As any veteran sports bettor would tell you, there is nothing worse than seeing a team you have action on, turn an absolutely unbeatable position into a gut wrenching defeat, burning your cash in the process. The pain is made even worse by the fact you could see it coming and yet there was nothing you could do. Or is there?
What is the cash out feature? The cash out feature is available for online or mobile betting. It allows a bettor to result a wager by accepting a payout offer prior to the event finishing. The cash out figure fluctuates in line with the live odds and is unavailable if live betting is suspended. Cashing out a wager voids promotions attached to that bet.
How Does the Cash Out Feature Work?
Cashing out an online or mobile bet is a relatively new feature for many bettors. Gaining maximum benefit from the feature requires some skill and plenty of foresight.
Essentially a bettor is offered a ‘cash out figure’ which represents the amount a sportsbook is willing to pay the client, if they were to result the bet at that exact moment. The payout figure is always less than what it would be if the bet was to go on and win, but clearly it is more than if the bet was to somehow lose. The decision about true value of the payout is up to the bettor.
For example let’s say a sportsbook client had wagered $100 on Houston Rockets to beat the Golden State Warriors outright (moneyline) at +125. At the beginning of the fourth quarter Houston are leading 82 – 76 and in the live betting are now paying -110. The cash out figure (includes stake and profit) offered by the book would be in the vicinity of $112 (depending on their juice)..
While there is some profit on offer for the bettor, it is nothing like the $225 (stake and profit) they would receive should they maintain the bet and the rockets go on to win.
Extra Juice
Interestingly the true cashout figure in the above example should be more like $117 but the sportsbook takes some additional juice for granting the privilege of being able to cash out the bet. This is over and above the small amount taken when the original odds were offered.
The extra juice is nowhere more evident than when a bet has just been placed. For example a $20 bet on a +200 underdog will immediately offer a cash out of around $17. This represents a 5% margin on the actual odds (decimal 3.00). The event may not be due to start for sometime and yet cashing out leaves the bettor with less money than when they started despite no odds change.
Partial Cash Out
If it hasn’t already the partial cash out feature is on it way to a sportsbook near you. It is a innovative new add on many sportsbooks offer, where, instead of cashing out the whole bet, a portion can be left to ride. This is a great way to enact some profit taking but keep an interest in the original investment. Plenty of fun to be had with this one!
The Formula
The cash out figure is a simple calculation:
Cash Out Figure = {(Original Decimal Odds/Live Decimal Odds) x Stake}
Note: Usually sportsbooks will take a small amount of extra juice off this figure. The amount is dependent on the book.
The Houston Rockets Example:
Cash Out Figure = {(Original Odds/Live Odds) x Stake}
= {( 2.25 / 1.92 ) x $100)
= 1.17 x $100
= $117 (less sportsbook cash out juice)
When is Cashing Out Actually Profitable?
1. When a Bettors Intuition is Good.
The key to getting the most benefit from the cash out feature actually comes down to the betting smarts of the person looking to cash out. With the sportsbooks taking an extra portion of juice at cash out, the argument could be made that cashing out is never a good idea, but there is a way!
If the bettor has the intuition to see that the team (or player) wagered on is about to lose momentum to the extent that the bet will fail, then they cannot cash out quick enough. This kind of intuition is rare and the tell tale signs have to be subtle enough to be spotted before those framing the live odds catch on. It takes a special kind of bettor to consistently out read the sportsbooks. When the bettor cashes out they are essentially banking on the fact that the live odds are not a true indication of the situation of the match and therefore the true value is found in taking the money and running.
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2. Enacting a Virtual Stop Loss.
When a full time professional stock trader takes a position in a stock for a short to medium term trade they will enact a stop loss. This means if their decision was in fact wrong and the stock price drops, an automatic sale of the stock will occur to limit the amount of money lost on the trade. This is called a stop loss. A sports bettor can employ exactly the same tactic by using the cash out feature.
If a wager is placed on a team (or player) and then, as can happen the team for some reason starts poorly, an experienced bettor may get that age old feeling of ‘its just not their night’. At this point they may decide to cash out their bet for a small loss before the situation deteriorates any further. In effect they employ a stop loss. The downside to this is, just like in stock trading, after the initial slow start, the team may click into gear and run away with the game. This is no doubt a frustration but bound to happen from time to time when using this strategy.
3. When Betting a Futures Market with Too Many Options to Hedge
The cash out feature is a huge benefit to a bettor fortunate enough to have a futures bet riding on a team or player, originally at juicy odds, who has performed well, and is now in just a small handful of genuine contenders. Markets like the US Masters Golf or a US Open Tennis are littered with these opportunities.
Although the bettors original pick has performed well they now may not feel as confident about the player going all the way to win. In this case normally a hedge would be suggested but with a number of contenders still in the game a hedge may be too difficult to execute. Therefore the cash out offers them a chance to bank the profit and move onto the next bet.
The Mistakes to Avoid When Using the Cash Out Feature.
1. Never Cash Out a Bet Due to a Low Account Balance
A classic mistake of recreational bettors is to cash out a live bet due to a lack of available funds in their account. When the account has taken a beat down and funds are low, the temptation to go to the pending bets section of the account and look for a live bet to cash out is always there. The bettor may be hanging out with some buddies and is looking for some action on a game they are about to watch, not wanting to make another deposit he/she cashes out a seemingly good bet to free up some bank to reinvest. This is a cardinal sin!
Assuming the bettor placed the original bet with consideration, research and intuition, then it should be allowed to run its course. After all, some value must have been identified at some point. Cashing out simply means a portion of the money is lost and that makes little sense for a bettor looking to win over the long term. Patience is a powerful weapon in any successful sports bettors arsenal, and it needs to be exercised here.
2. Televised Sport Delay – Live Odds Change and Payout Drops.
Cash out figures are based on a formula that takes into account the live odds on market. These odds can fluctuate play by play and therefore so does the payout figure. The issue here is unless the bettor is in person at the stadium, the coverage they are digesting is on a slight delay despite being advertised as real time. This delay may only be a handful of seconds, but it is long enough for sportsbooks to see a potential momentum shift in a match and suspend live betting before the at home bettor has had a chance to act. The mistake: believing that by watching the game at home they will be able to ‘get out ‘ of the bet as soon as a major match change occurs.
For example a person at home watching and betting on American Football, may see the quarterback from their team get hit hard in back play and stay down. They instantly surmise that if the QB is done for the night, then so may the chances of the team they have bet on, actually winning. In an instant they move to cash out the bet, only to find the market is already suspended and the cash out feature is unavailable. This is because the sportsbooks are on the spot and have a head start on the bettor. They may not have decided on how the odds will change yet, but by suspending betting they prevent bettors acting fast.
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3. Cash Out Does Not Replace Hedging
A common mistake is to view cashing out like a style of hedging. It is certainly not a hedge. Here is why. A hedge allows a bettor to lock in profit by betting against an original bet whose odds have shortened. For example a futures bet on a team at +2100 to win the superbowl and that team has now qualified for the big game. A sophisticated bettor would place a small wager on the opponent in the superbowl to ensure they win some money regardless of who lifts the Lombardi trophy at the end of the day..
On the flipside the bettor may be offered a cash out figure prior to kickoff that on face value looks enticing. As already established the sportsbooks are taking juice on that cash out value and therefore the number on offer is below the true odds. A hedge will avoid this ‘double tax’.
4. Missed Promotions
The competition between sportsbook is hotter than ever. The fight for a client’s business is a major benefit for the everyday sports bettor. Promotions are generous and many include a cash back or bonus bet clause if certain criteria are met. For example a common promotion is ‘cash back in bonus bets if a 4 leg parlay loses by just one leg’. Generous and well worth pursuing.
The issue here is a bettor may have a 4 leg parlay where 3 legs have already landed and be waiting on the final leg to be played. The sportsbook at this point is potentially offering a tidy cash out figure which is tempting for the bettor, but claiming it would be a huge mistake. Cashing out voids the promotion and means if the bet loses the bonus bet is not awarded. To avoid this the bettor needs to simply hedge by betting on the opposite result of the final leg of their muti. That way they lock in some profit and are still qualified for the bonus bet in the event of the parlay going down.
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The Game Starts Now!
The cash out feature is yet another wonderful innovation that online and mobile betting is binging to the world of sports betting. Used correctly it can be a profitable exercise for any sports bettor. Avoid the common mistakes and this feature is sure to enhance your betting experience.