Hedge Betting

Tuesday, September 13th, 2011
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Hedge betting is seen as a punter’s friend by many. In fact, it is nothing of the sort. Hedge betting involves making a ‘saver’ bet in case your original pick falls short. Essentially, it is a type of runner-up prize when your main bet does not win and involves betting on the event that is most likely to scupper your original bet.

 

It is a strategy used in all forms of gambling and also in the stock market (which is gambling, regardless of what Wall Street aficionados tell you). Two of the most popular sports to bet on; football and horse racing, are also the two most common sports for hedge betting.

 

Hedge Betting

Hedging is an easy to understand money management technique used by punters.

Making The Bet

In general, a punter will hedge a bet when they are closing in on an accumulator bet win. For example, a punter may place a bet on five different horses to win in five different races. Traditionally, bookies are delighted to see accumulator bets because their odds are often astronomical so have little or no chance of coming in. If a punter decides to place a £10 on five horses at the following odds:

 

  • Horse A @ Evens = £10 x 1/1 = £10 + £10 stake = £20
  • Horse B @ 3/1 = £20 x 3/1 = £60 + £20 stake =£80
  • Horse C @ 9/2 = £80 x 9/2 = £360 + £80 stake = £440
  • Horse D @ 5/2 = £440 x 5/2 = £1,100 + £440 stake = £1,540
  • Horse E @ 2/1 = £1,540 x 2/1 = £3,080 + £1,540 = £4,620 total

 

As you can see, a £10 stake turns into a hefty £4,620 return @ 461/1 total odds.

 

Hedging The Bet

Now, if a punter has seen his first four horses coming in, he is sure to get twitchy. He understands that the 4/6 favourite is the main threat but felt the 2/1 shot offered better value. However, with £4,620 on the line, he is understandably more nervous than he was before making the bet. He could decide to hedge his bet which would essentially mean placing a reasonably large bet on the favourite as this is the most likely horse to ruin his accumulator.

 

If the punter wagers £1,200 on the 4/6 favourite in the final race, one of three things can happen.

 

1: The 4/6 favourite romps home and the punter wins £800 (£1,200 x 4 = £4,800/6 = £800) minus the original £10 stake for a total profit of £790. Not bad.

2: The 2/1 horse originally backed by the punter wins for a total profit of £4,620 minus the £1,010 bet which equals £3,610. Fantastic.

3: Some other horse wins meaning the punter is down £1,010 because it is an accumulator which is essentially win or bust. Disaster of epic proportions.

 

The Bookie’s Friend?

The fact of the matter is, hedge betting is good for the bookies because you not only give them back some money, there is the chance that your big gamble could fail. If you are interested in hedge betting, horse racing is probably not the sport for it because in theory at least, any one of the horses in the field could win. Therefore, if there are 10 horses in a race and you bet on one main horse and a hedge bet, there are still 8 others that can ruin your bet. What are you going to do, bet on them all? Football matches are a better means of hedge betting as there are only three outcomes in general: Win, lose or draw.

 

A big part of gambling is to have the courage of your convictions. Hedge betting is seen by serious punters as something of a cop out. When there is value in the bet, it is worth taking. For example, if you have a 10 football team accumulator worth £7,000, the first 9 teams have done the business and you need Manchester City to beat Wigan for example. You could bet on the draw and Wigan if the odds make sense. However, if Man City are the big favourites, it makes no sense to back against them now. Gambling is also all about getting value, and there is no value betting £2,000 on an event you don’t think will happen just to guarantee a win of some sort.

 

If you feel the need to hedge bet then do it, but don’t go against the general principles of gambling when doing it which include getting value for your bet and sticking by your choices after careful consideration.

 

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