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Hedge Betting

 

You may have heard the expression “hedging your bets” before, but what does hedge betting actually mean? Although the term is usually used with sports betting, hedging can apply to many different situations where you’re looking to limit the downside of the possible outcome.

When it comes to sports wagering, hedge betting is an advanced tactic where you place additional bets to reduce the risk of your primary bet and guarantee some kind of profit.

Used properly, this strategy can help you minimize your losses. If you don’t know what you’re doing, though, you could end up wasting more money than you save. Follow this guide and we’ll give you some pointers for how to place a hedge bet.



What is Hedging a Bet?

Hedge betting is when you wager on both sides of a sports event to ensure you earn some sort of payout no matter the outcome.

Consider, for example, if there was a game between the New York Rangers and the Washington Capitals. The Rangers have -190 odds and the Capitals have +155 odds. You’re looking to make extra money, so you place a $200 wager on the Capitals.

However, they aren’t favored for this contest, so you want to cover yourself in case the game goes against you. To do that, you place a hedging bet on the Rangers for $100.

In this situation, you’re out $300 at the onset of the game. Ideally, for you, the Capitals pull off the upset, and you get $105 on top of your original bet for a small profit of $5. However, if the favored Rangers hold off the Capitals, you’ll get a tot. You still lost some money, but only half the $200 you would have lost for your original, incorrect bet.

This shows the positive and negative side to hedging your bets. You mitigate the losses you would have suffered on an incorrect bet, but also cut into the potential winnings you could have had with just your original bet without a hedge bet. However, there are ways to use hedging more effectively to guarantee a profit.


How to Hedge a Sports Bet?

Placing a hedging bet is simple enough. As you saw in the above example, all you have to do is wager on both sides of the contest. However, in that example, hedging wasn’t an effective way to guarantee profits. The trick for hedge betting comes down to knowing when to place a hedge bet.

In order to hedge bet effectively, you need to track live odds as they come in. For example, let’s say you initially placed a $300 bet on the Pacers with +150 odds in a game against the Nets. You wait a while for injury updates and other team news to break, and eventually some big news shifts the outlook so that the Nets have +250 odds.

With the new odds, you also hedge your bet by placing a $200 bet on the Nets. Now you have money on both sides of the contest, so one of your bets will pay off no matter which way the game goes.

If the Pacers win, your original bet will earn you $750. If the Nets win, your hedge bet will earn you $700. Either way, you’re well over the $500 you originally staked. Keep in mind that these odds are purely for illustrative purposes, and you often won’t quite get odds this favorable in real hedge betting scenarios. However, these same principles will apply in real situations.


Why Use Hedge Betting?

Whether or not you’ll want to use hedge betting comes down to a number of factors. Bettors have varying priorities; the casual player putting a few dollars on the line will naturally use different strategies than an avid bettor.

Each player has to figure out the strategies that work best for them. Used properly, hedge betting can help to reduce the risk of your wagers or even guarantee you a profit no matter how the game concludes.

Hedge Betting to Reduce Risk

Naturally, placing a bet on both sides of a contest ensures that you’ll get some sort of payout. As always, the question comes down to weighing the costs of a hedging bet against the benefits.

Imagine a game between the Los Angeles Dodgers and the Washington Nationals. Say the Nationals are given +150 odds, while the Dodgers are favored with -200. You like the Dodgers for this game, so you back them with a $500 bet. You’re risking $500 to win $750 ($250 in profit).

However, days go by, and surprising pregame news shift the lines. An injury on the Nationals’ side takes the Dodgers’ odds from -200 to -250. Now, the Nationals have odds of +220. This is the perfect moment for you to hedge your bet and reduce your risk.

Say that you now choose to bet $150 on the Nationals. That bet is risking $150 for a potential payout of $480 ($330 in profit). In total, you’ve staked $650. If your main bet on the Dodgers pays off, you’ll win $750, clearing a $100 profit. If your hedging bet on the Nationals pays off, you’ll win $480, with a net loss of $270.

In other words, you cut your downside risk by almost half: from potentially losing $500 to potentially losing $270. At the same time, you’ve cut your potential profits somewhat, from $250 to $100.

You’ll still lose money if you lose your main bet. However, because you used hedge betting, you’ve mitigated that risk considerably.

Hedge Betting to Guarantee Profits

In the best circumstances, you can use hedge betting to ensure you’ll make a profit no matter the outcome of the games you’re wagering on.

Let’s imagine you placed a $100 future bet on Rory McIlroy to win the US open at +800 odds. He’s still in contention on the last day, so your bet looks good, but he’s far from favored. Rory has +200 odds to be on top by the end of the day, while Dustin Johnson has -250 odds to win.

Your bet may still pay off, but for some safety, you place a hedging bet on the favorite, Johnson, for $300. You are now out a total of $400 going into the last day.

If McIlroy pulls off the upset, great! You get $900 for your correct future bet, earning a total profit of $500 with the $400 you originally staked. However, if the favorite Dustin Johnson wins, you’ll be paid out $420 from your hedge bet, getting your original $400 back plus a $20 profit.

You can see that no matter the outcome in this situation, you’re guaranteed a profit. You can’t beat the kind of safety in gambling that hedge betting can provide.


Where to Place a Hedge Bet?

Here is our expert selection of the bookmaker where you can place a Hedge Bet right away :

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Different Types of Hedge Betting

You can use the strategy of hedge betting no matter what sort of sports wagering you are doing. Here are some tips for placing a hedging bet for parlays, future bets, and other types of wagers.

Hedging a Parlay/Accumulator

You can apply hedge betting to minimize your losses when betting on multiple games. Let’s say, for example, you have a parlay where you’ve predicted the Steelers, the Jets, the Texans, and the Eagles to win.

Your first three picks all win their games, so your parlay is looking good. You want to add some security to your bet, though. To do that, you place a hedge bet on the Eagles’ opponents.

Now you stand to earn a big payout from your parlay if the Eagles win. But by using hedge betting, you’ve also minimized your losses by claiming a smaller payout if the Eagles’ opponents win.

Hedging a Future/Outright Bet

You can apply the same knowledge on how to place a hedge bet to reduce your risk on a future bet. Imagine you placed a future bet at the start of the season on the Jets taking home a Super Bowl ring. Any long-time Jets fan would call you crazy, but we’ll ignore that for this hypothetical outcome.

The planets align and the Jets manage to make it to the Super Bowl. However, they’re still underdogs, and most bookies seem to be predicting their opponents, the Chiefs, to come out on top.

Hedge betting in this situation would involve placing a wager on the Chiefs to win. Now you’re in for a massive payday if your future bet ends up correct, but you can cover some of your losses by taking home a payday from your hedge bet if the favorites win too.

Hedging Due to a Change in Opinion

You might also hedge a bet due to changing circumstances around the event you’re wagering on.

For example, you might have backed an underdog team because their rookie quarterback was playing above expectations in the early season. Unfortunately, as the game gets closer, defenses have started to figure out the rookie and he isn’t playing as well.

To hedge your bet, you place an additional wager on the favorites to win. You have to put more money at stake to gamble in this way, but you’ve mitigated your losses by wagering on both sides of the contest.

Hedging In-Play

Live in-play betting provides you a chance to play the odds in real time and use hedge betting to minimize losses. Let’s imagine a tennis match between Andy Murray and Novak Djokovic. Djokovic is the favorite going into the game, and you play it safe by backing him with your bet.

However, the first set doesn’t go as planned and Murray wins it. New in-play odds come out that give Murray a much better chance of winning. You won’t get quite the same payout you would have by backing him at the start of the match, but you place a hedge bet on Murray to win.

Now, no matter what happens, you’ve guaranteed a payout for yourself using live odds to your advantage.


Advantages and Disadvantages of Hedge Betting

Now that you know how to place a hedge bet, it may be tempting to apply this skill every time you’re placing a wager. But always consider the positives and negatives of hedge betting.

The advantages should be obvious from what we’ve covered. Betting on both sides of an event can minimize your losses or even guarantee you a profit no matter the outcome of a sporting event. Hedge betting makes your wagers more secure in this sense.

However, this strategy does come with a downside. By placing a hedge bet, you are also increasing the initial amount that you have staked on the game. Since both bets can’t pay off, you’ve also decreased the potential winnings you have on the table.

Ultimately, hedge betting is about a tradeoff between risk and reward. You decrease the risks you’re taking by guaranteeing a payout no matter the outcome, but you also have to put out more money and cut into your potential earnings. This balance between risk and reward comes down to each individual gambler’s priorities, resources, and preferences.


FAQ - Hedge Betting

Check out this quick reference for questions on the basics of placing a hedge bet.

When should I use hedge betting?

The simple answer is that it depends on the situation and the odds offered for a game. There are times when hedge betting can be used to reduce risk. There are other cases where it can guarantee you some extra payout no matter the outcome.

Learning to consider the risks and benefits is the key to knowing how to place a hedge bet.

Will I always win money if I hedge my bets?

Now that you’ve learned how to place a hedge bet, it may seem like you can’t lose at sports betting using this strategy. But the truth is, there is no guaranteed strategy for succeeding at gambling. The bookies would be out of business if there was.

However, there are some situations where hedging your bets can be an advantageous strategy for minimizing the risks of your bets. Learning when to place a hedging bet can be a valuable tool in your skillset as a bettor.


Final Thoughts

Hedge betting can help to minimize your risks when placing sports betting wagers. By betting on both sides of an outcome, you help assure that you’ll be paid out no matter what happens in the game.

However, reducing your risks cuts into the potential winnings you could’ve amassed. Always weigh the risk reduction against how much you could earn when deciding how to place a hedge bet.

In the correct situation, you can even guarantee a higher payout no matter the outcome of a game by placing a hedge bet. Add this to your collection of sports betting skills and you’ll be able to minimize the risks you take with your wagers.

Other great betting types you can learn how to place thanks to our betting experts:

Betting Odds Explained | Futures Betting | Moneyline Betting | Prop Betting | Point Spread Betting | Teaser Betting |