Hedging Bets on Favourites

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Upsets are not uncommon in sports. They happen often enough to make contests exciting and keep bettors on their toes. That’s why it is often a good idea when wagering on a favourite to take out a little insurance policy, just to make sure an otherwise well-studied bet doesn’t completely implode. The practice of using a counterbalancing bet to protect one’s primary wager is know as “hedging.”

As might be guessed, the word “hedge” used in betting derives from the same term “hedge” used in horticulture, where a line of shrubs serves as a protective enclosure. Hedging is one of the oldest strategies applied to wagering on horse races and, when used properly, it can be one of the most powerful tools for playing races profitably. There are also ways to apply hedge bets to other sports, as some of the examples below aptly demonstrate.

One of the most basic versions of a horserace hedging strategy is to wager on the favourite to win and then place bets on the same horse to place and show. If the pick wins, all three bets will pay out, but just in case the result is a second or third place finish, it is still possible to recover the entire stake and make a small profit.

For example, to back a horse with an £18 stake, a player might divide the wager into £2 to win, £4 to place and £12 to show. If the win, place and show payoffs are £10.20, £5.30 and £4.00, respectively, an outright win will pay £44.80 in total. A second place finish would pay £34.60, and a third place showing would yield £24. In all cases, a profit is made.

Of course, putting the full £18 on the horse to win would have been worth £91.80, but that’s the opportunity cost of the hedge. To guard against the worst case scenario, some potential profit must be sacrificed.

A similar method of hedging is “dutch betting.” Rather than back a single horse to win, bets are placed on the two top-ranked entries in proportions that ensure roughly the same amount will be won no matter which of the two comes out on top. For example, with £18 to wager, bet on the 4-to-1 favourite to win with £10 and dutch the 5-to-1 nearest competitor with £8 to win in order to generate payoffs of £50 or £48, respectively.

For sports in which there only two competitors vying for a win, hedging bets on the favourites are also possible. A simple example of this for football wagering would be to back the favoured team to win and dutch the draw, just in case the underdog doesn’t upset but manages to pull even.

In spread betting or Asian handicaps, gaps in the odds sometimes create hedging opportunities. At one bookmaker, Arsenal might be favoured to win their next match by 1.5 goals, but at another bookmaker the difference is only 0.5. By laying a wager of £10 against Arsenal at the first shop and backing them with £10 at the second, both bets win if the outcome is an Arsenal victory by one goal. Any other outcome will result in loss of the vigorish (i.e., the bookmaker’s commission), but not any significant portion of the £20 total stake.

One other excellent way to hedge bet on favourites is by taking advantage of live or “in running” bets. Begin by backing the favourite prior to the start of the match at the best odds available. Then, during the match as the favoured side pulls ahead, watch for the odds on the underdog to rise considerably and make a small hedge wager accordingly. Then, if the result doesn’t turn out as originally predicted, all will not be lost.

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