge betting entails betting on the opposite side of an existing wager you already made. It’s almost akin to betting the middle or fading the public in a sense, except in this context, the only person you’re being contrarian towards is yourself.
With enough luck, insight, and smart caution exercised, this can be a great strategy to offset risks, create almost guaranteed returns, and come out on top by playing both sides of the equation. Huge emphasis on the “both sides” part; this betting strategy applies strictly to events with two, binary outcomes.
Hedging is a less viable strategy in events with more than two outcomes. For instance, it’d be a less viable strategy in a soccer game, with the 3-way outcome of a win, loss, or draw. Likewise, with just about every race apart from a drag race, from horses, to high-horsepower F1 cars, to the three-and-a-half hour long left-turn-tourney that is NASCAR, you’ll have multiple parties gunning for the Top 5, Top 10, or much-coveted title of outright winner.
It’s much less viable to hedge in those particular scenarios, but the good news is that there’s plenty of wagering scenarios where hedging your bets will be a viable move. If you don’t know where to start, how to start, or why you should start, then keep reading for an in-depth overview of how to hedge your bets
How Does Hedging Bets Work?
As stated above, hedging and matching your bets can make for a great risk reduction strategy for minimizing losses and retaining profits, but what does it take for them to guarantee a profit? In order for that to happen, at least one of these two conditions must be true:
The odds must have drifted following the first lay bet
The odds must have shortened following the first back bet
To ensure a better likelihood of these two conditions happening, bettors should follow line movement trends as precisely as they can, especially if they’re participating in a sportsbook’s live, real-time in-game betting service. Odds can shift drastically in a matter of minutes, a matter of seconds, even, shifting the heaviest underdogs into the heaviest favorites, and vice versa.
Given the popularity of influencer e-celeb boxing in recent times, let’s use the example of a hypothetical twelve round pay-per-view fight between Logan Paul and Tyson Fury. The oddsmakers logically assume that a seasoned pro-boxer would pack the sufficient firepower necessary to put your average YouTuber’s lights out, so they price Tyson as the -120 favorite.
Since it’s been some time since the Maverick’s last main event, and he’s presumably spent most of that time vlogging (in this hypothetical), the oddsmakers price him as a hefty +420 underdog, both for the sake of this hypothetical, and for the sake of the sheer meme value too. To hedge a solid Ben Franklin no matter which boxer wins, you would start by obviously laying more juice on the favorite, let’s say, $210 for Tyson’s -120 odds.
On a different sportsbook, you could lay $74 on Logan’s +420 odds, and whether he or Tyson Fury won this hypothetical bout, you would be walking away with $100 in net profit, assuming the fight ends with a clear victor and loser. It’s entirely possible that there’s no clear victor or winner in boxing, but assuming the rules of a typical 2-way money line, both books would refund both bets in the event of a draw.
This will effectively result in a push, but in any case, you’re not losing anything! In live betting, you could also stack different odds at different moments to return more potential profit on the same contender. Harkening back to that hypothetical boxing match, let’s assume that Logan Paul got a few lucky hooks in on Tyson Fury, and by the 6th round, you can tell Fury’s looking a little punch drunk.
If you’re confident that Tyson can still turn it around, and it wouldn’t undermine your final hedge profit too much if he doesn’t, you could place a second live bet on Tyson at plus money odds, to increase your overall return if he wins.
Remember the Third Law of Thermodynamics: the entropy of any given isolated system in the universe is always set to increase. Oddsmakers and professional bettors are great at doing all sorts of complicated guesswork when trying to predict the most likely implied probability of an outcome, but the reality is that no one can really know with 100% certainty what exactly the future holds.
All sorts of random variables can dictate the likelihood of whether or not certain outcomes will come to fruition, which just makes hedging bets (provided you’re comfortable with the risk of those bets) all the wiser a decision. To calculate hedge bet outcomes, you’re going to need to know the following things:
The back or lay of your initial wager
The original stake and decimal odds you bet with
The opposing odds of your first selection + hedge stake amount
The commission of your exchange, if betting through one
Once you punch all of these things into a calculator (which you can do via online tools like our own handy odds calculator), you can then get a better grasp on the odds needed to guarantee that your hedged bet turns a profit, regardless of which outcome wins. As far as calculating some other variables in relation to hedge bets, here are some especially useful mathematical pointers to know:
When calculating a lay bet: Multiply the back price and back stake, then divide that result by the current lay odds.
When calculating the profit of a back-to-lay hedge bet: Multiply the back stake by the back odds, then subtract the result by the lay liability and back stake.
When calculating the total overall return of a winning lay bet: Subtract the lay stake from the backers’ stake.
Hedging through a betting exchange rather than a traditional sportsbook might offer even more risk reduction than hedge bets already do, as they generally charge bettors less and impose less betting limits on them. Nevertheless, there’s not really a “better” way to approach hedge betting; what’s better for you will ultimately come down to personal preference.
Since the entire point of strategies like hedge betting, arbitrage betting, and promotion stacking is to nullify the “gamble” of gambling, there is very little risk here. The biggest risk with hedging your bets is the possibility that sheer human error could get in your way. Just make sure that your attention is strictly focused on two-way outcomes, the odds will guarantee a net profit no matter which way things turn, and that you aren’t picking the wrong game by mistake!
When To Hedge A Bet
This is a tough question, and not necessarily one that has a single definitive right or wrong answer. Generally speaking, the answer to this question will depend on how much you’re comfortable risking, and how confident you are about your wager being more probable than the odds currently listed on the line.
Don’t forget about that Third Law either: all sorts of conflicting situational variables can affect the odds and throw them drastically off from the odds currently being listed to you. This is particularly important in the case of hedging live in-game bets, as all sorts of line movements and prop wagers could be hanging in the balance.
So before hedging any bet, you should have the utmost confidence that the situation you’re wagering on is more likely to occur than not. Yes, that underdog is likely to pay off big time with a smaller wager, but will it pay off big enough to cover a net profit whether the favorite or underdog wins? It’s important to consider that, along with a myriad of important factors.
Is Hedge Betting Illegal?
Is it legal to hedge bets? You might be reading all of this and wondering why online sportsbooks permit this strategy in the first place. After all, the house is infamous for skewing the odds in its own favor, and in most circumstances, that’s true. Therefore, it’s puzzling to think that the house would permit a wager that guarantees a profit, no matter the outcome.
Compounding that with all of the infamous stories throughout sports history of fixed or thrown events, it’s puzzling to contemplate why a sportsbook would allow a wager (or in this case, two wagers) where a profit is guaranteed no matter the outcome. That’s because a single house usually doesn’t look too highly upon arbitrage or hedge betting, but no rules prohibit hedging across one book to another.
Does the house generally have an edge, more often than not? We’d be lying if we pretended things were any different. But by shopping for the best lines across two opposite outcomes between two different houses, you can turn the edge in your favor. Just don’t conspire to throw any games or hedge bets between the same book, and you should be golden.
Bet Hedging: Pros & Cons
Bet hedging, like any type of gamble, presents its own unique set of risks and rewards.
Here’s a brief run-through explaining such risks and rewards:
It’s an almost win-win scenario if you strike luck
You can almost certainly guarantee turning a small profit
You can exploit betting opportunities emerging in-game
It’s an all-around great strategy to mitigate risk
Hedging line movements can backfire if you’re not careful
You might need a bigger first bet on the favorite, costing more
You have to wait for these opportunities to arise organically
The other side may have too much home-field advantage
Saving profit may lead to sacrificing some profit
In the best legal markets (which are only bound to expand with time), bettors have the freedom to enjoy a plethora of the industry’s best online sportsbooks, notable acclaimed names such as:
- New Jersey Sports Betting Sites
- Michigan Sports Betting Sites
- Pennsylvania Sports Betting Sites
- Indiana Sports Betting Sites
- Colorado Sports Betting Sites
- Tennessee Sports Betting Sites
- Iowa Sports Betting Sites
- Illinois Sports Betting Sites
- Arizona Sports Betting Sites
- Virginia Sports Betting Sites
- Connecticut Sports Betting Sites
- DC Sports Betting Sites
Although betting exchange markets have lagged behind in the U.S. due to industry pressure and legal issues, the tide is slowly beginning to turn on that front, as exchanges like Prophet and Sporttrade are set to open exchange betting markets.
For updates on that, where else to hedge bets, and other exciting news in the iGaming industry, we strongly encourage you to keep in touch with us and follow our news page.