Hedge fun

One of the fun things (to me) about playing pick N wagers is making it to the last leg and looking at opportunities to guarantee a profit by betting uncovered horses to win.

I allow that hedging can appear counter intuitive since in many (if not all) cases, you will be betting money on horses you view as underlays. That is the micro view of analyzing each individual win wager. The macro view is  that it is very rare that your coverage is 100% certain to win, and at that point it's more important to look at your risk of ruin than at individual odds for each race.

I somewhat liken it to Deal Or No Deal game theory. If my options are flipping a coin (50/50) for $1-million or taking $250k in cash then I'm probably going to take the cash. Sure, at 50/50 the expectation is greater for me to take a chance, but at the price point I'd rather leave with something than nothing. If we're talking about 50/50 for $20 and you offer me $8 then I'll probably just take my chances.

And so it goes with hedging at the conclusion of a pick N sequence. This isn't something I would recommend doing all the time or even most of the time, but if I put $100 into a P4 and have half the field for at least a $1k payoff, then I'll likely look to see if an extra $50 (or so) in win wagers can get me to a point where I'll at least break even no matter what.

In the example above we're getting at least 9-to-1 on our total investment if we win and nothing if we lose. If we think there's a 20% chance any horse from half of the field we don't have can win then we're 4-to-1 to lose, so hedging makes sense.

Below is a spreadsheet I created to help with hedging. It's from the last leg of the pick four on July 20 at Colonial Downs. I didn't like the big favorite at the price and was willing to just break even if he won, so I structured my three other win bets around that ideal. If you'd rather play around with an interactive version of the spreadsheet, you can click here.