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What is sports bet hedging? What is sports bet hedging?
You don’t need to be Sheldon Cooper to hedge a sports bet. Although you do need simple, basic math skills. That may scare some... What is sports bet hedging?

You don’t need to be Sheldon Cooper to hedge a sports bet. Although you do need simple, basic math skills.

That may scare some of you. But you do want to win money, right?

If done correctly, hedging is an effective sports wagering strategy that allows you to minimize a loss or even guarantee a payout.

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GIMME AN EXAMPLE

Here it goes. You bet on team X to win the Super Bowl after you’ve already placed a wager on team Y to win the same Super Bowl. Why do this? Well, that’s hedging.

While you’re guaranteed to lose one bet, you’re also certain to win one as well. Thus, the hedge. In specific instances, this is the smart (safe) thing to do, especially if your original bet looks uncertain.

So when you hedge your bet, you’re making wagers on a different outcome from your original bet, but you’re betting at different times.

Let’s look at a more specific example: Before the NFL season kicks off, you place a wager on the lowly Miami Dolphins to win the Super Bowl at 40-1 (long odds). They actually get to the title game and face the New York Giants. It’s Friday before the big game. By now betting on the Giants to win the very same Super Bowl, you can lock in a win. Of course, you won’t win as much as if you stayed with just the Dolphins (and they win the game), but you’ve now guaranteed a payday.

So why hedge your bets?

Cut your Losses

If you’ve made a wager and it doesn’t look likely to be a winner, you can at least guarantee you don’t lose all of the bet. You may still suffer a loss, but at least it won’t be as big as you feared.

For instance, let’s say you’ve bet $100 on the point spread for the Dolphins to beat the Buffalo Bills in next week’s game. However, the Dolphins are hit with injuries during practice that week and you don’t think they’ll beat the Bills with their top players on the sidelines. If you let the bet ride, you’re certain you’re going to be out $100. So an alternative here would be to also bet $100 on the Bills (if the line hasn’t shifted). While you’re going to lose one bet, you’re going to win the other and your losses will be less than the original $100.

Guarantee Profits

This is the big reason for hedging: Rather than facing all the risk, you can guarantee a profit when hedging a bet. Let’s say you’ve already wagered on England to win soccer’s next World Cup and they actually make to the final against Portugal and a red hot Cristiano Ronaldo. You could now guarantee a profit by betting on Portugal to win as well. (Note: The same holds true if you’ve made a six-team parlay bet and the first five have all won their games. If the sixth team wins, you’re going to hit a sizable windfall, but if they lose you’re left with nothing. So why not bet on the opposing team to beat them in that sixth game?)

Keep in mind, hedging is most commonly done when wagering on an outright or futures market. So, as mentioned, before the tournament, you bet $100 on England to win the World Cup at odds of 10/1 and they’re taking on Portugal.

MATH TIME

If England wins the World Cup, you’ll make a $1,000 profit — and if Portugal wins you’re out $100. The latest odds from your bookmaker list England 8/5 to win (2.60 or +160) and Portugal’s favored at 1/2 (1.50 or -200). You’ve now got a feeling Ronaldo’s going to lead Portugal to victory and you want to guarantee a profit so you put $500 down on Portugal.

This means you’ve placed a total of $600 in bets and you’re guaranteed a profit regardless of who wins. If Portugal triumphs, you’ll get $750 back and, since you laid out a combined $600 on both teams, you’ll make at least $150 in profit. If your original bet pays off and England wins, your return will be $1,100 for a profit of $600. It’s true, you could have made $1,000 profit if you didn’t hedge the bet and wagered on Portugal, but at least you were guaranteed something back if England blew it.

Of course, your profit margin can be altered by betting a different amount on Portugal in your second wager. For instance, if you bet $800 on Portugal at 1/2 you’d get $1,200 back after laying out $900 in bets for a profit of $300 if they win. If England wins you’d get $1,100 back on your original wager for a $200 profit.

PARLAYS

Hedging strategy is also effective if the odds are right when making parlay/accumulator wagers. If you’ve placed $50 on a six-team point-spread accumulator in the NFL at 40/1 (41.00 or +4000) you’d get $2,050 in return for a $2,000 profit. Your first five picks were right and now you’re hoping the Pittsburgh Steelers beat the New England Patriots to collect. If the Steelers cover the spread, you’ve made a tidy $2,000 and if they lose you’re out $50.

If the odds of a Patriots win are 10/11 (1.91 or -110), you could place $500 on them — which means you’ve bet a total of $550. If New England wins you’ll receive $954.55 back for a $404.55 profit. If the Steelers win, then your original bet pays $2,050 for a $1,500 profit. Either way, you’re making money. As with the World Cup scenario, you can make more or less profit on each team depending on the amount of your second wager.

Hedge betting can also be effective for a boxing match if Deontay Wilder was 3/2 (2.50 or +150) to beat Anthony Joshua, who’s favored at 3/10 (1.30 or -333) with a draw at 1/20 (21.00 or +2000). You believe Wilder will win, so you back him with $50 for a potential return of $125.

But a few days before the fight, you hear Wilder’s got the flu. You believe you’re going to be out $50. If he does win, you’d make $75 so you’re now going to bet $75 on Joshua for a combined wager of $125. If your original bet on Wilder pays off, you’d receive $125, so you haven’t lost anything. If Joshua wins, you’ll get $97.50 back for a loss of $27.50, which is still less than losing the original $50.

WHAT ABOUT DRAWS?

Good question. A draw is possible — and if that happens, you’re out $125. However, if you bet just $6 on a draw as well, you’d have some insurance and get a return of $126 on your layout of $131 if there was no winner. In this situation, you’d receive $125 back for a Wilder win for a loss of $6. You’d get $97.50 back on a Joshua win for a loss of $33.50 and, if the fight ended in a draw, you’d get $126 back for a loss of $5. You’re not going to make a profit, but your losses will be reduced.

LIVE BETTING

The final example of hedging a bet involves “live” or “in-play” betting. We see the odds of the Toronto Maple Leafs beating the Los Angeles Kings in their NHL game at 2/5 (1.50 or -250) and the odds of the Kings winning at 9/5 (2.80 or +180).

You back the Leafs to win at $100 for a potential return of $140. However, after the first period. the Leafs look brutal and are trailing 1-0. You’re convinced the Kings will win. Of course, the live odds have changed and the Leafs are now 3/5 (1.60 or -167) and the Kings are 13/10 (2.30 or +130). The Leafs are still favored, but you now place $50 on the Kings for a combined bet of $150.

If the Leafs win, the original bet pays $140 and you’re down $10. If the Kings win, you’re going to get $115 back for a loss of $35. Still, it’s better than losing your original $100 wager. If the Leafs should happen to come back and win, you’ll be down $10, but if the Kings win you’ll have saved $65.

When hedging your bets for live action, the amount won or lost depends on the current updated odds as well as the amount wagered. If the situation is right, you could guarantee a profit — if you’re quick on your toes and have a calculator in hand.

THE TAKEAWAY

Make no mistake: In some cases, you’re going to take a hit no matter the outcome, but hedging allows you to minimize losses — if things suddenly shift. Also don’t forget: you’re going to see your profits reduced if you make a second wager and your original bet should happen to win. But that’s what hedging is all about. Minimizing risk.

If you’re handy at math, you can play with the numbers to figure out the pros and cons of each specific situation and exactly how much to wager to feel comfortable with the outcome.

Good luck. And happy hedging.

Ian Palmer

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