Hedging Bets: Sportsbetting 101

• In sports betting, a “hedging bets” is the strategy of betting against an existing wager in order to: guarantee a profit, minimize losses, or create a “middle”.
• When deciding if/how aggressively to hedge, there are a lot of factors to consider.
• Though overuse will meaningfully cut into winnings, hedging certainly has a place in any bettor’s strategy. Read more to find out how.

What goes on in a sportsbook isn’t all that different from what goes down on Wall Street. After all, what’s a sports wager but an educated guess, on imperfect information, whose outcome relies on others? Of course, when you buy stock, you're not obligated to hold it for the remainder of the company's life. You’re free to cash out - pocketing profit or taking losses - at any time. 

Traditionally, betting markets didn’t offer an easy way to “get off of” a bet. These days, a lot of markets have a real-time “cash-out” option. If you’re winning, you get a smaller (depending on how well it’s going) payout. If not, you recoup some of your original stakes. 

What to do? You’ll want to consider “hedging”.

How to hedge a bet

Hedging bets is a strategy in which a bettor bets against his/her original wager, to either guarantee a profit or minimize losses. Let’s say you make a straight bet ($55, to win $50) on the Oklahoma City Thunder (+11.5 points, -110) against the Charlotte Hornets. OKC gets off to a hot start and leads by twelve after the first quarter. At this point, you’re 23.5 points to the good. Easy money!

However, the Hornets get their act together in the second, outscoring OKC by thirteen, and go into halftime with a one-point lead. 

You’re in decent shape, up 10.5 points. Maybe you’re perfectly happy seeing this thing through. Or.. maybe something in that second quarter gave you the creeps. The halftime line is Hornets (-5.5, -110). You can simply bet the Hornets, and create a scenario in which you cannot lose. In fact, you’ve created sports betting’s Holy Grail: the “middle”:

• If the Thunder lose by fewer than 12 points, OKC (+11.5) wins;
• If the Hornets win by at least 6 points, CHAR (-5.5) wins;
• BUT… if the Hornets win by at least 6 but fewer than 12 points, both OKC (+11.5) AND CHAR (-5.5) win

In hindsight, that second-half collapse you feared was, in fact, coming. The Thunder are outscored by 17 in the second half, and lose the game by 18. 

Sadly, you don’t hit that magical middle, but you wind up breaking even (minus vig). Maybe, in that spot, you don’t hedge at halftime, hoping that OKC finds its first-quarter mojo. Once you see that’s clearly not happening, you can use an in-game bet during the third quarter to get Charlotte -10/-11, and bail on your original bet.

The next night, you grab another underdog: Pistons (+12.5, -110), on the road against the Heat:

This time there’s no early lead. Miami leads by seven after the first quarter - though the Pistons do claw back a point in the second, and trail by six at halftime.

The second-half line is Miami (-6.5). That’s (-12.5) for the entire game. Maybe memories of the night before make you jump at the chance to escape with an assured $5 loss. Let’s say, though, that you decide to stand pat and see how the third quarter plays out. To your shock and delight, the Pistons somehow hold the Heat to eleven points, while scoring 22.

Ahead of the fourth, with the Pistons up five, you see an in-game Miami (-4.5) line. At this point, you hedge. If Miami comes back, you’ve got an eight-point window (Miami winning by 5-12 points) in which both bets win. And, wouldn’t you know it….

With the exception of any bet that pays out a life-changing sum, for my money, there’s no more satisfying feeling in sports betting than hitting a middle. 

“Zero-Sum” Hedges

Most of the time (like in our +11.5/-11.5 example), hedging is a “zero-sum proposition”, in which one - but not both - sides can win.

This is the case with futures bets, which are simple “yes or no” propositions. All the same, these bets still offer excellent hedging opportunities.

Say, for instance, you think that Indiana will reach the Sweet 16 of the NCAA Tournament:

Reaching the Sweet 16 requires a team to win its first two tournament games. Indiana, as a #12 seed, is an underdog against #5 St Mary's in the opening round. If they get through, they face the winner of #4 UCLA and #13 Akron, with the Sweet 16 - and your money - on the line. 

Assume that Indiana meets UCLA, and UCLA is a -300 favorite. If you’re comfortable letting it ride without a hedge, your possible outcomes are:

• Indiana beats UCLA, you get $249 (your original $30, plus winnings of $219)
• Indiana loses, and you’re out your original $30

If you hedge by betting $150 on the UCLA money line (to win $50), now:

• Indiana beats UCLA, you’re up $69 (winnings of $219 minus the lost $150 hedge)
• Indiana loses, you’re up $20 (winnings of $50 minus the loss of your original $30)

Hedging A Parlay

Hedging is perfect for when you’ve got a parlay that’s one leg from paying out, ideally with the last game taking place after the others are resolved.

Take the following basketball parlay, consisting of a pair of Tuesday night NBA games, and a college game, taking place the next day:

Assume that the two NBA legs win. At this point, you're hoping that Towson can keep things close against Wake Forest so that you can collect almost $140 (your $20, plus $119.16 in winnings). Maybe you feel great about this. If you’ve got any doubts, though, you can just go the other way:

In this case, you’re still invested in Towson covering (your winnings would be $64.19), but will win $30 ($50 in winnings, minus the loss of the original $20) if they don’t.

Should You Hedge Your Bets?

There’s no easy answer here. It depends on many factors:

• How much have you risked?
• How much will you win?
• How important is the win to your lifestyle? 
• How willing are you to take risks?
• What is the talent gap between “your team” and the opposition?
• How likely is your team to maintain its performance? 
• Has something (e.g. ejection) changed the game dynamic?

The Bottom Line

Hedging has a place in any successful bettor’s strategy. However, many factors play into whether to hedge, there’s no universal rule as to when to do it.
A word of caution, though: as with anything, moderation matters. Understanding how to hedge a bet and practicing will give you peace of mind, but overdoing it will meaningfully cut into your winnings.