Nothing is worse for a gambler than coming so close to winning a bet and a last-second field goal or late free throws ruins their chance at a big payout. To take away the sting of defeat, many gamblers hedge their bets.
But what does it mean to hedge a bet and how do you do it? We will look at everything you need to know about hedging, so you can get the most advantage possible at your favorite online betting site.
What is Hedging a Bet?
A hedge is a term that originated in finance but has applicability to gambling. Hedging is a type of betting strategy that refers to placing a second bet that works against an initial bet. You hedge when you are unsure of a wager paying out.
The idea behind hedging is that no matter the outcome, the gambler will still come out with some money. The first bet might be the real moneymaker, but by hedging, a savvy bettor can still recoup the costs if it doesn’t pan out.
How Do You Hedge a Bet?
Hedging a bet involves betting on the opposite outcome of your initial bet. You can hedge a bet on either single-game bets or futures.
For example, a gambler bets on the Baltimore Ravens to beat the Pittsburgh Steelers at -6.5. The news comes out that a key Ravens player is hurt, so you may bet the Steelers Moneyline to ensure you walk away with something no matter the outcome.
By hedging bets like in this example, you can ensure you at least take home some profit from a day of gambling. You will cut into your profit margin, but you will ensure yourself something to take home.
Why Do Gamblers Hedge Their Bets?
Sports betting has long been a popular industry. After New Jersey opened the floodgates on expanding gambling, more and more bettors have been wagering money on sports. But more risk-averse gamblers have been hedging bets for years.
So why do gamblers hedge? It’s simply a way to make betting safer. Professional gamblers will tell any aspiring bettor that taking big swings and missing is an easy way to end up without a sufficient bankroll.
While it may be exciting to try and hit a 10-leg parlay for a massive payout, making bets like this without hedging will drain your account quickly.
Ways to Hedge Your Bets
Perhaps the most common bet for gamblers to hedge are futures bets.
For the uninitiated, a futures bet involves a bettor gambling on outcomes that won’t occur for some time. These can be bets on a team like the Cleveland Cavaliers winning more than 30.5 games in the regular season, or for Duke to win the NCAA Basketball National Championship.
Futures Hedge Example
We will use an example involving the NBA. Say you made a bet on the Phoenix Suns to win the NBA Finals before the season began. The Suns are heavy underdogs, and the listed odds were at +2000. You put $10 on it, meaning you stand to win $200 if the Suns win it all.
As the season goes along, the Suns go from plucky underdogs to dark horse contenders and finally emerge as legitimate Finals favorites. They are such heavy favorites that it has become a question of the Suns versus the field.
As the playoffs begin, you may get a little nervous about the bet, so you decide to hedge. The best hedge would be to bet for the field to win it all, that way you always take something home.
Betting the field is offered at -200, meaning you have to risk $20 to win back your original $10 bet. You could effectively hedge your bet by putting a $40 wager on the field and seeing how the chips fall.
In the world where you only make one wager if the Phoenix Suns succeed you stand to take home $200 and if they lose you will be down $10.
If you hedge and the Suns win, your profit is cut to $160. But if any other team wins the Finals, you will make $10 in profit.
When to Hedge and When to Let it Ride
Deciding to hedge a bet is a personal choice. Every gambler should know when they think minimizing the risk is worth it for lower profits.
You can determine when to hedge bet based on the safety of the wager and the money at risk.
In the Phoenix Suns example, many gamblers might feel comfortable letting it ride. The Suns are heavy favorites, you have incredible odds from placing the bet when they were heavy underdogs, and the initial wager is low.
But if the initial bet in the example was closer to $10,000, the gambler in question may decide to take the safe option and hedge the wager to guarantee some return on investment.
If you make a futures bet or bet on a single game and become worried the gamble has little chance of paying off, you may decide to hedge.
While hedging is a simple concept, gambling can be difficult to wrap your head around. We have a few questions here to help clarify any questions you may still have.
How do I know when to hedge?
Only you know when a hedge may be in order. If the bet is too high-stakes for your liking, or you feel like there is little chance of winning, it may be time to hedge the bet.
Should I always hedge my bets?
Nothing stops you from hedging every bet, but it will make for a slow accumulation of profit. Some wagers aren’t worth hedging, as they won’t always be profitable to hedge. If you can afford to lose money or think you have a sure thing, a hedge may not be necessary.
Is hedging illegal?
Hedging is not illegal and is considered a legitimate betting strategy.
Smartly hedging your bets can help give you an edge against the sportsbook. And in this era of easily accessible sportsbooks, any advantage is worth it. To learn more betting strategies, enroll in our free course.