Hedging is a sports betting strategy that involves placing a second wager against your original bet to reduce risk or lock in profit. By placing another bet on the opposite outcome of the initial one, sports bettors can create a form of insurance that guarantees a profit irrespective of the outcome of the game. The primary purpose of hedging is to protect the original bet against possible losses or downside exposure.
The idea behind hedging is pretty straightforward. Let’s assume you placed a $200 futures bet on the Los Angeles Rams to win the NFL at odds of 10.0. Interestingly, the future bet is the most popular type of bet that can be hedged. So, if your bet wins, your potential payout will be $2000. But you are also exposed to a $200 loss if you lose. Let’s say the Rams make it to the finals, where they’ll be playing against the New York Giants.
At this point, you can choose one of two options–ride out your initial bet or place another bet on the New York Giants to win the game. If you’re confident in your initial bet, you can go with the first option, but you can choose to cover the downside of this bet by placing a hedge bet of $400 on the Giants, at odds of 2.0.
Now, the total amount you have spent on wagers equals $600, and you’re assured of getting a profit regardless of the game’s outcome. In essence, here are the possible scenarios:
If you didn’t hedge your initial bet and the New York Giants won, you would lose the original $200 wager and potential $2000 win. Essentially, hedging gives you a shot at winning even though you are not certain.
The primary reasons for hedging are:
Hedging offers sports bettors the option to opt for a lower risk rather than a higher one. When you place a bet on a game, you are exposed to the risk of losing your entire stake if your bet loses. However, you can reduce the initial risk or downside to a more comfortable level with hedging. Again, hedging a bet boils down to your preference.
One of the situations hedging comes in very handy is mitigating the risk of a bet you no longer have confidence in. For instance, let's say you placed a $50 points spread bet on the Toronto Raptors against the Cleveland Cavaliers, and you started doubting your chances of winning at some point before the game. Rather than riding out the bet and possibly losing your $50 stake, you can decide to hedge your bet by placing a $50 point spread bet on the Cleveland Cavaliers. You'll lose a bit of money at the end of the game, but your loss will only be a portion of the initial $50 you could have lost without the hedge bet.
Hedging can also guarantee that you walk away with a profit regardless of how the game pans out. For example, if you placed a $100 bet for a $500 payout on the 49ers to win a match against Chiefs ML, you can hedge the bet by placing a $50 for a $200 payout on the Chiefs ML, as well.
The best-case scenario will be that your original bet wins, and you rake in a profit of $350 after subtracting your stakes on both bets. And the worst-case scenario will be that your second bet wins, and you rake in a profit of $50.
As mentioned earlier, hedging a bet all boils down to your preference. So, depending on the goal you’re trying to achieve, there are various strategies you can employ when hedging your bets. These strategies include:
In sports betting, a parley is a bet that combines two or more stakes into a single wager. This type of bet works by rolling over the winnings from one bet into the next step of the parlay. If one of the bets loses, the entire parlay is lost. However, if all the bets in the parlay win, the bettor receives a larger payout.
Sports bettors often hedge their parlay bets that are one victory away from winning. So, let’s say you made a 3-game NFL parlay bet, staking $100 at odds of 40.0. Let’s also assume the first two teams win, and your third bet is on the Miami Chargers winning their game against the Los Angeles Dolphins.
You can let your parlay ride out, or you could protect your investment by placing a hedge bet. In this case, a good hedge bet to make will be $400 on the LA Dolphins, at odds of 1.91. If the Chargers win, your winning will be $4000 with a profit of $3500, and if the Dolphins win, you’ll rake in a profit of $264.
A futures bet is placed on an event or series of games that will be played in the near future. In many cases, sports bettors use hedging to protect a futures bet. If you placed a $100 futures bet on the New York Knicks winning the NBA at odds of 12.0, your potential payout at the end of the season would be $1200. If the Knicks have to play against the Miami Heat at the season's final game, you can use a hedge bet to protect your original bet and guarantee a profit. Assuming you decide to place a second bet of $300 on the Miami Heat at odds of 1.81, your possible winnings are as follows:
After placing your bet on a particular game, you may begin to have second thoughts about your stake while the game is on. You can place an opposite bet while the game is in play to reduce your loss with hedging.
For example, let’s say placed a $50 wager on the Detroit Lions winning a match against the Atlanta Falcons at odds of 1.91. While watching the game, you start feeling like it won't pan out as expected. Rather than risking losing your whole stake, placing a hedge bet will assure you of making a profit regardless of the team that wins the match.