The Basics: Hedge Your Bets
The term hedging literally means limiting exposure to downside, aka limiting risk. Therefore, when somebody hedges a sports bet, they are doing the same thing from a financial perspective. They may be doing it to limit the risk, to guarantee profit, or often both.
Similar to middling a wager, hedging involves placing bets on opposite sides of a bet. With futures betting increasing in popularity, hedging has followed.
Let’s look at a quick example. Say at the beginning of the year I placed $100 on the New York Yankees to win the World Series at +300. They find themselves in the World Series, and are four wins away! Now, let’s say the Cardinals found themselves in the World Series with them and are considered pretty big underdogs at +300 to beat the Yankees in the 7 game series (this makes the numbers very easy to comprehend).
If I do nothing and the Yankees win, I win $300 plus my original bet for an income of $400. If the Yankees lose, however, I am $100 short.
What if I hedge? So, once it’s solidified that the Yankees are in the World Series, I place a $100 bet on the Cardinals at +300. Now I am $200 short, but if the Yankees win, I guarantee $300 of income and if the Cardinals win, I guarantee $300 of income. So while there is not the possibility that I bring home that $400 if I did not hedge, the expected value is much higher in this scenario and guarantees a profit and takes out all risk.
This can also be implemented in live betting. I once placed a bet on a Wolverhampton and West Brom Premier League game. The bet was that both teams would score and there would be over 2.5 goals. The odds of this occurring were +220. Before halftime, the game was tied 1-1, so both teams had scored. The only way my bet would not hit would be if there were no more goals scored the rest of the match. So, what I did is placed a bet of equal size on there being no goals in the game at +300, guaranteeing myself all outcomes and a profit no matter what.
Live betting and futures are about the only way hedging is possible. No sports book will release pre-game odds that give the bettor the advantage or they would lose a lot of money and not survive . This would a negative hold percentage that would guarantee a loss for the sportsbook - the complete opposite strategy for a sustainable business model.
There is a sneaky way this is made possibly through multiple sports books. This is called arbitrage betting. Let’s say Bovada’s odds on a Penguins vs. Capitals game is +120 for the Capitals, whilst Draft King’s gives the Penguins +110 odds to win. If you place even money on opposite teams on both sports books, you are guaranteed to win every time. This comes very far and few between, implies you have accounts on multiple sports books, and can end up in banning in some extreme cases, so this is not encouraged, but I wanted to make you aware while we were on the subject.
Lastly, there are a handful of online tools out there to calculate the exact money you need to place on a specific bet to hedge out with exact even profit no matter the outcome. I have linked one here!
As always, bet better, bet smarter with help from smartsportsbet.
