What is Hedging and Hedge Betting?

A look at Hedge Betting in sports

Types of Bets

You may have come across the term Hedge Betting on your adventures into the world of sports bets. If you are unsure of what it is or need a refresher of how it all works, then read on. Naturally when it comes to sports betting you have that bit of unpredictability factor. Even in a tennis match between a strong favourite and an underdog, while the likelihood is that the favourite will win, even the top seeds and top players have off days and that’s hard to legislate for. That is where Hedging can help.

What is Hedging

Hedging is a form of betting coverage where you place a subsequent bet (or bets) on different outcomes of the same event. The whole point of it is to try and create situations where you will be guaranteed some profit regardless of the actual outcome of the event.

An example of Hedge Betting

So let’s say you have placed a bet on Simona Halep to beat Johanna Konta in a tennis match. Halep is the favourite at 1.36 and you back her to win the match outright. But there is always a chance that the underdog Konta could have her day and so you would back Konta at 3.0 odds.

But you are not just going to throw the same stake at each outcome. You need to achieve a balanced return and so you have to calculate how much stake to put on each outcome. So, for example, you would put a smaller stake on the Konta option at the longer odds and a bigger stake on the favourite.

The point of this makes a balanced book where no matter which one wins, you will be picking up around the same profit. We will explain the calculation of how to achieve a balanced return later on.

Where Hedging Works

You can use Hedge Betting strategy on almost anything but for simplicity and for those taking their first steps, we would recommend using it on sports matches where there are just two outcomes. Like in tennis, darts or snooker. That will keep things relatively simple as you play with your system before going on to things like trying to hedge football matches where there are three outcomes (the draw).

But you aren’t just limited to single matches to employ Hedging strategy. You can use it for tournament betting as well. You could, for example, spot a nice big priced winner to come through and win the PDC Darts World Championship, an underdog say at 31.00. They make it all the way through to the final where they would be meeting up with the pre-tournament favourite who is at 1.65.

You can then calculate a Hedge Bet to back the favourite in that match so you would still pick up profit no matter the outcome.

Calculating a Balanced Return

Hedge Betting is all about balance and balanced returns. Working with decimal odds there is a really simple formula that will allow you to calculate how much stake needs to go where.

Rule:
Divided the return of the initial bet by the odds price of the opposite outcome.

You had placed a 10 stake at 31.00 on Underdog to win.
£10 x 31.00 = £310
The odds on the other outcome of the Favourite is 1.65
So £310/1.65 = £187.87

Initial Underdog Bet: £10 x 31.00 = £310 minus both stakes (£10 + £187.87) = Total Profit £112.13
Subsequent Favourite Bet: £187.87 x 1.65 = £310 minus both stakes (£10 + £187.87) = Total Profit £112.13

So that final number after dividing the return from the initial bet by the price of the opposite outcome gives you the amount of stake that you need to place on the Favourite to create a Hedge Bet situation. Now, no matter which of them wins the Final, you would collect roughly the same profit of 112 (and change). It also means that you can sit back and relax without worrying about the outcome of the event.

Non-Balanced Returns

OK, so you probably have spotted something in all of that. Namely that you don’t have to create a situation when the profit coming back is equal. Of course not and that is actually the beauty of Hedge Betting. For example, you get to the situation above and you look at the match and think, there is no way that the favourite is going to lose (this is all on your own judgement!).

You can adjust the Hedge Betting opportunity here to increase the value of how much profit you would get back from the Favourite winning. You could up your stake from £187.87 to say £250 on the favourite. That does nothing to change the risk on your original bet of £10. So by playing with the advantage of the Hedge Bet, you could create this:

You had placed a £10 stake at 31.00 on Underdog to win.
£10 x 31.00 = £310
The odds on the other outcome of the Favourite is 1.65
So £310/1.65 = £187.87

Initial Underdog Bet: £10 x 31.00 = £310 minus both stakes (£10 + £187.87) = Total Profit £112.13
Subsequent Favourite Bet: £187.87 x 1.65 = £310 minus both stakes (£10 + £187.87) = Total Profit £112.13

But you decide to increase the stake on the Favorite from 187.87 to 250. Then you would end up with this scenario:

Initial Underdog Bet: £10 x 31.00 = £310 minus both stakes (£10 + £250) = Total Profit £50
Subsequent Favourite Bet: £250 x 1.65 = £412.50 minus both stakes (£10 + £250) = Total Profit £152.50

So by increasing the stake on the favourite in that situation then you could actually raise the return of the most likely outcome of the event, but still pick up some profit if your original bet were to crop up. So that would be a pretty positive situation really given that it would have been hard to pick up that kind of return off a favourite winning that match without risk.

By Hedging, you have eliminated the risk of just biting your nails over one single outcome for a match or tournament.

Worth the Work

Hedging can take a bit of work and this isn’t something that you are just going to rush into at the last minute. But the applications of it are fantastic but ALWAYS double check your calculations. You need the math to all add up or else you could be out of pocket a hefty chunk.

The opportunities to use Hedge Betting really are extensive. You can really get in-depth in situation where you could create a situation of the first half of a football match ending under 1.5 goals (not too of an uncommon occurrence) and use the correct score market option of 0-0, 1-0 or 0-1 to create hedge bet situations. This is obviously more complicated than just doing your Hedge Betting with two options.

Hedging and Arbitrage

So there is a basic overview of how Hedge Betting works. Now some punters may see the similarities between Hedging and Arbitrage Betting. But there are differences. Arbitrage betting is where you play with odds on the different outcomes of a single event at different bookmakers. With Arbitrage betting, you are kind of looking for the same balance but to get it you are looking for discrepancies between the odds on the same outcome at different bookmakers. For example, one bookmaker may have Rafael Nadal at 1.35 to win a match where another may have him at 1.50.

So you would use the bigger the odds there and try and find the biggest odds at a different bookmaker on the opposite outcome to beat the bookmaker’s margins. An Arbitrage situation is created when you try and get the combined bookmaker margin on the two outcomes, down under 100%. That is why you can’t do it at one bookmaker because their margin will always be around 105%.

With Hedging, you don’t have to do that extra legwork of looking around at different bookmakers because you can do it all in one place.


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