What is Hedging in Sports Betting?
Hedging betting is still an unfamiliar concept to many gamblers. Some people who have just heard the idea may think it makes no sense since there's no reason to insure their bets when betting itself is so closely related to risk-taking. Even so, in exceptional cases, hedging your bets can help you win a substantial amount of profit, regardless of the outcome of the match. Well, if that sounds like a myth, we'll explain it in detail in today's post.
In addition, in this article, we'll explain what hedge betting is, what its benefits are, when you should use it, and the methods you'll need to execute it correctly and profitably. By the conclusion of this course, you will be comfortable enough with how to hedge bets to include it in your successful sports betting strategy.
What is Hedging in Sports Betting? Detailed Example
If people buy insurance to ensure they receive some money if adverse conditions happen in their life, then in the world of online sports betting, hedging betting works with similar functionality. More specifically, the hedging betting definition implies players making a counter bet against their other wager in order to assure the profit, regardless of the outcome of a game or event. Or we might say, you'll make a wager against yourself. This could reduce your potential profit, but it can assure that you win money regardless of what happens in a game. Thus, if you hedge correctly, you don't even have to watch the game if you don't want to because you already know you'll earn money.
The definition we have just given can be confusing for you. You might be thinking, how can betting against yourself guarantee that you will win instead of causing you to lose? The answer lies in special situations. More specifically, some special bets in sports betting can help you adjust the odds, which are inherently fair, on a particular event. They will cause the inherent balance to be broken, creating a rift where you can bet on the opposite side and ensure a certain profit for you.
A Detailed Example
If you haven't fully understood what we are talking about, consider the example below to see how hedging betting works.
Before the NFL season kicks in, you bet your future on the Indianapolis Colts to win the Super Bowl. Of course, that is extremely unlikely, but in return, you will enjoy 1 to 100 odds. You believe in sports miracles and bet $100 on an average team. -as weak as the Indianapolis Colts, with the hope of a hefty $10,000 winnings.
Let's say the team you choose has a magical makeover. They spent a lot of money buying quality players and a coach. After a series of victories that no one thought they could, they made it to the Super Bowl final to face the Cincinnati Bengals.
In the finals, the odds are drawn to an even level: (-110) whichever team wins. For most other bettors, they can only almost double their bet (50% odds) if they correctly select the winner of the two teams if betting now. However, you have a huge advantage with the futures bet you selected for the Indianapolis Colts before the season even kicked off.
More specifically, you can win $10,000 if the Indianapolis Colts win. In the event that the Indianapolis Colts lose, you only lose $100. For other bettors, they will have to spend up to $5,000 in stakes in return for a $10,000 chance of winning if the Indianapolis Colts win, while you only need to invest 100$ for the same opportunity.
With that, the situation we created is complete. This is where hedging betting comes into play and guarantees you a profit regardless of the Super Bowl score.
To hedge your bets, you would bet $5,250 on the Indianapolis Colts to win. This bet is against the futures bet you have selected for the Indianapolis Colts. As crazy as it sounds, you will wonder why you have to spend such a huge amount when you have a 50% chance of winning $10,000. However, consider the following possible Super Bowl outcomes to see why this madness can help you secure a profit.
If Indianapolis Colts wins, you win your original futures bet with a $10,000 profit! But you will lose your risk bet in the amount of $5,250. This means your total profit if the Indianapolis Colts win the game is $4,750.
If Cincinnati Bengals wins, you will lose your original futures bet with a loss of $100. But you will win the bet against that you just made yourself with a profit of $4,772. This will generate your total profit if the Cowboys win $4,662.
In either case, no matter who wins in the end, you go home with around $4700! Even so, you will be sacrificing your chances of winning the $10,000 potential prize.
And that's how hedging your bets get the most out of it. Although you will never get your dream amount of $10,000, you will definitely walk away with around $4,700 instead of possibly losing a $100 bet with a 50% probability.
Why Should You Consider Hedge Betting?
The above example clearly demonstrates why hedging bets are beneficial in particular circumstances. Below, we will generalize all the advantages that hedging your bets gives you. From there, you'll see why you should consider this smart approach.
It's all too obvious considering our above example involving the fictional Indianapolis Colts vs. Cincinnati Bengals Super Bowl. Regardless of the outcome of the match, in the end, you are always the winner. While you'll have to give up the cap on how much you can earn, in return, guaranteeing you'll definitely get close to half of it is always a good option.
Lower Variance and Risk
Not only does hedge betting ensure earnings, but it also reduces variation and risk. In the example above, we have assumed big bets of $100 and $5,250 so that everything looks simpler and easier to visualize. However, that doesn't mean you have to play with such large amounts for hedging betting to work. Also, you don't have to wait long with future bets to see the benefits of this betting strategy. If you are a math geek, you can totally apply this risk and variance minimization strategy to win smaller but much more frequent wins.
Helps You To Cut Your Losses If You Think Your Prediction Might Be Wrong
A common scenario that many sports bettors encounter is that the match does not go according to the situation you originally predicted. Then, hedging betting will be a perfect solution to help you cut your losses if your previous bet situation is not positive.
For example, in a football match in the English Premier League, you bet on Manchester City to win when they handicap Tottenham with a difference of 1.5 goals. However, just after the first half, the score was Manchester City 0-3 Tottenham. At this point, 90% of you have a risk of losing the bet. The odds have now changed, and the handicap in the match is even between the two teams.
At the end of the first half, you can bet against your original bet and select Tottenham to be the eventual winner. Assuming the match ends with a score of Manchester City 0-4 Tottenham, you will have some winnings when choosing Tottenham to make up for the loss that you initially selected Manchester City. And that's how hedging betting will correct your wrong betting decisions earlier.
When to Hedge Your Bets
This is a difficult issue to answer since the answer is dependent on the scenario: the amount you've risked and how winning could influence your life, as well as your willingness to take risks and if you care about making the safe but complicated mathematical choice.
For example, if your initial wager seemed extremely unlikely at the time, and hedging still provides you with a chance of a life-changing amount of money regardless of the outcome, it definitely makes sense to hedge. But, once again, this situation is dependent on your willingness to accept risks.
On the other hand, if you're simply playing for fun and the possible loss won't hurt, you should not care much about hedging betting.
So, there is no consistently correct or incorrect answer to the question of should you hedge your bets. That depends on your personal preference and how much you value your winnings. The perfect time for you to hedge is when you have a chance to win huge amounts of money through special bets. It can be a futures bet, like the one we talked about in the example above, or it can be a parlay bet involving multiple teams, or when your initial prediction is not very likely, and hedging your bets can help you reduce your losses.
Creating Guaranteed Profit With Hedge Bets
Hedging betting is a special betting strategy that can virtually eliminate the possibility of losing a bet, depending on your particular situation. In return, you will happily enjoy a lower profit amount.
However, it is important that you have a specific plan for hedging before betting on an event. There are undoubtedly many players right now who are hurrying at the last minute to place a hedge bet in order to lock in some form of profit. If that's you, we hope you can sort things out because there's still time to lock in some profit.
Take it as a learning experience for everyone else. When it comes to hedging your bets, the greatest thing you can do is have a strategy in place in case you need it. Even if you are uncertain if you will hedge or are not given the opportunity, know how you will execute if necessary.
Cashing On Both Sides With Hedge Betting
Although this is quite rare, sportsbooks sometimes make mistakes and create a rift between the bets. At that point, your task is to make the most of that rift using the hedging betting strategy and make money on both sides of the match.
Example: In the NFL game between the New England Patriots and the Las Vegas Raiders, the odds of your first goal being New England Patriots -1.5. However, when the match was in progress, the Las Vegas Raiders +2.5 odds suddenly appeared. Once there, you can use the strategy to bet on the Las Vegas Raiders. If the New England Patriots win by exactly two points, you will win both of these bets and make a substantial profit.
With that said, the sportsbooks are always calculating, and rarely such a rift appears. However, it is entirely possible. When it actually happens, make sure you always keep an eye on the odds in the game to take advantage of the bets against your original bet to profit.
Hedging betting is a perfect bet that these Professional sports bettors love to make sure they always win. Its top benefits are locking the profits, reducing risk, and getting you out of situations where your initial prediction went wrong. However, you should only use it in situations where the potential prize pool is large enough that you must prioritize safety, as this strategy will almost eliminate all the drama that sports betting brings.