A few months ago, I placed a small $50 legal wager on the Cincinnati Reds to win the World Series. I knew it was a long shot from the start, but the payback would be $4,050 if they did indeed win. And, if they made the playoffs, I also knew I would hedge each series (either by betting the other team prior to a series, or just until the Reds come to an elimination game).
Fast forward to today, and the Reds are in a race for the final NL wildcard spot. Last check, ESPN only gives them a 45% chance of making the playoffs. There are about 10 games left for the Reds and their competitors this regular season.
What would you do?
ETA: My original intent was to try to net about $1k from this strategy, but their lack of playoff certainty will make that difficult.
Are you saying that you are trying to lock in a win at this point, so whether or not your team wins you come out ahead?
Look up the odds for your team to win the playoffs given where they are now. That would be important information. You could calculate the expected value of your ticket based on that. I assume it’s worth more than $50 now, unless your team was always expected to at least get close to the playoffs. But I’d also guess that it’s not worth anywhere near $1,000 yet, so I don’t know how you can guarantee that level of payout.
Given the vig, I wouldn’t hedge a $50 bet. If you want to do it though, you could place an offsetting $50 bet on the next game, and if your team loses you get your money back minus the vig from your offsetting bet. If your team wins, well, you lost another $50 but the value of your team ticket just went up more. If the EV (expected value) on your ticket is now $100, you could place an offsetting $100 bet, etc.
Unless the money is serious to you, just make bets based on the best estimation of the odds at a given time. Treat them as independent bets. Hedging sometimes forces you to take sub-optimal odds to protect your money.
My attitude is that every bet should be made only when the odds are favorable. I won’t take a bad bet just to offset a risk. Instead, I shouldn’t have taken the risk in the first place if it needs a hedge to make me comfortable.
In order to lock in about $1000 profit, the odds would need to shorten to 3/1. You would then lay a $1000 bet at 3/1. Then the payouts would be:
Reds go on to win: you lose $50 on bet 1, you keep $1000 on bet 2
Reds do not win: you win $4000 on bet 1, you pay out $3000 on bet 2
There are two-way markets where you can place both back and lay bets on some betting exchanges like Betfair in the UK. You pay a commission instead of vig. But you can’t use betting exchanges from the US.
Of course, backing all the other remaining teams is equivalent to laying the Reds, but that will be a very inefficient way to do it unless you wait until there are only a few other teams left. But then, their odds will not shorten to your 3/1 target unless they reach the final.
As pointed out, you can’t hedge a bet you aren’t winning (winning meaning the odds have shortened since you made the bet). Unless I’m misunderstanding your terms.
Well, you can hedge to lock in a partial loss. Given that bookies are offering 150/1, let’s suppose you had access to a betting exchange and you could find a backer at that same price. OP could lay a $26.50 bet to recover just over half his original stake. On that second bet OP would need to pay out $3,975 if the Reds went on to win, offset by the original bet.
It appears you’ve got the win & lose cases backwards vs. the payoffs. But your logic is clear enough.
Right now the OP has locked in an 80:1 payoff on something with current odds of 1:150. He’s still underwater. Said another way they were considered more likely to win when he bought the bet than they are now.
it’s very hard to protect a profit on an investment already going the wrong way. Of course, as folks have said, the odds can start moving in the right direction as the season continues winding down. But until they’re past 80:1, all the leverage is adverse.
Seems to me you need to bet another $50 at 150/1. Sure, if the odds don’t shorten then you’re out a total of $100, but if they do, you then have more options! Good luck
