What is hedging in sports? How does hedging work

Hedging is a betting strategy in which a wager is placed on an outcome that conflicts with a previous wager to reduce the risk of losing or to guarantee a profit. While a hedge bet can be the exact opposite of the original wager, that isn’t necessarily the case in every circumstance. But a hedge bet always conflicts at least in some way, shape, or form, thus creating multiple outcomes by which a loss can be minimized, or a profit can be guaranteed.

In sports betting, hedging a bet means you make an additional wager different from or perhaps even the exact opposite of an already existing wager to reduce the risk of a net loss or guarantee a net profit. Hedging creates multiple outcomes through which a bettor can be successful, making the combination of the wagers that are in play safer than the original, singular wager. While the overall profits aren’t maximized in a hedging situation, the chances of a net loss are reduced or eliminated.

There are various forms of hedge betting, including futures, parlay, and live betting. Hedging a futures bet means you wager on a different outcome (a team to win a championship, for example) when your original wager is still in play (the team you initially bet on is still in contention). Hedging a parlay bet means you wager on an individual outcome that is opposite from a leg in a parlay, such that you guarantee to win either that individual wager or the overall parlay. Hedging in live betting means you wager on the other side to win (the opposite of your initial bet) after the point spread and/or money line has moved, such that the risk of loss is minimized or a profit is guaranteed regardless of the eventual outcome.

You should likely hedge a bet when the odds on an initial wager have improved such that making a conflicting wager will reduce the risk of a net loss or guarantee a net profit. If you are feeling confident enough in the initial wager or risky enough to hold out hope for a maximum payout, hedging is not the way to go. It is, however, the smart choice when you want a safer way to ensure a net profit even though it is smaller.

On the futures market, it may be a good idea to hedge a bet when a team you wagered on prior to the season finds itself in the championship game or close to one. For example, if you bet on the Phoenix Suns at +3000 to win the NBA title prior to the 2020-21 campaign you could hedge that bet by making a wager on the Milwaukee Bucks at +130 to beat Phoenix in the NBA Finals. The size of your hedge bet on the Bucks relative to the size of your initial bet on the Suns can be decided upon such that a profit is guaranteed regardless of which team wins. On the parlay market, it may be a good idea to hedge a bet when 4 out of 5 legs on a 5-team parlay have already hit. You could then hedge that parlay by making an individual bet on the 5th and final team to lose. Thus you could guarantee a profit by winning either the original parlay (if team 5 wins) or the hedge bet (if team 5 loses).

The key to successfully hedging a bet is understanding how the hedge bet relates to the initial wager and how you can guarantee a profit. In the previous example, if you bet $30 on the Suns to win the NBA title at +3000 you would be in line for a $900 profit if it ends up being successful. What investment could you/should you make on a hedge bet on the Bucks? You don’t want it to be $900, because the overall bet would be a wash if the Suns win (you would profit $900 on Phoenix but lose $900 on your Milwaukee hedge bet). You do want it to be at least $24 because that amount guarantees you a profit ($24 on the Bucks at +130 would pay out more than $30, thus covering the initial $30 bet on the Suns). You likely would want to make the hedge bet considerably more than $30 in this situation, but it is just an example to show the importance of calculating what you must put at stake to lock in a profit. To make that calculation, visit any legal sportsbook for the latest odds and obviously select whichever book offers the highest payout.

We have already listed a few examples of hedging bets as a way to explain when the hedging strategy should be employed. Now let’s go more in-depth into hedging on the futures, parlay, individual, and live-betting markets.

Hedging a futures bet is when you make a new wager that conflicts with a futures ticket that is still in play, such that you are guaranteed to make a profit regardless of an event’s outcome. If you have a future bet on a team to win the title and that team reaches the final, you can then bet on the other team to win that final game or match to ensure that you will have a winner no matter what happens. For example, if you bet on the Tampa Bay Rays at +1500 to win the World Series at some point during the 2020 Major League Baseball regular season, you could then bet on the Los Angeles Dodgers at -175 to beat the Rays once that World Series matchup was set. Obviously, you would decide on the amount of your hedge bet on the Dodgers relative to the size of your Rays futures bet such that you are assured of a profit regardless of which team wins the series.

Even if your future bet has not been confirmed as an outright winner, if it remains in play long enough such that there is only one other outcome or few other outcomes, a hedging opportunity is created. Hedging gives you multiple outlets via which to guarantee a profit, and it all starts with the initial futures wager. That is arguably the main advantage of futures betting.

Hedging an individual bet on a game or match can be an effective way to guarantee a profit as long as you are vigilant about tracking the live odds movement on a certain game. If a team or player that you initially bet on pregame gets off to a strong start and experiences an improvement in the live odds to win, you can hedge that bet by wagering on the opposite side. For example, you might have bet on Rafael Nadal at +100 pre-match to beat Novak Djokovic. If Nadal takes the first set 6-1, Djokovic could become a +250 underdog. You could then place a hedge bet on Djokovic to win the match, the amount of which would depend on whatever guarantees a profit (if you initially bet $20 on Nadal, anything more than an $8 bet and less than a $20 would prevent any possible losses).

Hedging a bet through live betting relates to guaranteeing profits or reducing the risk of losses on an individual wager, as discussed above. Tracking the live odds movement of a game or match and then calculating the amount of the next wager is essential for making an effective hedge bet. In the above example, you can hedge to guarantee a profit because the match began in exactly the way you wanted it to, and the odds have shifted in favor of the player who you initially picked to win. However, you can also hedge a bet if a team or player you supported at the start gets into a precarious position. If you bet $100 on the Rockets and they get off to a poor start, or someone gets injured such that their chances of winning are all but over, you could hedge by betting on their opponent. Obviously, the live odds would have shifted such that you now have no way to make a profit, but if you play it correctly, you can reduce the losses regardless of the outcome to less than the $100 you would have lost on the initial Rockets bet.

Hedging a parlay bet is when you make an individual wager that conflicts with one leg of an existing parlay. It is a strategic play when all but one leg of the original parlay has already hit. Thus you can guarantee a profit by winning either the final leg of the parlay or the hedge bet. For example, you might have a five-team money line parlay with the Celtics, Hawks, Kings, Lakers, and Thunder as winners. If the Celtics, Hawks, Lakers, and Thunder have already won, you could hedge the parlay bet by picking the Kings to lose their game against the Pacers. If you staked $30 on the parlay, you would want to bet enough on the Pacers to ensure a payout of more than $30 on that individual bet to cover the $30 you would lose if the parlay is doomed by a Kings loss to the Pacers.

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