To hedge or not to hedge, here is the math and why hedging is a bad idea....

MUST READ!!!!!!

Vanzack you numbers are OFF.

If you DONT HEDGE you can either win 1000 or lose 100.  When you average out +1000 and -100 you don't get +500.  You get +450.  When you DO HEDGE you will win 424 if you do it right.  So yes, you are still paying a vig to hedge but not as much as you suggested.  Its $26 for a $100 parlay instead of $76 for a $100 parlay like you had said. 

hutch - i get it...i know in theory i'm wrong but the part i cannot get past is that if i am ever in this spot (which is rare), if i hedge, i put money in my pocket...

if i do not hedge, then i am taking more risk and the payout is unknown

i understand value in baseball and i know this correlates to this entire discussion however throwing away guaranteed money for expected value which is pure theory...an unknown quantity...and could suddenly have an 0-8 streak against me is not something i can live with

regardless if ive assumed the risk...guaranteed money is guaranteed money since expected value is UNKNOWN. it is just as possible for a baseball team to lose 10 straight as it is for a football team to lose 10 straight ATS. its both highly unlikely but it can happen

guys, i get it...i dont think anyone will ever convince me not to take a profit if one is available instead of gambling on the probability of a game coming in. i am not a mathematician. i understand probaility and value to some extent but am no expert

-in the Balt Cincy game the other night...i had got a bunch of Balt +2.5 +238 and +194 in game betting....i thought Balt would win and had the Balt money line pregame...yet i left an offer out there to sell it all back on Cincy -120 which got filled for me near the end of the 2nd quarter. I got + money on both sides...so regardless of the outcome, I won.

then again...i never do parlays...i have no idea why i'm debating this issue

I am just going to hire KOAJ as my spokesperson.

What he says is exactly what I have said numerous times in this thread.  Yes, I am taking back less money but the bottom line is, I am taking back money.  I like the known vs. the unknown.  I don't want to have to lose 5 straight parlays and hope that the 6th one finally hits.  To each his own.

Vanzack, one of my local bookies offers A/R (Action/Reverse) for games. How do you feel about those? Probability-wise, I'm pretty sure it's a bad deal to take games at different start times, but I think it'd okay to do if they are overlapping games. Do you know the math involved with A/Rs?

Koaj / Devilfan -

You both have said that you want "guaranteed" money even if that means you are willing to take less than you deserve.

My question is how much are less are you willing to take?

I brought up earlier a craps example, but let me give a football example.  You have a 110 dollar bet on the colts PK vs the pats.  Its halftime and the colts are up 28-0.  You are looking good to win your 100 profit on your bet.

Your bookie calls you and offers you a buyout of your bet.  Guaranteed money right?  He offers you 25 bucks.  Its guaranteed money, but far less than your EV, but as devilfan says "EV cant buy you a hotdog and I want to win today".

My question to you guys is how do you measure what that guarantee is worth to you?  Would you take 5 bucks guaranteed money for that bet?  How about 98 bucks?

I have yet to understand from either of you that on the parlay question that you use any kind of measure to see just how much you are actually giving away to get the guarantee.  My example above is exactly the same as the parlay, but I have a good idea that you are not using any measure to see just how much money you are losing by taking the "guarantee", and Im surprised that neither of you even care to know.

Opinions?

maddencurse - give me the possible outcomes and their payout odds and I will calculate your EV and give you an explanation.

I would have to take sick leave from work to read the entire thread, but the bottom line is Vanzack is correct.  Take a 3-team parlay paying 6-1.  You are laying -110 on each leg.  So for example, Buffalo -4. If you bet the opponent +4 you will win one lose one but you pay double juice.  Why would you want to bet 2 games -110 and go 1-1.  You lose!  May not seem like a lot, but it adds up.  This is basic when it comes to parlays, EXCEPT to the extent that maybe the line has moved a lot, or your opinion on the game truly has changed.  If you really like the other side at the price, then fine.  That just means that you made a lousy original bet.

Hedging futures and teasers are a different animal altogether.  Nothing at all wrong with adding a final teaser leg in (NFL) when it fits basic strategy and then betting the other side regular line if you like that bet.

trying to answer the bolds:

-i have no floor or ceiling...it depends on my feel on the last leg of the parlay

-re the Indy 28-0 halftime lead as a PK game...i wouldnt hedge that back. now if they are up 14-7 at the half with NE getting the ball and someone offers to buy my Indy ticket for $50 and split my wager then I probably do it. I would get $50 in my pocket and have a $50 wager on the Colts up by 7 as a PK

-of course i care to know or learn what i dont know but this is such a rare occurrance to me its almost irrelevant.

measuring risk is measuring the unknown...i like the known

if in the last 5 years the Oakland A's have played 60% unders, then they hit 6 overs in a row...what is the probability of their next 10 games going under? is it 60%? is it more? is it less?

measuring risk is measuring the unknown...i like the known

I should clarify - the unknown i refer to is the final leg of a 4 team parlay paying 10-1 or whatever its paying

vanzack - hope you dont think i'm retarded after all this...everyone has a different way of thinking. i know your math is correct as are your theories of probability and expected value however...all of this is unknown

in reality, i have cash in my pocket while others who do not hedge are hoping their other game comes in

its the known vs the unknown and accounting for such....i think thats what this whole thread is about

So you have proven Van's point. Van is talking about theory and backing it up with mathematically indisputable evidence.

If you read Van's first couple posts, he states that in your case, the utility has changed. In theory, all things being equal, Van is correct 100%. In the scenario of large dollars (as you perceive them) that you are presenting, that then cancels the all things being equal assumption just like a line shift or an injury would/could. You are now speaking of the utility of a large sum of money as opposed to the flippancy you would feel towards a smaller sum of money.

You are proving Van's point.

  There is no set rule.  If had a good week , I would let it roll.  If I was even  or down a bit for the week , I would hedge .  Its better than digging in my own pocket to put on a new set a tires  that the car needs badly.

    Of course with bigger amounts , I would hedge somethng for sure.

Vanzack --

Great post.

This debate seems to come up every 4 or 6 months. Remember, there are two types of people: Those who understand the math and those who don't. And by "understand" I do not just mean know how it works, but truly understand what it all means. Some people seem to be unwilling or incapable of grasping the original concept you laid out. No point in arguing with them, you will likely never change their minds. After all, guaranteed money is guaranteed money, right?

Anyway, great original post, and examples thereafter.

Have you read Gambling Theory and Other Topics, by Mason Malmuth? It's a good overview of a number of investment/gambling scenarios, including the (sometimes complex) math behind behind them. Seems like a book you'd enjoy.

Good Luck to you, and all those that truly understand the math behind sports investing. It's hard enough to make money in this business--don't make it even harder on yourself.