If you’ve ever made a bold sports bet, whether it be a future, parlay or picking a major upset, you know the anxiety of hoping the bet will cash.
If it does, you stand to make a major profit. But is there something you should do in case it doesn’t?
Yes. That’s where hedging comes in.
By hedging a bet, you can guarantee yourself a profit and reward yourself for making a strong bet with the original wager.
Let’s break down how it is done.
What Is Hedging a Bet?
Hedging is a sports betting strategy where a bettor makes a calculated wager on the opposite side of their original bet, generally in order to guarantee a profit.
Hedging usually occurs when the likelihood of the original bet winning has increased, therefore making it worthwhile to take the other side in case the bet eventually loses.
When hedging, a bettor is hoping to either:
- Guarantee a profit
- Reduce or potentially eliminate any loss on the original wager
Let’s break down an example from the Super Bowl Odds at WynnBET this season.
The Cincinnati Bengals were +7500 to win the AFC entering the 2021 season, so let’s say that you placed a $10 wager for them to win the conference (Bet $10, win $750).
Now, the Bengals are in the AFC Championship Game against the Kansas City Chiefs, but they are seven-point underdogs and +265 on the moneyline against the Chiefs (-330 on the moneyline).
By hedging this bet, you can guarantee yourself a profit in this scenario. If you aren’t too confident in the Bengals to win, you can still profit. In this scenario, you can hedge by placing a wager on the Chiefs, depending on how much you are willing to sacrifice if your original bet hits.
For example, you could wager $330 on the Chiefs to win $100, that way if Kansas City wins, you still come away with a profit of $90. However, in that scenario your Bengals +7500 bet would net you $420 instead of $750.
Here’s the full breakdown:
If you don’t hedge in this scenario:
- Bengals win: Win $750
- Bengals lose: Lose $10
If you do hedge in this scenario:
- Bengals win: $750 - $330 = $420
- Bengals lose: $100 - $10 = $90
By hedging this bet, you are guaranteeing a solid payout of at least $90 on an original wager of just $10 from prior to the season.
When Should You Hedge Your Bet?
There are several factors to consider when determining when you should hedge a bet.
- How much you’ve risked and how winning can affect your life
- Risk willingness
- Calculating the correct mathematical decision to guarantee a profit
When making a bet, the odds give bettors an implied probability that the outcome will occur. For example, using the game above, the Bengals had a 1.32 percent chance of winning the AFC prior to this season.
With their moneyline odds being at +265, oddsmakers are giving them just a 27.40 percent chance to upset the Chiefs, while Kansas City has a 76.74 percent chance of winning, based on the odds.
In order to make the correct decision mathematically, you would need to believe that there was a 76 percent or betting chance that the Chiefs would win the AFC title game. This has to be evaluated on a case-by-case basis, because you could wait until the odds for Kansas City change in game, but if the Chiefs get out to an early lead, then you’d likely need to risk more in order to hedge the original bet.
Which brings us to the risk aversion part of hedging.
If you are willing to take the risk that the Bengals win the game straight up, or that the Chiefs’ odds will drop during the AFC title game, then your time to hedge will be different than someone who isn’t willing to take that risk.
If you are able to hedge and come away with a life-changing amount of money either way, then hedging is probably the right decision to make. However, if it is a smaller bet and you’d rather see the original outcome occur, it may be more fun to just let the bet ride.
The short answer is there is no perfect time to hedge, it varies from person to person and situation to situation.
However, if you want to mathematically guarantee yourself a profit, then hedging is a great way to do that.