You’ve probably heard of the term, but have you ever wondered how to hedge a bet? Basically, it involves placing a counter bet against your original bet to either limit your potential losses or in some cases even guarantee a profit.
However, in cases where you can guarantee a profit, you should be aware that it will always be less than if your original bet were still to win. Most commonly, people hedge against a long-term futures bet with a short-term bet.
A hedge, not just in betting but in life, is where you take action to limit or eliminate the potential downside. When it comes to betting specifically, it involves wagering on the opposite outcome of an original bet, known as “hedging” against it.
There are two reasons for doing this, as our betting guide will show you in more detail:
Usually, you will hedge a short-term bet against a long-term “futures” wager. For example, let’s say that at the start of the season, you bet on Manchester City to win the Champions League at relatively long odds when there were still 32 teams that could conceivably win it.
Fast forward eight or nine months, and Man City have made it to the final against Real Madrid. Your original bet is agonisingly close to winning, but it could still fall at the final hurdle.
In this situation, you might want to hedge your bet by placing a bet on Real Madrid to win the match. That way, no matter what the outcome is, you will still receive a payout.
Now that you know what a hedge is in betting, let’s take a look at how much you should hedge, which is the most important thing. If you don’t get the amount right, you could wind up guaranteeing losses or still incurring a level of risk.
Here’s how calculate it with a $100 bet if the original bet on Manchester City were 61.00:
| Original bet: | $100 on Man City at 61.00 |
| Payout if original bet wins: | $6,100 ($6,000 profit + $100 stake returned) |
| Hedge bet: | $1,000 on Real Madrid to win the final at 3.00 |
| Payout if hedge bet wins: | $3,000 ($2,000 profit + $1,000 Wager) |
| Total stake (original + hedge): | $1,100 |
| Total profit if original wins: | $5,000 |
| Total profit if hedge wins | $1,900 |
In this example, you are guaranteed a profit, it’s just that your profit will be less than half of what it would have otherwise been if your hedged bet wins. In many cases, you will need a bigger stake to guarantee a profit, and in other cases, you may only be able to break even or limit your potential losses.
With the explanations, definitions and examples out of the way, let’s take a look at the pros and cons of hedge betting:
The example I’ve used above involves hedging a long term bet against a short term one. But can you hedge both outcomes at any Betting Exchange of a short term bet against each other?
The answer - not really, I’m afraid.
If, for instance, you were to bet on Manchester City to beat Real Madrid in the game, you wouldn’t be able to hedge that bet by also betting on Real Madrid. Doing so would always guarantee a loss, as the bookies look to protect their profits.
Though hard to find, there is sometimes a price difference that you can take advantage of on the odds offered by two different bookies. However, this goes beyond hedge betting and is a more advanced strategy known as arbitrage betting or “arbing”. It is also listed as one of our reasons why to use multiple sportsbooks.
Thinking about hedging a bet that you’ve already placed? Just so you know, it isn’t always going to be easy.
Before you decide to give it a go, make sure to read through our top five expert tips:
The maths required to calculate if a hedge bet is worth it, and how much you need to hedge isn’t easy. Fortunately, there are plenty of hedge betting calculators available online to do the hard work for you with instant results.
Sometimes there will be multiple options for hedging your bet, and you can be biased against a certain bet. For example, if you feel that your original or hedge bet has more chance of winning, you can weigh your stake more in favour of that outcome. It increases the risk of the otherwise, but increases the potential profit of your stronger outcome.
If you get to the stage where you are hedging bets often, having multiple sportsbook accounts helps. This is because you can compare all available sportsbooks to find the best possible odds for both your original and hedged bets.
Knowing when not to hedge is just as important as knowing when to do so. Don’t hedge for the sake of it - take the time to assess if it really is worth your while.
Hedging with a live bet is possible, however, the odds move faster and the calculations are tougher; therefore, it’s not something we recommend for beginners or even intermediate bettors. See our guide to in play betting explained for more info.
To summarise, hedging is the act of taking action to reduce or limit the risk of your original action. When it comes to betting, it effectively means that you can bet on the opposite outcome of your original bet to either reduce your potential losses on one side or guarantee a profit no matter what. If you want to know if hedging your bet is worth it, and how much you need to stake, a hedging calculator is your best friend.
A hedge bet is when you place a wager on the opposite outcome of your original bet to guarantee a profit or reduce your losses. Typically, you hedge against a futures bet with a short-term bet as the event approaches.
For example, if you bet on the Celtics to win the NBA Championship at the start of the season and they make it to the finals against the Warriors, you might place a counter bet on the Warriors. This counter bet is large enough to guarantee a profit regardless of which team wins, though it may be a smaller profit.
To calculate a hedge bet, divide your original stake by the hedging odds and subtract one. For ease, you can use a hedging calculator. For more details and guides, visit SportsGambler.com.
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