Hedge betting can be known throughout the sports betting scene under many different names including ‘arbing’, ‘laying’ and ‘greening up’. With each comes a slight difference in the process of the strategy. In sports betting, hedging a bet means betting both sides of a game to safe guard against a loss. Let’s say at the start of the American football season you put $1,000 on an 8 to 1 shot winning the Super. Hedging in sports betting is often much more nuanced than just a simple calculator. But particularly when live betting, you can lock in profits when the odds have shifted in your favor. To use our hedging calculator, simply add the price of your pre-game bet under “My Odds” and the bet amount. Then add the current price under “Hedge Odds” and the calculator will automatically calculate how much you need to bet.
The term ‘hedge your bet’ first came about many years ago, when George Villiers, the 2nd Duke of Buckingham, used the phrase during a play.
But, how do you hedge a bet? This term is very common in modern gambling and refers to a bet with reduced risk and potentially guaranteeing a profit.
We will explore what is hedging a bet and provide examples and leave our readers with a clear understanding of the term.
What is Hedging?
Hedging is used to reduce risk in certain situations. For example when betting and the odds have:
- Shortened after an initial bet.
- Drifted after an initial bet.
By using this strategy, bettors will minimize the risk of their bet and reduce any possibility of a nasty surprise. It’s important to take not of the odds throughout the period leading up to the payout.
Hedging Bets for Profit
The principle of placing bets on various outcomes to produce a result that pays out to the bettor regardless of whether the original bet wins or loses. This is what all bettors aspire to find when employing their own betting strategy.
Sports Betting Hedge Fund
Hedging a bet is only possible as we see a shift between opening and closing odds. Changes in the odds open up for hedging bets, meaning the potential loss is outweighed by the perceived gain elsewhere. This is why we see the term “Hedge fund” used on Wall Street today.
As we see in many betting systems, it’s not the perfect system. But losses can be mitigated, allowing for profits to be made, but losses can be made in numerous areas of a bet. There’s always a risk.
Examples of Hedges Bets
So if you’re line shopping and decide to hedge your bets on one particular market, we’d advise going with a mainstream sports market like the NFL.
- Take, for example, a bettor places $100 on the Colts to win the Super Bowl before the season begins at +350. The bettor would be in with a strong chance of winning if they made it to the Super Bowl that year.
So in this situation, the bettor is still very unlikely to win the bet, as they are still outsiders in a strong league.
- This situation presents the bettor with the opportunity to hedge their bets by backing the other Super Bowl team, the Steelers, to win the game. If the Steelers are +150 to win the title, then a $100 would yield $250.
Meaning regardless of the outcome the bettor will be making a decent profit, having hedged his bets on both teams at the Super Bowl. It’s important to remember in this situation to back the Steelers to lift the trophy, not just to win the game.
While we’ve provided examples of hedge betting for the NFL, it is common in a variety of sports. Let’s take a less common example of Champions League soccer matches.
- A bettor places $100 on Manchester United to win the Champions League as a future bet at `+350. The bettor may choose to hedge their bets on the day of the final, covering themselves by hedging their bets on the other team Bayern Munich.
How Sportsbooks Hedge bets
Sportsbooks are regularly hedging bets so that they can limit their risks and maximize profits. They do this by positioning themselves to make money by limiting the damage of big wins from punters.
By laying off large amounts of their liabilities, bookmakers are able to ensure that the money doesn’t flow out of their own funds – the sportsbooks bankroll management!
It acts as a kind of insurance, oddsmakers use the money they have taken in bets and use it to hedge their bets against potential losses.
Types of Hedging Bets
While we see players make hedge bet wagers all the time, there are two other ways which we will include below with examples to make things clear.
The sports betting industry is evolving and changing all the time, as such we try to ensure our readers get the full picture and know what they’re doing when they start wagering online.
Adjust Hedging
One option available to bettors is to adjust the stakes to shift the risk. Using the Super Bowl example we gave earlier, the bettor may decide to place more on the Steelers as the Colts QB is out injured.
This would obviously add weight to the stake meaning the profits on that side of the bet would be lower. A sharp is always able to find balance and weigh their bets for maximum profit.
Hedging Bets on In-Play Markets
As we mentioned before, hedging is based on movements in the market. So if the odds of a given outcome are likely to change during an event.
- Take for example the World Cup Final. If one team scores a goal early on the odds will change, allowing players to enjoy additional markets. Hedging your bets on In-Play markets is quite a popular wager to make.
This works with in-play betting markets. If the underdog scores to take the lead, the potential profit from the bet can be used to back the favorite, thus guaranteeing a return on your wager.
Hedging bets is something that is talked about more than it is understood. It’s also a concept that can be very dangerous because it can easily be used incorrectly in ways that negatively impact your bottom line.
Basically, hedging is just a way to reduce or eliminate the risk of a bet. You would generally look to hedge a bet when you are no longer comfortable with the bet you have made – i.e. you don’t think you have a particularly good chance of winning. The simplest example of a hedge is a bet on the other side in the game in question. Let’s say, for example, that the Yankees were playing the Red Sox, and you had bet the Yankees at -120. As the game neared, though, you became less certain that the Yankees were going to win. You could hedge that bet by betting on the Red Sox at +100, and you could do it in a number of ways. If you bet the same amount of money on the Red Sox as you bet on the Yankees then your only risk would be the juice you would have to pay if the Yankees won. If you bet less on the Red Sox than you did on the Yankees then you would be making a partial hedge bet – you would effectively be reducing the size of your bet on the Yankees. If you bet more on the Red Sox than you have on the Yankees then it’s as if you had just bet on the Red Sox.
That’s hedging in the most basic form, but there are ways that it can be more powerful, and therefore more interesting. One good example is with series bets in the playoffs. Let’s say, for example, that you had bet $100 on an underdog in the series at +200. You can bet series bets at the start of the series, but you can also bet them throughout the series – with adjusted prices according to the results so far. If your underdog wins the first game of the series then the prices and betting lines will adjust significantly – the favorite could fall all the way from -240 to -120. At that point you could bet $120 on the favorite to win the series. If the favorite does fight back and win the series then you would win $100 from your hedge bet, and still lose the $100 you bet on the underdogs, so you would break even. That’s a lot better than losing $100. If the underdogs continue on and win the series then you would win $200 on your original bet, but lose the $120 on your hedge bet, so you would have a profit of $80. You would have an upside of $80 with a downside of breaking even – you have definitely cut down on your risk. If you want to accept less upside you could even guarantee yourself a profit. If you made a $150 hedge bet on the favorite then you would make a profit of $25 if the favorite won, and $50 if the underdog won.
If you understand the concept then you also can see that you could do the same thing by betting on a game and hedging the bet with in-game betting. The opportunity to make a guaranteed profit happens surprisingly often, and even if that doesn’t work out quite right you can often limit the size of your loss.
So, with hedging we can limit our losses and often guarantee a profit. Sounds perfect, doesn’t it? Well, since it seems to good to be true there are obviously some real downsides to hedging. The first is that you often have to act fairly quickly to be sure to get the right price. Hedging can be a bit confusing to think about when you are first doing it, so it is easy to make a mistake when you are working fast. I’ve heard several stories about guys who thought they were hedging their bet but were actually increasing their exposure – and their potential losses. That can be a painful lesson.
Betting Hedge Calculator
More significantly, the problem with hedging is that you no longer have a chance to win your bet after you hedge it. Unless you made the bet specifically with the hope of hedging it (which would be a highly risky gamble) then you probably made it because you thought you had a good chance to win it – there was value. If the bet can be hedged that typically means that your team is doing well. That means that your bet has a better chance of winning then it did when you made your bet – you have even more value than you originally did. By hedging the bet you are throwing away all of that value – or at least most of it. Successful sports betting is all about maximizing the value of each bet. The more value you capture in your bets, the more successful you will be over the long term. If you are making sound bets and then hedging them then you might make a profit in the short term, but over the long term you are decreasing the amount of value you are capturing, and limiting your long term expectations as a result.
That’s not to suggest that hedging is always a bad idea. You just have to be very aware of what you are doing, and have a good reason for doing so. If you have a good reason to think that you don’t have the edge you thought you did – a matchup you were counting on dominating isn’t turning out that way, or a star player is playing like he is hurt – then a hedge can actually be a way to gain more value.