The Art of Hedging Sports Bets to Minimize Risk

Sports betting is more than just picking winners—it's about strategy. One of our favorite strategies is hedging. We'll discuss the power of hedging, a tactic revered for its ability to manage risk and ensure profits, regardless of the game's outcome.
Hedging Sports Bets to Minimize Risk

As you start off in sports betting, you quickly learn it’s not just about picking winners. It’s as much about strategy as it is about prediction. One such strategy, known for its effectiveness in managing risk, is hedging bets. 

Hedging, in the context of sports betting, is a method used to guarantee profits or minimize losses regardless of the outcome of a sporting event.

Of course, walking away with a fat stack of cash is everyone’s goal, but there’s a bit more to it than just that.

Understanding Hedging in Sports Betting

Hedging is essentially an insurance policy. Bettors use this strategy to protect themselves against potential losses or to ensure a profit from their bets, regardless of the game’s outcome.

It involves placing a secondary bet on a different outcome from the original wager. The idea is to create a situation where, no matter what the result of the event is, you’re either minimizing your losses or locking in a profit.

When to Hedge Your Bets

Deciding when to hedge a bet is crucial for its success. There are a few scenarios where this strategy can be particularly beneficial—

  • Locking in profits. If you have a bet that’s close to winning but still at risk due to upcoming events in the match or game, hedging can secure a portion of those profits.
  • Mitigating losses. In situations where your initial bet is likely to lose, placing a hedge bet can reduce the amount you’re set to lose.
  • Guaranteed profits on futures bets. Hedging is commonly used in futures markets, where you might have placed a bet on a team to win a championship at the start of the season. As the season progresses and your team’s chances look good, you can hedge to ensure you walk away with a profit, no matter the final outcome.

You may find that there are other reasons more applicable to your betting style that work with hedging. It’s not an end-all-be-all strategy, but it does come in handy from time to time.

How to Effectively Hedge a Bet

To hedge a bet effectively, you need to calculate the optimal amount to wager on the hedge bet.

This calculation considers the odds of the original bet and the hedge bet, aiming to maximize profit or minimize loss.

Tools and calculators available online can help with these calculations, but understanding the basics of how these numbers work together is beneficial.

Our favorite tool for determining if the hedge is worth it is the HedgeCalculator. It’s simple, and all you have to do is enter the original bet, the original odds, and the hedge odds. This tool even breaks down the various strategies you can use for your hedge bet so you can turn out the most profit or minimize the most losses.

Practical Example of Hedging

Imagine you’ve placed a $100 bet on the Tampa Bay Buccaneers to win the Super Bowl at odds of +500 (implying a $500 profit if the Bucs win). As the season progresses, the Bucs make it to the final, and their odds of winning have significantly shortened. 

At this point, you could place a hedge bet on the Kansas City Chiefs, our theoretical opponent, ensuring that you will make a profit no matter who wins the big game.

Obviously, this strategy doesn’t work in every scenario, and it’s not only applicable to the futures scenario we mentioned. However, this should give you a good idea of how you can use it to your advantage.

The Pros and Cons of Hedging

Hedging your bets can be a smart move, but it’s not without its downsides. 

Pros of hedging sports bets—

  • Guarantees profit or minimizes loss. This is the big one everyone gets fixated on. Hedging allows you to lock in profits or reduce potential losses, making your betting outcome more predictable.
  • Risk management. It acts as an insurance policy against unpredictable sporting event outcomes, safeguarding your investments.
  • Flexibility in betting strategy. Offers the ability to adjust your betting approach based on how events unfold, providing strategic control. Obviously, this is better suited for those who don’t like to set it and forget it.
  • Opportunity in futures bets. Particularly useful in futures markets, ensuring that long-term bets can still bring in profit regardless of final outcomes.

Cons of hedging sports bets—

  • Reduced maximum profit. While hedging secures a profit, it also means you won’t win as much as you could if you didn’t hedge. Less risk means less reward.
  • Requires additional investment. To place a hedge bet, you need to invest more money, which might not always be readily available. You may want to keep a portion of your bankroll dedicated to hedging.
  • Complex calculations. Effective hedging requires understanding the odds and performing precise calculations to determine the optimal hedge bet amount.
  • Not always necessary. Hedging might be an overused strategy in situations where confidence in the initial bet should have led to holding your position without the extra safety net.

Is this betting strategy always called for? Definitely not, but it’s an excellent tool to know about and have in your back pocket for a rainy day.

Is Hedging and Arbitrage the Same Thing?

Not exactly. Of course, many sports bettors believe the two are the same, but there are some stark differences between the hedging and arbitrage betting. We’ve laid out a brief table that highlights the key differences between the two approaches.

Feature Hedging Bets Arbitrage Betting
Purpose To manage risk by minimizing losses or securing profits. To guarantee a profit by exploiting odds discrepancies.
Timing Reactive, often used later in a betting scenario. Proactive, requires upfront research to identify opportunities.
Execution Involves betting on different outcomes within the same event. Involves placing bets on all possible outcomes across different bookmakers.
Profit Margin Can vary widely, potentially large depending on initial bet. Usually small but guaranteed due to tight margins between odds.
Risk Low to moderate, depending on the strategy’s success. Very low to none, as profits are mathematically guaranteed.
Requirements Requires an initial bet that looks likely to win. Requires access to multiple bookmakers and quick execution.
Strategy Focus Risk management and profit locking. Risk-free profit making through odds analysis.

Reduce Your Risk and Start Hedging

Hedging bets is an advanced betting strategy that, when used correctly, can significantly minimize risk and secure profits. It requires a good understanding of odds, a knack for timing, and the discipline to make calculated decisions.

While it may not be the right strategy for every bet or bettor, it’s a valuable tool to have in your betting arsenal for those moments when securing a sure thing is within reach. 

The goal of hedging isn’t just to win big—it’s to win smart.

 

Matt Brown


Head of Sports Betting and DFS

Matt’s love for sports betting and daily fantasy sports, coupled with a deep understanding of football, hockey, and baseball, shapes his innovative thoughts on Hello Rookie. He has a B.S. in Aeronautical Computer Science and a M.S. in Project Management.