Hedging Bets – A Short Guide

In sports betting, like in all forms of gambling, the goal is to overcome the risk associated with trying to predict events with uncertain outcomes en route to profits. Hence, bettors, like all gamblers, look to minimize or even nullify the risk inherent to this practice. Enter hedging.

You may have heard of hedging as a financial term often used in the investment realm, referring to offsetting asset positions in hopes of reducing the risk linked to existing ones. Thus, in investing, hedging entails lowering the hazards linked with adverse price movements. In sports gambling, hedging primarily covers wagering on the opposite outcomes of the same market, meaning putting down conflicting wagers. Naturally, this gets done so that you ensure at least some level of profit, and when done right, it stands as one of the most effective ways a gambler can limit losses and boost upside. In this guide, we explore this tactic, explaining its basics. 

How to Hedge a Bet

In essence, hedging is betting on an event at different times and odds. As noted above, you hedge a bet when you make an extra wager that is different than your original one. It may even be an opposite bet, as you aim to reduce the net loss risk.

To give you a simple example of how this works, let us say that before the start of the NBA season, you have chosen to make an outright wager on the Los Angeles Lakers at odds of five to one to win the NBA Championship. The bet made was $100, leading to a $500 payout. Throughout the year, the Lakers have dominated the regular season and have entered the playoff beaming with confidence. Things have gone as planned, and they have reached the finals, where they will lock horns with the Denver Nuggets, who are on a fantastic run of form.

Doubting Before the Finals

Before the finals start, you start doubting the Lakers, your original pick and think that the Nuggets have a decent shot to go all the way. So, you put down a $50 bet for them to lift the Larry O’Brien Championship Trophy. Then, the odds for the Nuggets to end the year stand at three to one. Therefore, you have bet $150 in total. If the Nuggets win, you get your total stake back. And if the Lakers win, you get a $350 payout. Accordingly, you will not lose money despite who wins, and you only stand to win if your initial guess pans out. There is no risk involved, meaning you have hedged.

The example above is an outright one. But, the logic applied works with different types of bets. Many gamblers like to use this strategy with live betting when their made wagers appear they will not win. Consequently, they look to minimize the financial damage they are likely to incur if the game keeps unfolding unfavorably. Of course, the in-play odds on most markets will not allow them to recoup their losses, but they can help a bit.

Do Bookies Permit Hedging Bets?

Do you know that bookmakers will sometimes implement hedging bets themselves to limit their exposure/risk? Hey, why shouldn’t they do this? Regarding whether gamblers get allowed to use this practice. The answer, in most cases, is yes. Some sites go so far as to encourage it. They even have features built into their sportsbook solutions that make it easy. We already noted in-play wagering, which can have a cash-out feature, which lets you settle bets before an event’s conclusion. Platforms can also provide partial cash-out, which is super-handy for those looking to hedge selectively.

Automated alerts for odds changes and scores are useful to stay informed about hedging opportunities, and the bet builder feature, the edit bet option that allows you to adjust existing wagers on the fly, and multi-bet functionalities are particularly beneficial for managing complex hedging strategies. 

In general, online bookmakers will not kick you out for employing this tactic, as they want you to expose yourself to as much juice as possible. That said if you keep turning profits and begin frequently withdrawing sizeable sums. Your account will likely get limited. Please check your chosen site’s terms and conditions page to get familiarized if hedging in any dimension is some sort of rule violation, so you know what kind of betting experience you are getting yourself into.

The Difference Between Hedging & Arbitrage

Hedging helps bettors minimize losses by reducing risk exposure, entailing placing a novel wager on the opposing team/outcome. Arbitrage, a form of hedge wagering, on the other hand, seeks to exploit odds discrepancies among bookies. The goal here is to capitalize on these differences, ensuring a positive return. It usually involves simultaneous betting on all outcomes.

Sports Betting Hedging Bets Calculators

These are available in free versions, are rather simple to find with a quick Google search, and are easy to use. Loads of options are out there, assisting in diverting the risk associated with your first bet. Be aware that most of the sites that feature these calculators are ones that target the US market. That means the majority of them will implement American odds by default, and you are unlikely to be able to modify this setting. They will traditionally have four fields. They are My Odds, Bet Amount, Hedge Odds, and Hedge Amount. Once you fill in the first three, the fourth one will automatically get calculated, and you will receive your Total Bet Amount, Total Payout, and Hedge Profit.

We have also seen ones where you enter your Original Wager, Initial Odds, and Hedge ones, and the calculator figures out the Hedge Amount Required, the Guaranteed Profit, your Total Wager, and ROI.

Hedging Bets Parting Thought

Considering hedge betting depends on your risk tolerance, financial goals, the opportunities a bookmaker offers, and the changing circumstances. It is a good practice to keep in mind to cut back a bit when things are looking dire, with hedging’s main disadvantage being that you are cutting into your potential wins and only barely getting something back if you hedge too late. Remember that this strategy demands attention to detail to get used right. For that reason, if you are not an attentive person, you are unlikely to hedge correctly.

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