Corporate bookmakers introduced the ‘cash out’ last year and it quickly became an essential product. Partly to service clients, predominately to make more profit. We look at how the product works and how it compares to laying off on Betfair, an option that has been around since the beginning of the Exchange.
Specifically, we’re going to look at how to hedge your profit on Winx in the 2017 Cox Plate. A Betfair VIP has been generous enough to share one of his monster multis.
Why Cash Out
Cashing out allows you to make a profit on a betting option that has significantly shortened in price. This could be a single leg ticket, like a futures bet, or a multi bet with several legs.
The Problem With Cash Outs
Apart from the potential for regret (“Winx brained them, why did I lay any of it off?!”), there’s several issues to address.
Firstly, most corporate bookmakers don’t allow you to cash out on futures horse racing. This could be because of website functionality or because of a decision to treat ‘all-in’ horse racing differently. All-in horse racing markets, as you probably know, refers to markets before the final field is confirmed. If a horse doesn’t end up competing in the race then there are no refunds.
Secondly, when a cash out is available, corporate bookmakers marginate them. You’re not paid out on what your multi has accumulated so far. Or anything close to it. You’re offered a fraction of those winnings.
To illustrate how big the margin can be let’s look at a famous example from the 2015 Melbourne Cup:
— Andrew Bensley (@AndrewBensley) November 3, 2015
Unfortunately the punter famously cashed out when they had Prince of Penzance in the last leg of their multi. However, the choice to cash out isn’t our focus. The client was only offered a payout of $441.20, instead of the full ticket value which would have been $1,710 at that stage. The TAB offered 25.8% of what the ticket had accumulated.
Let’s try to avoid this margin by cashing out of a real example.
How To Handle A Monster Winx Ticket
One of our Betfair VIPs, Brad Miller, has placed several huge multis that are still live. Winx winning the 2017 Cox Plate is his last leg.
Impressively, he had similar tickets running around last year.
Let’s look at one of these bets:
|Stake||Multi Leg||Event||Selection||Odds||Combined Odds||Current Value|
|3||Queen Elizabeth||Hartnell (Place)||$3||$144||$21,600|
|4||AFL Top 4||GWS||$1.65||$237.60||$35,640|
He’s effectively had a bet that’s gone from odds of $618 into $1.20. Even the most risk seeking punter would find it difficult not to hedge off in these circumstances. It’s a golden opportunity to make a profit, regardless of the Cox Plate result.
Lay The Golden Egg
As much as we all think Winx is a moral in the Cox Plate, we don’t have a house deposit riding on it.
Brad, whose no stranger to these big tickets, layed off some of his bet on the Exchange just in case Winx didn’t run. As his ticket was placed on all-in betting conditions, he wouldn’t get a refund if Winx got injured or pulled out of the race.
He also wasn’t offered a cash out opportunity by the corporate bookmaker. Although, like he told us, “The cash out offers are always at a horrible discount, so it makes sense to make that extra effort & hedge when they’re as short as Winx.”
Up until several days before the race Brad had layed off $21,270 at average odds of $1.24.
Brad’s Book (on this ticket):
Winx wins: WIN $87,559 ($92,664-$5,104.80)
Winx loses: WIN $19,873.80 ($21,270 – original stake – 6% Betfair Commission)
That’s the definition of a win-win.
Don’t forget that Brad has a few more smaller tickets on Winx too. He’s looking to lay a little more off at the current odds of $1.20 so that his final book looks something like $160,000 if Winx wins, $35,000 if she doesn’t.
If you’re considering hedging off any live multis that end in Winx winning the Cox Plate, we recommend analysing the numbers.
Corporate bookmakers might not offer cash out opportunities, but if they do, determine the margin in their offer. If their cash out commission exceeds Betfair’s 6% commission on Victorian racing then you’re better off laying the mighty mare on the Exchange. Winx’s current odds of $1.20 requires very little liquidity or potential for loss.