Art of Hedging
Don’t see it as foregoing profit,
view it as money you’ve already earned
Hedging Sports Wagers, The GambLou perspective (for more great sports info follow him on twitter @Gamblou )
As discussed plenty in earlier GambLou blogs, we hold a substantial future ticket on the Kings to win the West which has now left us multiple options for profit. We purchase future tickets not necessarily with the intentions of actually cashing them, but rather to give ourselves a chance to lock in a playoff profit in some way, shape, or form.
Let’s review our potential options if we’re sitting on a Kings ticket from the beginning of the postseason:
Scenario 1: We hold our longshot ticket at 11-1 and allow the Kings to finish their work, win the conference, and move to the Stanley Cup Finals. Pretty straight forward with dynamic profit potential but also full of risk given our initial wager amount.
Scenario 2: Hedge the future wager to insure bottom line profit and eliminate risk altogether. So (the standard $100.00 dollar example) we take the Yote’s in the series to win half of what our future ticket would pay risking $400 to win $600 . If the Yote’s win the series, we bottom line profit $500.00. If the Kings win at the original $100.00 wager for example, the gross win is $1,100.00 with a net profit of $700.00.
Uncle Louie’s single point of focus is “Profitable Sports Gaming” not ‘all or nothing wagering’!
While many would look at the Kings recent puck prowess and decide to ride the wager, we wouldn’t think of it nor should the seasoned sports investor. We have an opportunity to take a no risk profit of either 5 units or 7 units (we still profit more if the Kings win) in this particular scenario.
We are business people here and have discussed profit as our single point of emphasis and we live by that mantra. Uncle Louie is a grinder day in and day out, there’s no other way to look at things. We take profit whether nominal or substantial and move to the next opportunity that will inevitably present itself in sports. We preach making our gaming decisions like running a small business with the end goal having more good days than bad days. Our goal is to continue to compile small profitable outcomes rather than look for the lottery ticket score. Any smart business person would make the same choice and while this is our decision in this specific instance, there’s no reason to judge or criticize others who choose to approach the situation differently.
Our view of the Coyotes-Kings series:
In our opinion, the Kings have some questions to address for Ol’ Uncle Louie.
- How will they react to being the hunted for the first time this postseason instead of doing the hunting?
- How will they handle that most dangerous word in sports: expectation?
- How about the natural reaction (as the Predators did) to look at this Coyote Ugly team of no names (Doan, Whitney and Smith excluded) and avoid underestimating them?
- How will LA approach a red hot goalie in Mike Smith since this will be the first time they don’t have an overwhelming edge in net this postseason?
Bottom line for us is we made the price considerably lower on LA for the series than books chose to use so it begs the question, what are we missing?
- LA walked through the number 1 seed, Canucks 4 games to 1, then swept a talented but outmatched number 2 seed in St Louis. Suddenly LA catches a team who has surpassed expectations thus far much like themselves and quite possibly true power numbers haven’t been adjusted the right way.
- Cali is close to Las Vegas and there will be public action galore on the Kings so there may be some existing and continued bias. However, my belief is there may be some Kings liability in future books and using a price shaded to LA discourages more Kings money from coming into the market
- The Yote’s style of play, ‘from the goal out,’ and their relative lack of big names make it easy for folks not deep into this puck platform to underestimate this group.
Our decision to Hedge our bet and take the money and run in this series is based as much on pocketing bottom line profit as it is on the fact that in our opinion the Yote’s will match up favorably with the Kings. These teams know each other; hatred will show up early and often with these two fast aggressive squads.
When opportunity for profit presents itself in sports investing eliminate risk and maximize results. In the end, the name of the game is cashing tickets, not looking for the big score.
Interested in reading more about playoff hedging and arbitrage? Check out the official Gamblou Blog
