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Hedging Bets on Favourites

Published on: 20/11/2016

Betting on sports involves making predictions but sport can sometimes be very unpredictable. Every contest will have a favourite and an underdog but no matter how certain an outcome may seem, upsets can still happen. That is what makes sports so exciting to watch but it is also what makes betting for profit so tricky.

Many bettors talk about “sure-fire bets” or “bankers” - bets that are easy to predict and will almost certainly guarantee a win. But in reality, there is no such things as a sure-fire bet. And that is why many punters sometimes hedge their bets just in case the favourite fails to deliver.

Hedging basically means placing a counter bet as an insurance policy. The term derives from the way in which a gardener protects an area by planting a hedge around it. It is one of the earliest known betting strategies and was first applied to horse race wagering. When used correctly, hedging can be a useful strategy and can it help punters to minimise their losses over time. However, it can also reduce potential profits, so it must be used in a productive and well thought out manner.

For example, if a player has €18 to place on a horse that is priced at 5/1, they could place an each-way bet (2 x €8.50 bets). An each-way bet is actually a form of hedging.

The winnings would be as follows (based on an each-way price of 1/4 the odds for places 1, 2 and 3):

Of course, if the horse wins then both bets pay out resulting in a return of €74.25 which gives a profit of €56.25 (€74.25 - €18.00). However, if the selection finishes second of third, the return is €20.25, giving a profit of €2.25. In both cases, a profit is guaranteed as long as the horse finishes in the top three. But remember, if the horse finishes outside of the top three, the bet is lost.

While the each-way bet is a ready-made way of hedging a bet in a horse race, other sports offer similar bets that offer the bettor a safety net. For example, the “Draw no Bet” in football gives you your money back if the favourite does not win and the game is drawn.

As well as these ready-made bets, punters may also build their own hedges by combining different bet types. This can take skill and is a practise best applied by gamblers who have a good level of experience.

Another type of hedging is known as “Dutch betting.” In this case, instead of backing a single horse to win, the player places bets on the top two entries in a race. The bet is split in a way that ensures that the return will be roughly the same whichever horse wins. For example, an €18 wager could be split so that €10 is placed on the 4/1 favourite and €8 is placed on the 5/1 second favourite to return £50 and £48 respectively.

Eagle-eyed punters may even spot discrepancies in different bookmaker’s odds which can be exploited by backing both sides of an event where there only two possible outcomes to guarantee a small profit. This can sometimes happen in events where the competitors are closely matched and is known as an arbitrage.

Published on: 20/11/2016 © Bet Bind