You might have heard the phrase to “hedge your bets” when people talk about having two options, and not knowing which one to go for.
You could “hedge your bets” on picking two dishes from a menu because you just can’t decide which one to have. You know at least one will be right!
Instead of going all-in on one option, you go for both – knowing that you’re guaranteed a reward no matter the outcome, even if it’s smaller.
Well, the concept of hedging comes from betting – specifically horse racing – where punters would try to cover their risk by betting on outcomes other than their original selection.
In this guide we’ll walk you through the idea of hedge betting and how you can do it effectively. We’ll offer up an example so you can see it in action. Hedge betting isn’t easy and it requires good judgement and a huge slice of luck to nail a profit every time.
With that in mind, let’s dive into the world of hedging here!
Hedge betting explained
Hedge betting is the principle of spreading your risk across multiple outcomes in a sports event, so you win profit no matter the result. At least, that’s the gold standard for hedge betting.
Sometimes punters will leave some risk exposed and hope that they’ve covered enough outcomes to win a bet. We’ll look at that more closely later in this guide.
In effect, the point of hedging is to minimise risk and lock in profit.
It’s common in horse racing betting, football betting, and when betting on individual tournament sports like golf and tennis.
Hedge bet examples
The best way to truly understand hedge betting is to look at some examples. Let’s start with football. Say you bet £10 on Brazil to win the World Cup at odds of 5/1. You stand to make £50 profit if they win.
Now, you hold your nerve and Brazil reach the final, where they are favourites to beat Belgium. You could stick with your single bet and hope Brazil win. Or, you could bet £10 on Belgium to lift the trophy, at odds of 3/1,
Suddenly you win no matter the result:
- Brazil win the World Cup final = £50 profit + £10 stake = £60 return
- Belgium win the World Cup final = £30 profit + £10 stake = £40 return
Of course, because you’ve placed two opposing bets, one of them has to lose. So, you definitely lose £10. Yet your overall return will either be £50 or £30. Not bad!
Hedging your bets is great when there are only two outcomes and the odds swing wildly enough to make it worthwhile. However, it’s not easy to judge this and comes with risk. What if Brazil had failed to make it out of the group stage? You’d have simply lost your original bet.
Another issue with hedging comes when there are multiple outcomes, say in horse racing betting. Punters will often bet on a favourite to win and bet each way on an outsider at higher odds. But what about all the other runners?
You leave yourself exposed to a lot of risk when hedging in horse racing, unless you try and cover most of the field. But, if you do this, you spend a lot of money placing bets that may not pay out anything at all.
Football hedge betting involves waiting for the odds to change
How to hedge bets effectively
If you plan to use hedge bets in the future then it’s important you understand the work and the risks involved. For a start, you can’t simply bet on a tennis player to win a match, wait for their odds to shift, and then bet on the opponent. What if the odds don’t move in your favour? You’ve then committed to half the hedge and have no way of escaping the first bet, unless you cash out.
What happens, too, if a big outsider wins a race where you’ve backed three other horses? You could suddenly see yourself suffering a heavy loss from more than one bet, just because you didn’t hedge the right horse.
That’s why it’s important to do your research when hedge betting and make the smartest picks possible. It’s also imperative you follow the odds, because you have to time the hedged bet to perfection. Miss your moment and that chance to lock in profit could disappear.
Paddy’s Tip: Start Small
If you’re new to hedging but want to give it a go then the best thing to do is start small.
Bet a small, affordable amount on a two-way result. Say, an NBA game or a tennis match. Basically, anything where there isn’t a draw.
Find odds that you’re sure will shrink when the event gets underway. For example, you know a particular tennis player always starts strong, so their 2/1 price to win will likely fall. Then, once those odds have fallen, back the opposing outcome at higher odds.
Now you’ve locked in a “green book” no matter the outcome.
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