Hedging A Spread Bet

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Hedging A Spread Bet
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Is it ever a good idea to hedge a bet?
Is arbitrage a form of hedge betting?
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Hedging is one of the most hotly contested topics in sports betting. Full-blown debates are common among bettors over whether it’s a viable strategy.
Conceptually, hedging is simple. It involves placing a bet on the opposite side of an existing wager after the odds on the existing bet have shifted. Hedging is a risk management strategy bettors use to either lock in a guaranteed profit or soften a loss.
Knowing when or if to hedge, how much to hedge, and the math behind hedging is a bit more complicated. As sports betting options expand, so too have the number of potential hedging opportunities. BettingUSA tackles the tough questions regarding hedging in this guide.
The best way to illustrate how hedging works is through a simple example. Imagine that before the current NFL season, a bettor had placed a $100 wager on the Buffalo Bills to win the AFC Championship at +700.
By luck and skill, the Bills weave their way to a divisional title, win their first two playoff games, and are now facing the tough Kansas City Chiefs at Arrowhead Stadium. The odds on the Bills to win the game and the AFC crown are +200. The Chiefs are -240 favorites.
At this point, the bettor has a decision: let it ride on the Bills for the chance to win $800 or mitigate risk by placing a hedge bet on the Chiefs moneyline. The bettor decides to take the cautious route and hedge but isn’t sure how much to bet on KC. Let’s consider a couple of scenarios.
Scenario #1: Bettor hedges $50 on KC at -240
Well, that isn’t much of a hedge. The bettor realizes that to recoup the original $100 bet (if the Bills lose), the payout on Kansas City must be at least $100. At -240 odds, bettors risk $240 to win $100. So, the bettor must risk more than that to guarantee a profit. $400 seems like a reasonable figure.
Scenario #2: Bettor hedges $400 on KC at -240
A Bills victory is still the ideal result in this scenario, but the bettor profits regardless.
The above example illustrates an important point: The more the odds shift in favor of the original bet, the less the bettor must wager on the opposite side to guarantee profits.
Imagine instead that the Bills were -240 moneyline favorites and the Chiefs were +200 dogs. The bettor would only have to wager $50 on Kansas City to cover the original bet.
Scenario #3: Bettor hedges $50 on Kansas City at +200:
Any wager above $50 on Kansas City (within reason) would result in guaranteed profits, regardless of the winner.
There is a multitude of situations where hedging might make sense. We examine a few of the most common ones.
Hedging against futures has always been popular, and for a good reason.
Futures are among the highest-risk, highest-reward wagers in sports betting. Even the best teams are often heavy underdogs to win conference championships or league titles. In a league of 32 teams, a 10% chance (+900) to win it all signifies an outstanding team. Conversely, a middle-of-the-pack team may kick off the season at +3,000 odds or longer.
Imagine sweating a Cinderella team at +4,000 odds for an entire season, only for them to lose the Championship game. That’s a daunting prospect for most bettors, which is why they’ll bet the other finalist to lock in meaty guaranteed profits.
Some bettors will even take this a step further and begin hedging in the semi-finals or divisional rounds. By then, the odds on their pick will have dropped enough that generating a profit regardless of the outcome won’t be difficult. They may not score the mammoth payday had they just let it ride, but they still stand to win a significant payout in any outcome.
Big, multi-leg parlays have exploded in popularity due to their lottery-style appeal and a heavy marketing push by online sports betting operators. Rarely a day goes by when the airwaves aren’t flooded with stories of lucky bettors converting a few morsels into an Emperor’s feast.
Even more so than futures, big parlays are extremely risky propositions that usually result in players going bust but occasionally award life-changing payouts.
Bettors that hit all but one leg of a parlay win absolutely nothing. Hitting six out of seven legs generates the same profits as zero out of seven – zero.
The primary condition for hedging parlays is to win all the earlier legs. Order matters, which is why some bettors play it safe with the early games and save the longer shots for last.
As the final legs approach, hedging becomes a more viable and attractive option. Hedging against the last leg of a massive parlay will often guarantee hefty profits.
Imagine a parlay consisting of 6 NFL point spreads, all at -110 odds. Using FanDuel Sportsbook as an example, the payout on a $10 ticket consisting of six -110 NFL spreads is $474.13.
Now imagine the first five legs hit, and the bettor faces a decision: Ride the wave knowing there’s a 50/50 chance the parlay will lose or hedge. Many bettors will take their chances.
Up the wager to $50 and the parlay to 11 legs at -110 for a potential $61,335.06 payout, and the bettor might change their mind.
In the past, bettors were lucky if they could place in-game wagers at halftime or during commercial breaks. Now, in-play betting technology has evolved to where odds are available after nearly every action on the field or court.
Live odds shift dramatically during a game, presenting opportunities for bettors to lock in guaranteed profits. For example, if a team’s pregame line is +140 and they start off hot, the bettor may be able to snag the other side at better than +140 odds. This strategy won’t result in massive payoffs and is certainly not a path to becoming a long-term winner, but it does help casual bettors preserve their bankrolls.  
There is a ton of variance in sports. Trades, injuries, last-minute pitching changes, and even weather conditions can significantly impact the odds.
A bettor may place a futures bet that goes great for the first eight weeks, only for a star player to go down with a season-ending injury. Similarly, a pregame total may take a downward turn if the weather forecast projects a blizzard.
Suddenly, a bettor’s wager doesn’t look very good. If they’re quick, they can grab the other side and only lose the vigorish. Or if their team was winning before disaster struck, they may even be able to lock up a few pennies. Emphasis on quick, as sportsbooks will swiftly change in-play lines to account for significant game condition changes. Sportsbooks may even suspend betting until they readjust.
Fair warning, it’s perilous to hedge against point spreads and totals that move in an unfavorable direction. By betting the other side, bettors run the risk of getting reverse middled . For instance, if a bettor has the OVER 43.5 on a Saints-49ers game, and the in-play over-under slips to 37.5, this is not a time to hedge the UNDER. Bettors will either lose the vigorish, or if the final score lands between 38 and 43, they’ll lose both wagers.
Betting the over isn’t much better, but at least there’s a chance both wagers will win.
Bettors are under no obligation to place hedge bets on the same sportsbook as the original bet. If anything, always hedging on the same book is a poor strategy.
Even for highly efficient markets like the NFL playoffs, slight odds variations will exist among books. The difference between a -165 and a -170 moneyline may not sound like much, but small discrepancies add up over time, especially if the hedge amounts are large.
Bettors can find significant value by shopping in-play hedge bets. In-play odds are calculated on the fly and are far less accurate than pregame wagers. Odds discrepancies tend to be greater across books, opening opportunities for hedge bettors to find more value.
The point is to always incorporate line shopping as part of your sports betting strategy, even for hedging.
Many hedge bettors want to ensure equal profits, regardless of the outcome, but don’t know how. Luckily, the math behind this zero-risk strategy is simple.
The key is to ensure that the hedge bet has the same payout as the original bet. For instance, if a bettor backs the Tampa Bay Buccaneers to win the Super Bowl at +600, and the wager size is $50, the potential payout is $350 ($50 original bet + $300 profit).
The beauty here is that bettors don’t even have to calculate the original bet’s payout. Sportsbooks do it for them. This is how it looks on FanDuel:
As fortune would have it, the Bucs make the Super Bowl and are up against the Buffalo Bills. The moneyline on the Bills is +120, and the bettor is looking to hedge an amount so that no matter who wins, the payout is the same.
To find the answer, calculate how much the bettor must risk for a $350 payout on the Bills. First, find the implied probabilities of a Bills win, using one of two formulas:
Implied probability (negative American odds) = -(odds)/((-odds) + 100)
Implied probability (positive American odds) = 100 / (odds + 100)
The rest is simple. Just take the implied probability and multiply that by the payout on the original bet. In this example, the implied probability is 100 / (120 + 100) = 45.45%. Multiply that by $350 (the payout on the original bet) to get $159.09. That’s the amount bettors will need to stake on the Bills.
The game result is now irrelevant, as the bettor will lock up equal profits. To illustrate:
Bettors who take this route can relax and enjoy the game, knowing that the outcome’s financial implications are neutral.
Sportsbooks stay in business because they charge a tax called vigorish on every bet. Unfortunately, the vigorish on futures, parlays, and in-play lines – all the wagers bettors might consider hedging – is already particularly high.
Bettors pay an additional tax when they hedge. Barring an egregious error, bettors do not find hedges priced at fair market value. As a result, the bettor’s expected value will take a minor hit.
Hedging can also be cash-intensive, especially if the initial bet featured long odds. Imagine if the payoff on a $100 Super Bowl future is $5,100 (+5000 American odds). To ensure even profits on both sides, bettors will have to reach deep into their wallets – over $2,500 deep on a -110 line.
Bettors may not have that kind of expendable cash, and even if they do, the house limits may present an obstacle.
The other downside of hedging is obvious. By hedging, bettors cap their potential upside, sometimes significantly. 
There is no clear-cut answer to this question. Professional or otherwise serious bettors with large bankrolls are best off never hedging due to the loss of expected value. Hedging is usually the wrong mathematical decision.
On the other hand, casual bettors may view hedging as a valuable tool. They may not use it if the risk-reward ratio is small, but if the payout on the original bet is life-altering, then it’s a weapon they should probably be wielding.
Other casuals may just decide to throw caution to the wind and let it ride on even the most outlandish payouts. It’s a personal decision bettors should base on a combination of math and individual circumstance.
What they should not base the decision on is pure feel. Gut instinct is a poor motivation for hedging.
Sharp sportsbooks use advanced data and analytics and account for hundreds of variables to create their lines. In-play lines are less accurate but still a better indicator than a queasy stomach. Licensed sportsbooks may not all be sharp, but they do copy lines from the sharpest sportsbooks.
Bettors who find a mathematical discrepancy like an in-play line that is 20 cents better at one book than any other, now that’s a different story. They should consider hedging that line.
Hedge because the math and circumstances make sense, not on feelings.
Arbitrage betting is not the same as hedge betting, although the two share some common characteristics.
For the most part, lines across various US sportsbooks are similar. That’s because they often copy the lines and subsequent movements from sharp sportsbooks. However, books occasionally formulate their own opinions or are slow to update their lines. This is especially common for smaller, less efficient markets and derivative markets. After all, it’s impossible to always be on the ball when dealing with thousands of lines daily.
Arbitrage opportunities arise when there is a substantial deviation between two sportsbooks. It allows bettors to bet one side on one sportsbook and the other side on another to guarantee profits. For example, imagine PointsBet offered an alternative point spread of +180 on the Rams +7.5, and BetMGM had their opponent, the Cardinals, listed at -7.5 -160.
In this scenario, the bettor can place a $100 bet on the Rams and a $170 bet on the Cardinals to lock up a small profit regardless of the outcome. It’s not the same as hedging because the odds haven’t shifted. Bettors are just taking advantage of an odds discrepancy between two books.
There are some drawbacks to arbitrage betting. Mainly, true arbitrage scenarios seldomly arise. More frequently, line shopping helps bettors reduce the house edge, not eliminate it. Secondly, arbitrage betting often leads to sportsbooks limiting bettors. Use it sparingly.
On the other hand, hedge betting is perfectly acceptable, and sportsbooks welcome it. If it wasn’t, books wouldn’t offer the early cash-out option , which is a form of hedging.
Bettors will have no issue placing hedge bets in any state with legal online sports betting. Hedging at retail books is also possible, but it may be more challenging to capture favorable in-play lines.
The more online sportsbooks a state supports, the better, as bettors will have more opportunities to find well-priced hedge bets. For a synopsis of the legal status of sports betting in your state, start with BettingUSA’s guide to licensed sportsbooks in every state .
Robert Dellafave is an expert sports bettor, professional gambler, and advocate for the fair treatment of sports bettors.
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The objective of a hedge in sports betting is to guarantee your bet won’t lose by betting both sides of the same game . 
For example, let’s say that you placed a wager on the Lakers -4 .5 against the Knicks. The game starts, and you start getting nervous about your Lakers bet and are unsure if they will actually cover this spread. This is when you would hedge – you would place a wager on the Knicks +4.5 so that way, no matter what happens you would have a bet that won. 
Wagering the correct dollar amounts is the essential step to executing a hedge. This is where the OddsJam Arbitrage & Hedge calculator comes in handy. In short, the calculator takes into account the odds on either side of your hedge. Then, you can modify the dollar amounts of your hedge based on how much money you’ve got staked on a particular outcome, and the calculator will give you a dollar amount that guarantees a mathematical profit (or slimmer loss) if you bet on the opposite outcome.
When you break it down to the most basic level, hedging removes the “sweat” from a parlay or individual bet, because no matter the outcome you’ve already locked in a profit.
There are multiple ways a sports bettor can hedge a bet. The Lakers/Knicks example from earlier would be an example of doing it during a live game. You were on the Lakers -4.5, but as you were watching the game you decided you wanted to back the Knicks instead and took them at +4.5. No matter what outcome happens here, you are protected and guaranteed to have one bet that wins. 
Another way you could hedge is if the odds/spread change before the game starts, and you bet the other side before the match begins. Using the same Lakers/Knicks game as an example: instead of betting the Lakers spread, let’s say you bet their moneyline at -150 odds. As the day goes on, you start to get nervous about your Lakers bet and decide you want to hedge out of it and bet on the Knicks moneyline. If you can find Knicks moneyline odds at +150 odds or better, you could hedge out without losing any money and possibly guarantee a profit! 
Lastly, there is a way you can hedge a bet, both live or pre-game, that could have both bets win. This is a sports betting strategy called middling , and is detailed further in another post. The way middling works is you would still bet both sides of the same game, but instead of betting the same spread (Lakers -4.5/Knicks +4.5) or a teams moneyline, you would instead bet a spread or total at two different numbers that would guarantee at least one hits, with the option of both possibly hitting as well.
So, for example, let’s stick with the Lakers -4.5 bet. You bet on the Lakers -4.5, and you notice that as the day goes on you could actually bet the Knicks at +6.5. There are three scenarios here:
You should hedge in sports betting in two situations.

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Despite their deserved reputation as speculators' tools, you can also use spread bets to reduce short-term risk. This is known as hedging. Here are three short examples.
1. You are planning to buy some FTSE 100 shares in three months' time when a big slice of dividend income comes in from your existing portfolio. But the FTSE is rising fast. You're worried that if you wait three months before buying, you'll have to pay a fortune for the shares. So you could hedge with a spread bet. Place an up bet on the FTSE now. If the index rises over the next three months, your cash profit from the bet when you close it out, plus the dividend income you receive, should allow you to buy roughly as many shares as you could have done had the dividend been paid three months earlier.
2. You hold a large position in a company. You believe that the next set of results will be poor, and you'd like to take advantage in the short term. But long-term, you're happy to hold Co
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