Pilot Heidi Kennedy
Head of Casino Operations
Head of Casino Operations
Good morning, afternoon or evening, depending on where in the universe you find yourself. Today, our cosmic exploration is all about hedging your bets. Perhaps you’re here because you have simply heard of hedging a bet and want to know more. Perhaps you know a little about it but want to get up to scratch, so you can apply this strategy yourself.
Either way, I’m here to guide you through the choppy meteor-ridden waters of cyberspace to help you find the right betting strategy for you. Oh, and before we begin, this is your captain speaking.
To give you the best idea of what hedging your bets means, I think it’s important that we first understand what odds are. Hedge betting requires odds in order for everything else to work. Now, I’m well aware that most of you will already know that odds are the things you click on and then get told how much you win if your bet is successful. But it’s important to remember that they also represent a prediction made by the bookmaker.
This is the case whether we’re talking about American, decimal or fractional odds. They can all be calculated into a percentage using a calculator – or your own maths if you’re a cyberspace interstellar whiz kid. This percentage is the prediction. So, 25% means they think that team or player has an even chance of winning, for instance.
They’re important, because figuring out whether hedging bets is right for you is all about assessing those odds. Doing so successfully requires you to be able to assess the accuracy of that prediction, which is the case where you’re hedging a bet or implementing any other kind of strategy.
Alright, so we’ve gone through our odds basic training, right between anti-gravity practise and putting your helmet on the right way round 101. Now onto the task at hand. To put it simply, hedging bets is where you place bets on opposing markets.
The most common example of how this is utilised is in a 1X2 market. Here, you have to back one team, or the other, with the final option being a draw. The way bets usually work is that you back one team when you think the odds are right and if they win, you win. Hedging bets sees you backing the other team too. You could also back the draw possibility if you want and if you think it suits that situation.
To put it really simply, hedge betting is where you back contradictory bets for any kind of benefit. We’ll be going into specific examples shortly, but the reasons generally fall into two camps. One is to try and ensure a profit, and the other is to minimise loss.
These possibilities can come in a huge variety of situations and can often have very different thought processes behind them, but that’s always the purpose of hedge betting. Of course, knowing whether or not a bet will benefit from hedge betting comes down to your potential returns. And whether it’s wise also comes down to the quality of the predictions behind those odds. For instance, if you had gotten great odds on team A – in other words, the bookmaker’s odds show they’ve vastly underestimated them in your opinion – there are few situations in which hedging your bet would be a smart choice.
But hedging does not require wisdom, so if you back the markets, that’s you hedging your bet. It doesn’t require a degree in astroengineering to understand, especially with a hedging bets calculator to help you out.
The phrase to hedge your bets is most commonly used in reference to minimising losses. It’s broken out of the betting world and into the mainstream. However, in the universe of betting, it can also mean securing a profit. In fact, that is arguably the most strategically sound use of this technique.
First off, for this scenario to work, you would need an accumulator that has already overwhelmingly been successful. I know, I know, there’s no magic formula here. Let’s say, for instance, that you have backed the Detroit Red Wings to win the season, and then make it to the final. At this point, a lot of money is riding on that final game. It could be thousands of dollars, for what was originally quite a small stake. Hypothetically, you are looking at a $8,000 win, and let’s say you bet $50.
In this instance, let’s say that their opponents have 1/3 odds, which translates to a 75% probability. You could back them for $3000 to win (remember that someone must win the Stanley Cup Final) with a return of $4000. In this scenario, whoever wins, you will profit. Even with that extra stake, you would profit $4950 if your first pick wins, and $950 if your second pick wins.
There’s a few questions to ask yourself before making this decision. The first is whether the last game is worth the risk because you’re reducing your potential winning here to ensure a victory. The second is whether or not the odds provided on the second pick are fair, in both return and implied probability. The third is whether you might make more from a cash out if you really don’t want to risk it. What really matters is whatever you choose, there’s so much strategic flexibility, you’ll be more nimble than a moonbounce.
The other example I’m going to show you today does instead focus on minimising potential losses. Let’s stick with the NHL and this time use a game between the CHI Blackhawks and the CLB Blue Jackets as our example. The line here is for a draw no bet – so you don’t need to worry about a dead heat complicating matters – gives the CHI Blackhawks 1/1 odds and the CLB Blue Jackets 5/7 odds. This translates to 50% and 58.3% odds respectively.
Perhaps you’re wondering why that number is higher than 100%. Well, unlike many of the secrets of the universe, this one I can explain. You see, that’s the overround, also known as the advantage the bookmaker has over the bettor. It’s how bookmakers consistently make money on tough to predict markets. It also means that hedging your bets in this scenario would mean a loss.
Let’s say you bet on the Blackhawks but then changed your mind. You decided that actually, you didn’t think they were going to win, or at least, you aren’t as sure they will win and would like to mitigate that risk. Well, you can so by betting on the opposite team, which is how you hedge your bets. It’s very flexible too, as you can adjust your stakes to give yourself close to the exact level of risk you want.
If you bet $100 on the Blackhawks, you’d be looking at a $200 return. If you bet another $100 on the Blue Jackets and they won, you’d get a $171 return. Your total stake here would therefore be $200, meaning a Blackhawks win would see you break even, and a Blue Jackets win would see you lose $29. Really, this would only be useful if you had a giant drop of confidence in your original pick.
More common would be for you to bet something like $50 on the Blue Jackets alongside your $100 original bet. This second bet would have a return of $87. In this scenario, your total stake would be $150. This would mean that if your first bet won, you’d be up $50, and if the second bet won, you would lose $63. In other words, this would allow you to seriously lower your potential losses while still having the opportunity to win should you change your mind about the level of risk you’re comfortable with.
If you’re confused about how to work out these numbers to see if you should consider hedging bets, a hedging bets calculator is easy to find and does all the hard work for you.
The reason understanding hedging bets is so important is that it comes down to having another tool at your disposal. That’s what makes this betting cyberspace such an invigorating place to explore. You’re almost always able to adjust and hedging a bet is exactly that – an adjustment.
Just like cash outs, build a bet or many other strategies from using the Martingale system on baccarat to arbitrage betting, being able to hedge your bets it’s all about allowing you to bet the way you want to. If you decide you want to make your accumulator a sure thing, or ensure that you’re risking less potential losses than your original stake, then this is an option. It’s like a backup bottle of rocket fuel – hopefully you won’t need it, but you’ll sure be glad it’s there if you ever do.