A couple of years ago in Las Vegas, I bet $110 on a three-game parlay during the first week of the NCAA basketball tournament. A three-game parlay requires that a bettor must correctly pick the winner of all three games (including point spreads) and pays 6 to 1 odds.
I picked the correct winner for the first two games and found myself faced with a decision before the third game started. Do I hedge this bet? Hedging a bet is where a bettor places a second bet against the first bet to guarantee winning or breaking even.
If I do not hedge my bet, then I have three possible outcomes:
Win $600 plus original bet of $100 and $10 vig
Push 3rd game, which defaults a 3-game parlay to a 2-game parlay payout with a 2.6 to 1 odds resulting in $260 winnings plus original bet of $100 and $10 vig
If I hedge my bet, that would require me to place $121 on the opposite team in the third game. This would result in two possible outcomes:
Win $490 plus original bet of $100 bet and $10 vig
Break Even because of winning $110 plus hedge bet of $121 bet and $11 vig
Push 3rd game, win $139 plus original bet of $100 and $10 vig
A summary of the possible outcomes are in the following table.