What is Hedge Betting?

Hedge betting refers to placing multiple bets on different outcomes on a single sport event to return a profit or reduce the risk of the bet regardless of the actual outcome of the sport event.

An excellent way to hedge our bets is to lay the exact same bet on an exchange to lock in our profit/loss regardless of the actual outcome of the sport event.

There are 3 ways that we can hedge our bets to guarantee ourselves a profit without worrying about the outcome of the event we’re betting on.

Profit by Arbing

The first way to reliably profit is from arbing. Typically, a bet on the bookmaker will have lower odds compared to the same bet on the exchange. For an example, in Chelsea v Man U, a bookmaker might have Chelsea to win at 2.0 odds, but the exchange can have Chelsea to win at 2.1 odds.

However, sometimes the bookmaker’s odds can be higher than the exchange’s odds. This is sometimes due to the bookmaker’s software updating a little slowly. When this happens, it is referred to as an arb. Arbs can be found on every sport offered by the bookmaker and exchange.

Example - in a popular horse race Royal Ascot 15:35, Coral have Black Beauty to win at 2.20 odds. On an exchange, on the other hand, have Black Beauty to win at odds of 2.0. Since the bookmaker’s odds are higher than the odds on the exchange, it is considered an arb.

We place £50 on Black Beauty to win on Coral.

We then hedge our bet by laying £55 on Black Beauty to win on the exchange.

If Black Beauty wins the race:
Coral pays us out £50 x 2.20 = £110, including our stakes. Excluding stakes, Coral would’ve paid us a total of £110 - £50 = £60.
On the exchange, we would lose our lay bet, £55 x 2.0 = £110, including their stakes. Excluding stakes, we would’ve lost £110 - £55 = £55 exactly.
Coral = +£60
Exchange = -£55
Total profit/loss = +£5

If Black Beauty loses the race:
Our bet with Coral loses, losing us £50.
Our bet on the exchange would’ve won £55, which was our lay stake.
Coral = -£50
Exchange = +£55
Total profit/loss = +£5

So, by hedging our bet, we would’ve guaranteed ourselves £5 regardless of whether Black Beauty wins the race by arbing.

Profit by Trading

Another way to profit by hedge betting is to trade. Trade here refers to placing a bet before the game starts, and then hedging that bet when the odds drift in our favour.

Normally during a sports event, odds for bets in the event drift constantly due to events happening the game. For an example, if Liverpool scores a goal and takes the lead, the odds for Liverpool to win will have dropped significantly. On the other hand, if Liverpool concedes a goal, the odds for Liverpool to win will go up sharply. Taking advantage of odds movement, we can hedge our bets to guarantee ourselves a profit.

Example - in a popular fixture Chelsea v Liverpool, the odds offered by Coral for “Under 2.5 Goals” is 2.40. We place a £50 stake on the bet.
At half time, the game is still 0-0, and the odds for “Under 2.5 Goals” is now 1.5 on the exchange. We can then look to hedge our bet. We place a £80 lay bet on the exchange on “Under 2.5 Goals” at 1.5 odds.

We placed a £50 bet with Coral on “Under 2.5 Goals”.
We have now hedged our bet by laying £80 for “Under 2.5 Goals” on the exchange.

If the game ends with less than 3 goals (Under 2.5 goals):
Coral would’ve paid us £50 x 2.40 = £120 including stakes. Excluding stakes, Coral would’ve paid us £120 - £50 = £70.
Our bet with the exchange would’ve lost, losing us £80 x 1.50 = £120 including stakes. Excluding stakes, we would’ve lost a total of £120 - £80 = £40.
Coral = +£70
Exchange = -£40
Total profit/loss = +£30

If the game ends with 3 goals or more (Over 2.5 goals):
Our bet with Coral would’ve lost, losing us £50.
Our lay bet with the exchange would’ve won, winning us £80 (our lay stake).
Coral = -£50
Exchange = +£80
Total profit/loss = +£30

By hedging our bet when the odds shift, we now guarantee ourselves a profit regardless of the actual outcome of the game.

Profit by Matched Betting

The third way to profit by hedging our bets is by matched betting. Matched betting takes advantage of offers given by bookmakers to secure a profit.

We often see bookmakers giving punters promotion to encourage punters to bet more. An example of a offer given by bookmakers may include “bet £25 on a football game, get a £25 free bet in-play on that game”. If you place a £25 bet on Man U v Tottenham, you’ll receive a £25 free bet on that game when it starts.

Matched bettors take advantage of this by placing a £25 bet on the game, and hedging it by laying the bet on an exchange. This makes their bet risk-free, and they won’t lose any money, regardless of the actual outcome of the game. However, they now qualify for a £25 free bet on the game.

So, when the game starts, they place their £25 free bet on an outcome in the game, and they hedge that as well by laying it on the exchange. This time, they lay a lower amount so that they guarantee themselves a profit regardless of the outcome of the game.

Example - if they were to place their £25 free bet on Man U to win at 5.0 odds. They then hedge their bet by laying £20 on Man U to win at 5.0 odds on an exchange.

If Man U wins the game:
Their free bet would’ve won, and the bookmaker will have paid them out £25 x 5.0 = £125. As it’s a free bet, the stake is not included in their winnings, so they’ll win a total of £125 - £25 = £100.
Their lay bet would’ve lost £20 x 5.0 = £100, and excluding stakes, they’ll lose a total of £80.

Bookmaker = +£100
Exchange = -£80
Total = +£20

If Man U draws or loses the game:
Their free bet would’ve lost, and their free bet of £25 will be gone.
Their lay bet would’ve won, winning them £20.

Bookmaker = £0
Exchange = +£20
Total = +£20

Regardless of the actual outcome of the game, matched bettors have guaranteed themselves a risk-free profit by hedging their bets and taking advantage of free bets given by bookmakers.

Hedge Betting Calculator

To help us calculate how much should we lay to hedge our bets, we can use the matched betting calculator. A matched betting calculator can act as a hedge betting calculator to help us calculate the optimal stake to lay our bets with.

Using the calculator, we enter the stake and odds for our bet, and when we want to hedge the bet, we enter the lay odds for that bet and the commission of the exchange we are using. Betfair Exchange charges 5%, Smarkets 2% and Matchbook 1.7%.

In the above matched betting example, we hedged our bet by laying Man U to win at odds of 5.0. This is how we would enter it in the calculator. We can see that the calculator automatically calculates an optimal lay stake for us to maximize our profit regardless of the actual outcome.

hedge betting calculator
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