You’ve probably heard the phrase ‘hedge your bets’ before, but actually not ever used it in its common context: sports betting.
Mind you, it’s thought that the original use of the phrase dates back to 1672 – specifically, George Villiers’ play The Rehearsal. It’s doubtful that George was thinking of backing both teams to score in a football game at the time given that the sport wasn’t really invented for another 200 years.
But the notion of hedging your bets remains nearly 400 years later after its first usage, and the idea of limiting the risk of your sports bets is as valid today as it’s ever been.
What is Hedging Your Bets?
Let’s imagine that you have bet on Liverpool to win the Premier League at odds of 5/1. You’ve put £10 on, so there’s a possibility of £50 winging its way to you if the Reds oblige.
Now let’s imagine that with five games left of the season to play, Liverpool are three points clear at the top of the table. Clearly, they are now going to be favourites with the bookies to lift the trophy, and those odds will have undoubtedly shortened.
As a punter, you might think that you don’t have a decision to make, and instead can let your wager run until the bitter end: if Liverpool win the league, your bet pays out. If they don’t, it doesn’t.
Let’s consider a scenario where a key Liverpool player gets injured during the run-in, while Manchester City embark on an excellent run of form and win five games out of five. Your confidence in your bet may start to waiver… so what can you do about it?
This is where the beauty of hedging your bets kicks in.
How to Hedge Your Bets
Remember, you have bet £10 on Liverpool at odds of 5/1, leaving you a potential prize pool of £50.
Now let’s consider our options. If we don’t want to let our bet run – and the title battle is a two-horse race between Liverpool and Man City – then we have another potential choice: backing City as well.
The benefit of this is that, essentially, we can balance out our original bet to create a return covering both outcomes – if we have a bet on both teams, then whether it’s Liverpool or Man City that get their hands on the trophy, one of our bets wins.
Of course, the numbers still have to stack up.
Remembering that we have bet £10 on Liverpool to win £50, we can now use some of our potential prize money to hedge our bets:
- £10 on Liverpool at 5/1
- £20 on Man City at 2/1
Our potential outcomes are as follows:
- If Liverpool win the title, we win £50 minus our £20 stake on City. That’s £30 returned in winnings.
- If City win the title, we win £40 from our bet on them minus the £10 we have staked on Liverpool. Again, that’s £30 returned in winnings.
So by hedging our bets, we have bagged ourselves a £30 return and eliminated the risk of a losing bet by covering both outcomes at different times.
Sure, we might have won a little more by letting our Liverpool wager run to the end, but what’s that old saying: a bird in the hand is worth two in the bush.
What is Back to Lay Betting?
If you bet at a betting exchange like Smarkets or the Betfair Exchange, the concept of hedging your bets has a different name: back to lay.
In our Liverpool example above, we hedged our bets by wagering on two different market runners: Liverpool and Man City. But with back-to-lay betting, we can hedge a single runner instead.
This time, let’s say we’re wagering on the Grand National ante post market.
We back Ahoy Senor on the Betfair Exchange at 23.00 with our £10 stake.
The horse has a fantastic season, wins an eye-catching race at the Cheltenham Festival and his odds tumble to 14.00.
Now, we can lay some or all of our stake back to hedge our bets and create a situation where we still get a return if Ahoy Senor wins, but lose nothing if he doesn’t.
- Step 1 – back Ahoy Senor at 23.00 (£10 liability)
- Step 2 – lay Ahoy Senor at 14.00 (£130 liability)
- Outcome 1 – Ahoy Senor wins (£220 win – £130 liability = £90 net)
- Outcome 2 – Ahoy Senor loses (£0 liability after laying back our stake)
Hedging a bet and back-to-lay are essentially the same thing, it’s just that the way you manoeuvre your money around the market changes.
Should You Hedge Your Bet?
Now here’s the million dollar question: should you hedge a bet?
The answer is the same as when punters ask should I cash out my bet? The answer is… it depends.
Good bettors only place positive expectancy, i.e. value, bets in the first place. If you know that you’ve taken value odds, why would you hedge or cash out? You should have complete confidence in your pick achieving what you want them to.
On the flipside, sometimes things happen that are beyond our control – Liverpool might have been a value price at 5/1 to win the Premier League, but if they suffer a spate of injuries to key players then maybe that value is eroded.
But once you know about hedging your bets, concerns about whether to cash out become a thing of the past if a market only has two or three options – you can hedge the other live runners and keep your own bet alive, whereas with cash out you exit your bet and take the offer put forward by the bookies.
Hedging gives you more control than cashing out, so if you feel as though your original bet wasn’t good value enough or has lost some value along the way, this is usually your smartest next step.