Hedging is a key strategy employed by pro sports gamblers but its principles can equally be used by casual bettors. So whether you’re new to betting on sports or have been wagering for years, read on to learn more about hedging and how to use it in your sports betting strategy.
Hedging is a bit like a defender bringing down an attacker when they’re through on goal and about to score. The defensive player knows they’re going to pay a price for the foul but trades the risk off, knowing they might just stop their team from losing by taking out the opposition player.
To hedge or not to hedge is one of the most divisive debates in sports betting. Hedging means betting on a different outcome to a previously placed wager to avoid the worst-case scenario. It also lessens the opportunity from the best-case sequence of events.
A simple example of how hedging could be used for the Super Bowl is as follows:
The Giants then make the Super Bowl and put you in line for a $10,000 profit.
You know the Giants winning will be a fantastic payday but if they lose you will get nothing.
You decide to hedge by backing the other finalist with $2,500 at odds of +200 which would pay you a $5,000 profit.
You now stand to either land $10,000 or $5,000 on a total outlay on the two wagers of $2,600.
Hedging is always a balance depending on the individual circumstances. In this situation, it’s debatable whether a professional sports bettor would hedge on this. They might let the original bet ride without the reduction in profit and take the hit if the Giants don’t win - but that’s another debate altogether. Regardless, for the everyday sports fan who rarely wins anything of significance, hedging would likely be a no-brainer in such a situation.
Most of us have some concept as to what hedge betting is. After all, spreading the risk by ‘hedging your bets’ has been common parlance for centuries.
When it comes to arbitrage though we might automatically think of financial traders on the floor of a stock exchange. Gordon Gekko did indeed make his fortune by ‘arbing’ in the movie Wall Street, but it’s also a sports betting strategy that can be employed.
As for middling or betting the middle, that’s another wagering technique that has elements of hedging but is also used to score bigger payouts.
Let’s start with an overview and some further examples:
Hedge betting is playing it safe. You either use it to guarantee a win or at least minimize losses so that they don’t hurt.
Arbitrage betting is a form of hedging. It usually involves placing multiple wagers at the same time on multiple outcomes, all the while ensuring that the combination returns a profit. Arbing is used by bettors to take advantage of line discrepancies that move all the time to lock in a profit.
An arbitrage strategy will usually tally up small profits on many bets to accumulate a healthy return over a longer period. Here’s a simple example of an arbitrage bet:
Say the NY Knicks open at -150 to win at FanDuel and the Nets are +165 at DraftKings.
You wager $150 on the Knicks which would return $100 profit.
You also wager $95 on the Nets which would return $156.75 profit.
If the Knicks win, you get $100 but need to take off the $95 so you’re $5 up.
If the Nets win, you get $156.75 but need to take off the $150 so you’re $6.75 up.
Middling means to bet on both sides of a market with an opportunity to win both wagers. It means capitalizing on the movement of a line on a point spread or an over/under market. Hitting a middling opportunity bang on can earn high profits with low risk.
Take the following example of the most famous bet on the middle. So notorious was it, that the event became known as ‘Black Sunday’ by the Vegas books:
Ahead of Super Bowl XIII, Pittsburgh opened as the early favorite at -3.5 on the spread for the game against Dallas.
Serious money quickly flowed on Pittsburgh so the books moved the line to -4. With little action still on the Dallas side, the tipping point was then reached when the line shifted again to -4.5. Then the wagers really started dropping heavily on the Cowboys.
In the end, Dallas scored in the final minute to see the game end at 35-31 to Pittsburgh. The books lost a bundle on both sides as the sweet spot for middle-spotters was hit and so history was made.
Hedge betting is most commonly used on parlays, futures and when following in the in-play markets in which something dramatic happens during a game that causes a significant odds change.
Before we consider how hedge betting works best on each of those bet types, let’s consider the basis of when not to hedge:
You’re confident in your pick’s chances and hedging will only reduce the profit you stand to make.
You don’t know enough about the event you’re monitoring or there just isn’t enough information out there for you to make a decision.
The odds aren’t in your favor to make a hedge. This may sound obvious but if a hedge simply won’t compute then let the original bet ride.
Hedging a parlay bet is a common strategy, particularly as the nerves start to jitter after your initial legs start to win but you have concerns about the final one.
You might have placed $50 on a six-team parlay at +4000 with five hitting so far. You’re on course here for a $2,000 profit but you could also lose the $50. If the sportsbook allows you to cash out at this point you’d make a nice enough return but still lose some profit.
A neater option might be to bet the other side in the final game. Say they’re at -110 so $500 would get you $455 in profit. Either way, you now stand to make the $2,000 profit or the $455 less the 50 on the original bet.
Futures are the perfect opportunity to hedge a bet, limit risk and make some money. The most famous, and biggest successful hedging strategies that have hit the headlines have usually been on futures.
For example, England is at +700 to win the soccer World Cup so you wager $100 on them. When the tournament reaches its climax, England are set to play Brazil in the final. If they win, you’ll be up $700. If they lose, you’re down $100. Brazil are favorites and offered at odds of -200. If you hedge and go $500 on Brazil you’d make $250 profit. Here, whatever happens, you can congratulate yourself on being one of the real winners at the World Cup.
We said above that hedging when you don’t have enough information about a contest to make the decision usually isn’t wise. Live betting offers unique access to lots of details about what might be about to happen. This is particularly true if an event doesn’t look like it will turn out how you expected.
It might be that you’ve bet an over in basketball. The favorite gets off to a hot start and you know that they’re going to cover easily. As a result, the line moves higher in-play. But as a basketball fan, you know that it’s likely that bench players will be introduced who won’t score at the same rate as the starters. At that point, you might go for the under on the inflated line. Here, you’re technically middling that the final tally will fall in the optimal gap that returns a profit on both bets.
Changes in opinion often signal a time to hedge. A successful betting strategy includes managing risk effectively. If you have a bet that you no longer think will win then reducing your exposure by hedging may well be the right thing to do.
You might alter your view on what will happen in a game for a multitude of reasons including injuries to key players, poor weather that will limit scoring, you think the coach’s announced startling lineup is unfavorable, or even that you had a rush of blood and having slept on a wager you consider that you made the wrong call. It’s never wrong to change your opinion on a bet but as the sportsbooks won’t let you take it back, hedging may be the best option available.
While the core concept of hedging involves wagering on the opposite outcome to your original bet, you still have to decide what to do next to hedge effectively. This involves determining how much money to wager on the other side.
If you’d liked the Yankees in the week leading up to an interleague game versus the Mets and wagered $500 at -135 but news reaches you that a key player has a surprise injury you might consider what to do next. Here are three ways you can do this:
Bet the same amount of money on the Mets as you did the Yankees.
Bet less money on the Mets as you still think the Yankees will win but with a reduced chance.
Bet more money on the Mets as you think they’re now the more likely winner.
It tends to be that experienced bettors don’t wager wildly differently on the hedge. Instead, they seek to book a small profit or take the hit but minimize losses. You should also be aware that if you hedge equally on both sides, you’re baking in a loss equivalent to the vig/juice - usually 10%. Then to inform your decision-making, you need to calculate the staking options…
The quickest and simplest way to work out the stake needed for a successful hedge is to use a hedging calculator. Alternatively, you can use the following steps to do it yourself:
Calculate the total payout you will get if your original bet wins.
Convert the hedge bet odds to the decimal format.
Divide the total payout from the original bet by the decimal odds of the hedge bet.
Here’s a worked example:
A bet of $100 at odds of +150 = $250 payout
Hedge bet odds of +300 = decimal odds of 4.0
$250 / 4 = $62.50
Hedging bets can be profitable when done properly. It’s important to also realize that it can also lose you money or reduce the profit you make from the original bet.
It is legal to hedge sports bets. In a lot of cases, it can also be a sensible strategy. However, there’s nothing to stop a sportsbook from placing restrictions on your account if they spot that you’re regularly successful when hedging. If you do hedge often, it’s best to use multiple NY sportsbooks.
The question of whether to hedge or not almost always comes down to personal circumstances, decision making and approach to risk. If you’ve thrown a few dollars that won’t be missed at a ‘fun’ bet at huge odds that has a chance of coming off then you may be inclined to see what happens. On the other hand, if you’d wagered on something incredibly unlikely and the return from hedging it would still make a big difference to you financially, then it may be the wisest decision you make today.