What is Hedging in Sports Betting? Detail Explanation & Example

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

“Hedging" is a term that signifies a strategic approach employed by gamblers to minimize risk or secure a guaranteed profit by placing additional bets on an existing wager.

This technique involves placing new bets, often on alternative outcomes, with the intention of either counteracting or offsetting the potential losses or gains from the original bet.

Essentially, hedging serves as a financial safeguard for bettors, allowing them to manage their exposure to risk and control the potential outcomes of their wagers before the final result of an event is determined.

Hedging a Bet Example

To truly grasp the concept of hedging in sports betting, let's delve into a concrete example:

Suppose you've wagered $100 on Team A to win a highly anticipated basketball game. Team A's odds are set at +150, indicating that if they emerge victorious, you stand to make a profit of $150 (comprising your original $100 stake plus $50 in winnings).

As the game unfolds, Team A takes a commanding lead, significantly enhancing their chances of winning. In this scenario, you decide to employ the hedging strategy to secure some profit, even if the game takes an unexpected turn. You place a $50 bet on Team B, their opponents, with odds of +200.

Now, you're presented with two potential outcomes:

• Team A Emerges Victorious: In this case, you profit $150 from your initial Team A bet, but you lose the $50 you placed on Team B. This results in a net profit of $100.
• Team B Stages an Upset: If Team B manages to pull off an upset and wins the game, you profit $100 from your bet on Team B, effectively compensating for the $100 you lost on your initial Team A bet.

This strategic use of hedging ensures that you will either secure a profit of $100 or break even, regardless of which team ultimately wins the game. The primary goal is risk management, allowing you to maintain a level of control over the financial outcome of your bets, even if your initial prediction doesn't come to fruition.

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. 

Guaranteed Profit

One of the paramount reasons for employing hedge betting in sports is the assurance of a guaranteed profit or, at the very least, minimizing potential losses. By strategically placing supplementary bets that counterbalance the possible outcomes of your initial wager, you effectively lock in a certain amount of winnings, irrespective of the event's final result. 

This approach not only provides a degree of financial security but also instills a sense of confidence and peace of mind that traditional betting might not offer.

Lower Variance and Risk

Hedge betting plays a pivotal role in significantly reducing the variance typically associated with sports betting. It effectively transforms what might otherwise be an "all or nothing" situation into a more controlled and measured outcome. Although the potential profits may not soar as high as they would if you allowed the original bet to ride, the appeal lies in the significantly reduced risk and the predictability it affords.

Helps You To Cut Your Losses If You Think Your Prediction Might Be Wrong

When doubt begins to creep in regarding the accuracy of your initial bet, hedging can prove to be a shrewd move. Let's say you initially placed a bet on an underdog team, but as the game progresses, they start to fall behind, and your confidence wanes. To mitigate potential losses, you choose to hedge your bet by placing a wager on the favored team. While this won't entirely recoup your initial stake, it will serve to limit the damage and allow you to recover a portion of your investment.

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

Knowing when to execute a hedge bet is paramount to mastering the art of hedging in sports betting. Here are some scenarios in which it is advisable to employ this strategy:

• When You Have a Significant Profit Opportunity: If your initial bet has already yielded a substantial profit, consider hedging to lock in some of those winnings, thereby ensuring you don't leave empty-handed.
• When You Have Doubts About Your Initial Bet: In situations where events are unfolding differently than you expected, and you're losing confidence in your initial prediction, hedging can protect you from substantial losses.
• When You Want to Minimize Risk: For risk-averse bettors or those seeking a more certain outcome, hedging is a prudent strategy to limit potential losses and provide a safety net.
• In Multi-Leg Bets: If you've placed a parlay or accumulator bet with multiple legs, and most of those legs have already won, consider hedging to secure some winnings before the final leg is decided.
• In High-Stakes Situations: When you've placed a substantial bet and the outcome is highly uncertain, hedging can help alleviate the pressure and ensure you don't lose everything in one fell swoop. 

Hedging your bets is a strategic move in sports betting, but knowing precisely when to employ this tactic can make the difference between securing a profit and potentially missing out on gains.

Here's a detailed example to illustrate when and how to hedge your bets effectively:

Multi-Leg Parlay Bet

Imagine you've placed a multi-leg parlay bet on three NFL games. To win your parlay, all three selected teams must emerge victorious. Your initial stake is $100, and the potential payout is an enticing $800 if all your picks are correct. However, as the games progress, the outcomes become more uncertain.

• Game 1: Your selected team is leading comfortably at halftime, and their odds of winning are now heavily favored.
• Game 2: The second game is a close contest, and your chosen team is only slightly ahead. The outcome could go either way.
• Game 3: Unfortunately, the third game is not going well. Your selected team is trailing, and their chances of a comeback are diminishing.

Now, let's explore when and how to hedge your bets in this scenario:

1. When to Hedge:

• After Game 1: Given that your first pick looks promising and is likely to win, you could consider hedging your bet before Game 2 begins. This involves placing a bet against the outcome you initially selected for Game 2. If your first pick holds, your parlay still has a chance, but if it fails, you've secured a profit from Game 1.
• Before Game 2: If you choose to let Game 1 play out, you can still hedge your bet before Game 2 starts. Evaluate the odds and consider placing a bet that ensures you win something regardless of the outcome of Game 2.

2. How to Hedge:

• Game 2 Hedge: Let's say you decide to hedge before Game 2, which is a close matchup. You can place a bet on the opposing team or the "under" on the total points scored, depending on the available odds. This way, you create a situation where you win if either your initial pick for Game 2 or your new hedge bet is successful.
• Game 3 Hedge: If, after Game 2, your parlay is still alive but facing uncertain odds, you can hedge before Game 3. In this case, you might place a bet on the opposing team or the "under" for the total points in Game 3. Again, your goal is to ensure some form of profit, regardless of whether the parlay ultimately succeeds.

3. Possible Outcomes:

• All Games Win: If all your selected teams win their respective games, you'll secure the $800 parlay payout.
• Game 1 Wins, Game 2 Loses: In this scenario, your hedged bet on Game 2 will have secured a profit from Game 1. While you won't win the parlay, you'll still have made money overall.
• Game 1 Wins, Game 2 Wins, Game 3 Loses: If your parlay loses in Game 3, you'll have secured profits from Game 1 and Game 2. Again, while the parlay didn't succeed, you'll end up in a positive position.

This detailed example illustrates how to strategically hedge your bets in a multi-leg parlay scenario. By doing so, you effectively reduce the risk of losing your entire initial stake while still having the opportunity to profit from the individual games. The key is to carefully analyze each situation, assess the odds, and make calculated decisions to maximize your potential outcomes.

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. 

FAQs

Is hedging your bet always a recommended strategy?

While hedging can be a valuable strategy, it is not universally suitable for all situations. Its effectiveness depends on factors such as the potential profit, your level of confidence in the initial bet, and your tolerance for risk. It's essential to carefully evaluate the circumstances before deciding whether to hedge.

Can you hedge a bet after the sporting event has already started?

In some cases, it is possible to hedge a bet after a sporting event has commenced, but it's important to note that odds and opportunities can change rapidly once the event is underway. Generally, pre-game hedging is more common and provides better control over your bets.

Does hedging always guarantee a profit?

Hedging can guarantee a profit in certain scenarios, but it does not guarantee profit in every situation. It serves as a risk management strategy aimed at minimizing losses or securing gains, but it does not eliminate the possibility of losing money. The degree of profit or loss depends on the specific bets placed and the outcomes of the events wagered on.

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.