Playing It Smart: Are hedges a sensible form of gambling insurance?

In some casino games, you can hedge bets by wagering on opposite sides of the same proposition. It's like a fee that lowers the net profit of wins, in return for cutting or eliminating costs of losses. Players who like hedges view them as insurance against big setbacks. Most gambling gurus disdain hedges because they raise the edge on the action and lower effective payback ratio.

Not all hedges increase the edge some even lower it. But using them still exacts a price. Roulette affords examples with bets on sets of specific numbers in a class, offset with money on combinations of the opposite class. Illustrations might be taking multiple red spots and hedging with a wager on Black, or betting on numbers in the second and third columns and hedging with a wager on the first column. Here are two representative cases.

1.	Bet $1 on each of 10 red numbers and $10 on Black.
a.	One of the red numbers hits: you pick up $35 but lose $9 on the other nine plus $10 on Black; you have 10 ways to net $35 - $9 - $10 = $16.
b.	Black hits: you pick up $10 and lose $10 on the numbers; this is 18 ways to break-even.
 
c.	0 or 00 hits: in some casinos (principally in Atlantic City) you lose half, $5, on Black and $10 on the numbers    $15 in all; in most joints, you lose the whole $20. Either has two ways to happen.
d.	None of these hit: you have eight ways to lose $20.
e.	Edge for the overall $20 bet is 3.94 percent in "half-back" casinos, 5.26 percent otherwise.
2.	Bet $1 on each of 10 red numbers and $18 on Black.
a.	One of the red numbers hits: you pick up $35 but lose $9 on the others plus $18 on Black; the result is 18 ways to net $35 - $9 - $18 = $8.
b.	Black hits: you pick up $18 and lose $10 on the numbers so you net $18 - $10 = $8; that's 18 ways.
c.	0 or 00 hits: you lose $10 on the numbers and $9 on Black; that's two ways for a net penalty of $10 + $9 = $19 in Atlantic City and $10 + $18 = $28 elsewhere.
d.	Edge for the consolidated $28 bet is 3.57 percent in "half back" casinos and 5.26 percent elsewhere.

Depending on where you play and whether the auxiliary bet loses half or all on 0 or 00, these strategies reduce edge or leave it at 5.26 percent. Edge isn't the whole story, though.

For starters, edge is a percentage and not a dollar amount. It becomes money by acting on a wager. So, say you use the first of the representative hedges. You bet $20 total. The casino figures you're good for 3.94 or 5.26 percent of $20 $0.79 or $1.05, respectively. Had you bet $10 on the numbers alone, the fee you'd pay the bosses would be $0.53; $10 on Black only would cost you $0.27 or $0.53 depending on the rules where you play.

A second weak point of the hedges described lies in how much you can win, and the odds, for what you place at risk. Solid citizens betting $1 each on 10 red numbers have 10 ways of netting $26 and the remaining 28 of losing $10; that's 2.8-to-1 odds of a 2.6-to-1 payoff. If they're comfortable putting $20 on the line, $1 on each of 20 red numbers offers 20 ways to net $35 - $19 = $16 and 18 to lose $20. Alternately, for the same exposure, $2 on each of 10 numbers gives 10 ways to net $70 - $18 = $52 and 28 to lose $20. With $1 each on 10 red numbers and $10 on Black, they have 10 ways to win $16, 18 to break even, two to lose $15 and eight to lose $20 at half-back tables, and 10 ways to lose $20 elsewhere; the odds where there's no "half-back" are 10-to-10 or 1-to-1 (a 50-50 proposition) that $20 will win $16.

Carry these hedges to a logical extreme and bet $1 on each of 18 red numbers and $18 on Black. If 0 or 00 hits you lose either $27 or $36 depending on the rules. Anything else and you break even. So you can lose but you can't win. A ridiculous bet? Yes. But a matter of magnitude rather than kind. The edge? It's still 3.94 percent in Atlantic City and 5.25 percent elsewhere. Those who call that protection didn't learn much from Sumner A Ingmark:

You're not apt to intensify gambling endurance,
If you think of a hedge as cheap bettors' insurance.