The latest trend in sports betting is called Cash Out. This tool offered by betting operators allow bettors to secure their profits or minimize their losses before the referee’s final whistle. Yet, by Cashing Out, they are effectively making bookmakers richer.
Let’s see why.
First, explaining Cash Out is in order with an example in football betting. Say a football game is going in favor of a bettor. During live betting, they are able to take their profits earlier by using the Cash Out tool. Of course, they stand to make a bit less money than their initial reward, depending on the odds they decide to execute the order.
On the contrary, if their selected team is struggling and has already conceded a goal or two, the bettor can now minimize or keep their losses under control by Cashing Out. Again, the affected total risk amount depends on the available odds at that time and obviously, they cannot save their whole wager.
Say you bet 10 euros at 3.00 and in-play odds have now shortened to 2.00. Hurray! Cash Out offers you 15 euros (instead of 30) to get out and take your profit. No more feeling stressful each time your team is defending till the end. If on the other hand odds drifted to 5.00, Cash Out gives you 6 euros back to abandon the game before it’s really too late and lose 10 euros. By doing so, it “seems” you are saving 4 euros.
Sport bettors are easily tempted by Cash Out. Known for their impatience, gamblers want to take profits as soon as possible, while they are always scared of losing money. Both tendencies lead them to try Cash Out and probably get addicted to it.
So, where is the catch?
Cash Out pays less than fair value
In the example above, the fortunate bettor has the opportunity to get paid 15 euros in the event odds having shortened to 2.00. That would have been the price of a fair Cash Out. Fair, as calculated by this formula:
((X*(Y-1)) – (X*(Z-1)))/Z
Χ = original stake
Υ = original starting odds
Ζ = final odds at Cash Out
Yet, the betting operator will offer 13 euros to the bettor instead of 15! This is due to the operator’s vigorish, which translates in profit margin for the bookmaker.
By taking “advantage” of the Cash Out tool, the bettor effectively agrees betting on the two other likely outcomes of the game, besides their original selection. Thus, if they had bet on home win originally, they are now betting on X2 by Cashing Out. As a result, they have bet on all possible outcomes.
Warning: Cash Out should not be confused with Greening Up at betting exchanges, a process that is almost always recommended.
However, gaming operators’ betting books are never priced at 100%. They are in fact, returning about 90% to bettors. That remaining 10% is known as vig to keep them profitable. Therefore, Cash Out leads bettors to place another disadvantageous bet at the same football game!
While originally the sports bettor placed a bet at theoretically –EV odds, they are now lured into placing another bet under the same conditions! Yet, now the disadvantage is well concealed behind the attractiveness of Cash Out, either by securing a profit or minimizing the loss.
Pay attention. Initially, our sports bettor bet 10 euros at, say, 10% disadvantage, given fair odds should have been 3.40 instead of 3.00. That equals with 1 euro in long-term net loss. Going straight into the Cash Out trap, they place yet another bet at 10% disadvantage. This time the stake is hypothetically 15 euros.
Summing it all up, their net loss in the long run stands at 1+1.50=2.50 euros.
The sports betting company has doubled its profits via Cash Out!
Or did you think gaming operators were minding your wallet’s benefit, when introducing new tools in their betting interface?
Their goal is to keep you entertained and happy, while betting at them. If by offering you the Cash Out tool, they tempt you to spend more time and money on their betting platforms, they succeed their ultimate goal. Just, don’t expect them to do that selflessly!
Are you taking ‘advantage’ of the new Cash Out tool when betting on sports, or are you avoiding it? Let me know in the comments below.