What does it mean to hedge a bet
October 19, 2021
Whether you bet on sports, invest in stocks, or make any other financial investment, at some point you will be looking to protect your money.
As a simple explanation, hedging your money can be thought of as “insurance” on investments to protect against potential losses. In finance, it is used as a strategy or tool that limits potential losses on financial assets and ensures long-term growth for a company.
Sports betting is the same way where the bookmaker or you can set up hedges for bets that protect both sides of an outcome.
When the book sets up a hedge, they do so via a payout feature. This allows you to cash in early while the bookmaker avoids the risk of paying you what you would receive if all the bets in your bet slip were settled.
This article takes a closer look at sports betting hedging and how it can be done. Before we get started, you need to know that there is a difference between a hedge bet and an arbitrage bet. Hedge betting is legal while arbitrage betting is illegal and will get you banned.
How to insure yourself A tennis bet
Hedging in sports betting is commonly done in tennis betting. One of the most famous tennis bets you will see is the one where the underdog player is eliminated in the first set but still plays the 2nd and 3rd sets.
To hedge this bet, place two separate bets: one on each of the two outcomes. A common way to do this is to hedge with an alternative bet on that game. So let’s say you bet on the underdog player at +3.5 sets in a tennis match. After retiring in the first set, you should place two bets: one where the player will win the 2nd or 3rd set outright, and one where he will win the second set but lose the third. You can also hedge with an alternative bet or match on the same tennis event to limit your losses if the first bet fails. By hedging the chance of a loss, you gain a smaller return than if you just let that bet go and hope for the best.
How to insure yourself A basketball bet
Hedging a basketball bet can be a bit more difficult as there are more outcomes for the spread. One of the best ways to hedge a basketball bet is to place two separate bets on the spread and the other on the over/under.
Let’s say for you NBA fans, you’ve watched this game on TV and think the San Antonio Spurs are going to win, but they’re only favored by 1.50. If you take a closer look at this game, you realize that Tony Parker is out with an injury. After further researching this team, you find out that their backup center is injured and won’t be playing either.
What you want to do is hedge that bet by adding a handicap. In this case we give the point distribution right away and then add -5 for the spurs. This gives us a new line from San Antonio -6.5 (1.50 + 3.00 = 4.50)
You now want to put this new line on the Spurs. If they lose, you win both bets: one for Spurs +1.50 and the other for San Antonio -6.5 (-110).
How to insure yourself A baseball bet
Hedging a baseball bet can also be difficult as there are so many different outcomes in the game itself.
Let’s say you bet the Yankees 1.50 on a game where A-Rod is expecting a big day. Ahead of the first pitch, A-Rod hits the disabled list with a hamstring injury and won’t play for at least two weeks. You can’t let this bet rest, so you should hedge this bet.
One of the best ways to hedge a baseball bet is to place a separate bet on either side of the line you are betting on. In this case, we want to take our original bet and add the bet to the same bet: A-Rod doesn’t play and another does where it does.
So let’s look at our original line. We want to bet the Yankees 1.50 where A-Rod lands a hit and is on the starting lineup. After some research, we see that his hamstring injury is not serious, and he will be batting third in this game against a righty pitcher.
Since we know he won’t score in this game, we can add a bet he won’t score in the same bet. In this case, we’d bet A-Rod goes 0-4 with four strikeouts.
As mentioned, the Yankees are about 1.50 favorites to win this game and you can bet on either side of that line now. You now have a bet on the Yankees winning -1.50 and one on A-Rod going 0-4 with four strikeouts at +650.
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