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

I agree with you van on 99% but there are some times a couple situations to hedge...

Lets say that you had the Colts at 20-1 for the superbowl before the season started... Then in the Superbowl game you actually feel that there is value betting on lets say the Eagles because they are bigger underdogs than you perceive them to be and you think the line will go down.. Lets say the eagles were +10.5 but you feel they should be only getting a TD...  So you bet on the eagles because of the value, it is a middle though.. i guess i could of used an example saying eagles are -3 when you think they should be -7 or lets say you take the Eagles ML at -110 when you think they should be -180 or something and so on but the fact of the matter is, if there is value then it is a good hedge to bet the eagles even though u have the colts already whether it is a middle in the first example or a hedge for the Eagles to win straight up in the 3rd one.... so you didnt bet the eagles to hedge, you bet them because that game itself presented an opportunity, it was a good investment..

 

Van! Thanks for the thread. Even though I knew it wasn't 'the most profitable', i didn't realize just how dumb it was. 

Awesome thread Van.  Only got thru 3 pages so far but I gotta say, I give you credit for trying as hard as you are to make some people understand what is basic logic.  I can't wait to finish reading the rest.  It's eye opening to how clueless people can be

Just read the first 9 or so pages before going numb lol....it really is something to see how many people that consider themselves "professional" or "knowledgeable sports investors" don't understand what should be considered high school math. From reading the responses, it is clear that most of the people who fall into the camp of wanting to guarantee money don't understand the concept of taking the 3rd team off....I'll try to break it down

Situation 1 :  You have 100 to win 1000....standard 4 team parlay at -110 odds.....the first three hit, and the last one remains....within this scenario you have several options

     a:   let it ride, thus giving you either a win of 1000 or a loss of 100  (dealing with utility or expected value may make things too complicated for some)

     b : hedge, say by betting 440 to win 400 on the other team, thus giving you either a profit of 560$ if the ticket wins (1000 - 440 = 560) , or a profit of 300$ if the ticket loses (win of 400 - 100 = 300)

NOW, and this is where it gets tricky....SAY YOU ONLY BET THE FIRST THREE LEGS OF THE PARLAY.....this only works if you will be BETTING THE 4th LEG SEPARATELY NO MATTER WHAT!!!

that means you actually bet 100$ to win 600, and were successful. So now you are up 600$, you have the following decision to make:

     Bet 600 to win 545.45         this means if you WIN, you will have won 1145.45  (First 3 team parlay yielding +600$....PLUS the win on game 4 which is +545.45  = 1145.45  WHICH IS MORE THAN YOU WOULD HAVE WON HAD YOU BET THE 4 TEAM PARLAY!!!!

Bet 600 to win 545.45.....AND LOSE....therefore you have lost 600 total....OR just your 100$ investment you were going to make a 4 team parlay that would have lost and you never would have won the 600)

Bet 0  and win 0....you walk away with 600, which is more than you would have won if you had HEDGED IN ANY WAY!! (If confused, refer back to Situation 1, option B stated above)



If this scenario doesn't show you without a shadow of a doubt that by hedging you are LOSING money, as Vanzack has been trying to show people for 5 freaking years, then you don't have a basic understanding of what high school math is all about (and I'm not trying to brag, I got stuck at Algebra level two, never SNIFFED per-calculus) and you are not going to win in the long run....

Disclosure : I make parlays and hedge all the time, so I am not trying to be a d*** about this, just trying to have it laid out for whomever wants to know...

 

Great read.  Bump.  

at the end of the day PARLAYS in general are for SUCKERS.. the best bet is 1 game per card nothing more and nothing less..... i doubt that the "big time" sharps even comment or even go on these forums but if they did they will tell you the same...PARLAYS are for losers or soccer moms trying to get a high off there 25 buck card... chow.

I would say that I disagree with this under the following circumstances:

1.  You are betting "true odds" parlays.  In other words, just a multiplier.  As opposed to say getting 10-1 for a 4 team parlay, if you got the real game prices rolled over on those 4 teams.

2.  You have an edge in every one of the games you are including (obviously a calculated edge).

3.  The games all start concurrently - OR - you are buying a line for a future game that you have an edge on or is going to move against you.

If you have the three things above, then a parlay is really not dumb at all.  Parlays can maximize edges.  The problem is that getting the above 3 conditions is hard - and without all 3 - parlays are a suckers bet.

This is one of the funniest threads on covers. This should be put in the HOF of covers posts. Amazing how dumb people are I guess it makes sense why all of these books/casinos are in business. I was shocked that KOAJ is such a square though(maybe he has changed since 2007).

wow, i remember this thread.. good stuff..

Yes, it's good stuff but it still falls on deaf ears.  Players are still playing parlays and still asking about hedging their final game.  It happens all the time.  It happened again today:

https://www.covers.com/postingforum/post01/showmessage.aspx?spt=21&sub=101706653&page=1

Guys!  Just leave off that last, late leg!!  You then won't have to worry about hedging!  You will already have your "weekend profit" that you desire so much!  You can then bet a portion of your winnings ON that late game if you desire!

"If you are in a POSITION to hedge, you've already made a fundamental error."  If you don't understand this, you shouldn't be gambling!

hedging isnt a waste of money and let me explain since im going thru this right now as we speak...i have a parlay denver (won) dodgers(won) and SD 200$ to win 430$. Oakland was +200 ML. if i wasnt greedy and what i should have done was bet 200$ on oakland so it would pay me out 400$ and if SD wins i get paid out 430 leaving me with either a 200$ profit if Oakland wins and 230$ if SD wins...i didnt hedge and now SD down 17 before half

You're just looking at one weekend.  You need to look at the big picture. 

Sure, not hedging tonight "cost you" (notice the quotes)...  but OVERALL, at the end of a long session, you will have more money in your pocket by not hedging.  You did the right thing by not hedging.

This is what a lot of players don't understand.  All they want is a "profitable weekend."  They don't look at the big picture.

No one just makes one bet and that's it.  Everyone continues to bet, week in and week out, year in and year out. 

Hedging comes at a price.  If you don't hedge, you don't have to pay that price.  And thus you will have more money at the end of the session (but not every weekend) than if you always do hedge.

It is pretty shocking when you read the first 2+ pages (I stopped after 2, personally) and see the posts from someone like DevilFan (and many others) who are completely incapable of grasping what is such a fundamentally simple mathematical concept...

Even if you are getting true odds on the parlays... you still end up losing money (although a bit less) in scenarios A and C...

Just saw CoryCohen made a very similar post to mine... 

I do think about Hedging, and most of the time I turn it down, Glad I read your article to actual see the math involved.

this all assumes you're a frequent bettor

what if you only bet a couple of times a year, and you have all but the last game on a sizeable parlay--makes sense to hedge there

Vanzack----good luck bro. You are trying to educate people who think a 20-10 record betting all -280 favorites  is somehow better than a 10-20 record betting all +280 dogs.  They no comprende!!   They have Sarah Palinitis--incurable Bimboness!!

I only read the first post and didn't follow the discussion but if one's EV on parlays is less than $0 or only slightly above $0 on any individual parlay, which applies to just about everyone, then booking a guaranteed profit is +EV

I'm still not sure about hedging. I never do it, but I know that there are a lot of people that should be hedging because they are not +EV on any individual bet

dont matter how much of this post you read....

This thread deserves a bump.