Hedging March Madness

I set up and run a lot of hedges. Hedges are not immediately apparent to many sports bettors, because they require more thought than just handicapping the winner of an individual contest. Also, to be most successful, hedging requires a large bankroll, with much of it locked up for months at a time, with the rest utilized to squeeze out a profit.

Here is the general idea when placing futures bets to hedge:

Hedging

Let’s consider the 2019 Men’s NCAA college basketball tournament. Betting the tournament early, in the Summer or early Fall of 2018, can allow for some big odds futures, so I get started early…and often. I am a huge college hoops fan and follow it very closely. I handicap it every day of the season and tend to bet it every day, throughout the season. So, I have a pretty good idea who was good last season, and who should be good this season.

Joe Lunardi runs his Bracketology analysis throughout the off-season, with frequent updates throughout the regular season. What I am interested in is which teams he thinks the tournament will consist of next year. He fills out the brackets and shows his projected seeds and matchups, just like it was early March! Lunardi is good at what he does. I am not-at-all interested in the big favorites to win the tournament like Kentucky, Kansas or Duke, because the odds on these teams will be very short, so I do not consider teams paying less than 100/1 odds.

Getting the longest odds is the value proposition

I go through his brackets and find teams he has seeded around 4 or 5 and scour the brackets down to conference champions who get automatic bids. Then I go shop the lines around. Most sportsbooks around Las Vegas have their future odds up by the middle of the summer, some much earlier. I always shop at least four different books, such as William Hill, Boyd Gaming, Stations and one of the big boys like Caesar’s. South Point usually gets thrown into the mix, too.

I am looking for the longest odds possible on the teams Lunardi and I think will get invited to the tournament. Not all of my wagers will be reflected in Lunardi’s projections. After all, I am likewise knowledgeable at this and am seeking some under-the-radar teams that offer exceptional value. Getting the longest odds is the value proposition. If I can find a team at 200/1 at one shop, but then find them at 300/1, you know where I am betting that team! The more value you get with the future, the more hedging value you will have when it is time to hedge.

Old Dominion is one team I bet this summer. William Hill had them at 1000/1 to win the tournament. Twenty dollars on the Monarchs creates an expected value of $20,000! Old Dominion is expected to get into the tournament by winning Conference USA and getting an automatic bid. If they don’t get in, I’m out $20.

TCU is another team I bet at great value. TCU is expected to return nearly all their players from last season and I found them at 125/1 odds at William Hill. All other shops I checked were offering no more than 100/1. They were a damn good team last season, getting into the tournament as an at-large six seed, losing to Syracuse in the first round. One hundred dollars bet on the Horned Frogs creates hedging value worth $12,500!

Mind you, while I bet these teams to WIN the tournament, I do not expect them to win. Although, it would be fine if one of them did! Betting teams to win the tournament, not just win their conference or to get into the tournament is how I create maximum hedging value.

Here is how the theoretical hedge works:

  1. As the season grinds along, I monitor all of my bets. I know what it cost me to make the bet and the expected hedging value, established by the odds I received when I bet the team;
  2. If the team is strong, no suspensions or injuries, or other potential red flags, I do nothing but monitor how the team is playing;
  3. If the team has some kind of problem that would result in them losing games and not making the tournament, I look for opportunities to hedge my future during the regular season;
  4. Using TCU as an example, let’s say they play Kansas for the Big 12 Tournament title. If this is the case, then no matter which team wins, they likely both get into the tournament. Oddsmakers might make Kansas a small favorite to win the game. I can then bet some amount of my expected future payout on Kansas to win the tournament. If this occurs, then I have made money back on Kansas and likely still have a live ticket on TCU, albeit with a little diminished value. If TCU needs to win this hypothetical game against Kansas just to make the tournament, then I will adjust my Kansas bet accordingly to, at the very least, pay back what it cost me to buy the future ticket (in this case $100).
  5. Sit back and wait to see what happens.

As I write this, Lunardi has not recently updated his brackets, which still show TCU as a 4-seed in the West. Blue Ribbon College Basketball Yearbook projects TCU to be ranked 25 at the start of the season. These opinions give me confidence that I will have a live futures ticket come Madness time.

I will have much more to say about this as we get closer to March, so stay tuned!

But for now, here are the NCAA Men’s Basketball Tournament future odds I hold:

100 to 1 Teams

  • Arizona
  • Louisville
  • Kansas State
  • Maryland
  • North Carolina State
  • Xavier

125 to 1 Teams

  • Butler
  • Memphis
  • Seton Hall
  • TCU

250 to 1 Teams

  • Houston
  • Minnesota

300 to 1 Teams

  • Connecticut
  • Iowa State
  • Loyola Chicago
  • Nebraska
  • South Carolina

500 to 1 Team

  • Davidson

1000 to 1 Teams

  • Buffalo
  • Old Dominion