Hedge betting, or hedging, is a popular betting strategy that involves managing risk and ensuring profits, regardless of the outcome of a sporting event.
In this guide you will find how hedging works, how to find opportunities and gives you some real life examples.
Let's dive in!
What is Hedge Betting?
Hedge betting is a strategy where you place bets on different outcomes to either secure a profit or minimise a potential loss. This strategy gets its name from the financial term ‘hedging', which refers to the practice of safeguarding against losses.
In short, hedge betting protects you from the risks of losing money by placing bets on another outcome simultaneously. In the paragraphs below you will find some real-life examples of hedge betting on cricket and football.
Example of Hedging in Cricket
Cricket, being a much-loved sport in India, provides the perfect backdrop for understanding hedge betting. Let's consider an example where India is playing Australia in a One Day International (ODI).
You decide to bet INR 1,000 on India to win, with decimal odds of 2.50 (meaning you stand to win INR 2,500 if India wins).
As the match progresses, India has a good start. Seeing this, the live betting odds for Australia to win change to 6.00. You decide to place an INR 2,000 hedge bet on Australia. Here's how your potential outcomes look:
- If India wins, you gain INR 1,500 (INR 2,500 – INR 1,000 initial bet) but lose INR 200 from your second bet. Your net profit is INR 1,300.
- If Australia wins, you lose your initial INR 1,000 bet on India but gain INR 1,000 (INR 1,200 profit – INR 200 initial bet) from your second bet. You break even.
Example of Hedging in Football
The Indian Super League (ISL) provides a good opportunity for hedge betting in football. Suppose at the beginning of the season, you bet INR 1,000 on Mumbai City FC to win the league, with decimal odds of 5.00.
As the season progresses, Mumbai City FC and FC Goa emerge as strong contenders. With five games left, the odds for FC Goa to win the league are now 8.00. You decide to place an INR 600 hedge bet on FC Goa.
The outcomes now look like this:
- If Mumbai City FC wins, you gain INR 4,000 (INR 5,000 – INR 1,000 initial bet) but lose INR 600 from your second bet. Your net profit is INR 3,400.
- If FC Goa wins, you lose your initial INR 1,000 bet on Mumbai City FC but gain INR 4,200 (INR 4,800 profit – INR 6,00 initial bet) from your second bet. Your net profit is INR 3,200.
This strategy ensures that no matter the outcome, you still walk away with a profit.
Of course, this hedge only works if either Mumbai City FC or FC Goa goes home with the title. If another team emerges at the top of the table, you will lose your money.
Because of this, it is extremely important to only make hedge bets when you are nearly certain that one of your two outcomes will be successful.
Takeaways
Hedge betting can be an effective way to manage risk and guarantee a profit from your bets. Rather than predicting who will win, you're playing the odds to ensure favourable results.
While hedge betting can reduce your losses, it also limits your potential winnings because you're spreading your bets. It's all about striking a balance that suits your betting style and risk tolerance.
