Cashout is a feature offered by betting exchanges and some bookmakers that allows you to settle your bet before the event has finished.
This means that you can take a profit if you think the outcome is going in your favour, or minimize your loss if things are not going as planned.
The cashout price will be lower than your potential winnings if you let the bet run to its conclusion. But it gives you the chance to take a guaranteed profit or cut your losses.
Yet, betting exchange cashout differs considerably from the feature offered by traditional bookmakers. In the sense that it is much superior and fairer.
Let’s see why…
Traditional Cashout
A few words about the cashout feature offered by traditional bookmakers… We have to understand the mechanism of each to understand the differences.
Bookmaker cashout is a feature that allows you to cash out your bets before the event has finished. This means that if you place a bet on an event and the outcome is not looking good, you have the option to cash out your bet for a reduced payout. On the other hand, if the outcome is looking favourable, you can cash out your bet for a higher payout than you would receive if you waited until the event finished.
Bookmakers use sophisticated algorithms to calculate the value of a cashout. They determine it by using a number of factors, including (but not limited to) the current score, the time left in the event, and the odds of the bet winning or losing.
The cashout offer will be updated in real-time as the event progresses and the outcome becomes more certain.
A simple example
Let’s say you’ve placed a bet on a football match, with a stake of €10 at odds of 2.00, meaning that your potential profit is €10. If your team takes an early lead, the bookmaker may offer you a cashout value of €15. This means that you can choose to cash out your bet for €15 instead of letting it run to its conclusion, securing a guaranteed profit of €5.
On the other hand, if your team is losing, the bookmaker or exchange may offer you a cashout value of €5. If you take this option, you’ll receive €5 back from the bookmaker or exchange, cutting your losses at €5 instead of losing the full €10 stake.
Cashout is a popular feature among bettors because it allows them to mitigate their losses and lock in a profit before the event has finished. However, it’s important to note that the cashout value offered by the bookmaker may not always be in the bettor’s best interest, as the bookmaker will always look to minimize their own risk and maximize their own profit. Bettors should therefore weigh the potential benefits and drawbacks of cashing out before making a decision.
Simply put, bookmakers decide how much they will give you.
Oh, and bookmakers are profit-oriented! So, guess whose pocket they are thinking of when they calculate your cashout?! 🙂
Betting Exchange Cashout
Betting exchanges also offer a cash-out option to their customers. Although the way it works is different from the cashout options offered by bookmakers.
On a betting exchange, you can place both back and lay bets on a particular outcome. If the context changes and you want to close out your position before the event is finished, you can use the cashout feature to do so.
Let’s say you placed a back bet on a football team to win, but as the match progresses, the other team begins to dominate. You may decide to cash out your position before the match ends to limit your potential losses. The cashout amount will be based on the current odds of the bet, the amount of the bet, and the time remaining in the event.
In contrast to traditional bookmakers, the cashout option on a betting exchange is determined by the market itself, rather than the bookmaker’s own internal calculations.
This means that the return of the cashout feature is a fair one. It’s the same thing as placing an opposite bet.
Here is a simple example for you to understand better…
You back a tennis player to win the match at odds of 3.00. He took the lead and now dropped to 2.00. To have a guaranteed profit regardless of the final score, you need to place an opposite bet (lay bet) at those odds.
If you manually hedge your trade, you have a guaranteed profit of €50. The cashout button will offer you the same amount. A traditional bookmaker will offer you a lower amount very close to €50.
The cashout amount can fluctuate rapidly as market conditions change. You need to be prepared to act quickly if you want to take advantage of the opportunities.
Conclusion
Both bookmakers and betting exchanges offer a cashout feature.
The difference lies in the fact that the betting exchange offers a fair cashout, strictly depending on the odds available at that time.
Simply put, it is a button through which automatic hedging is done for you.
Overall, the cashout option on a betting exchange can be a valuable tool for managing risk and locking in profits. And is way better than traditional cash out.
However, we do not recommend using it, except if strictly necessary…
Why is that?
- It will hedge your trade (distribute the profit or loss equally). Maybe you want to keep most of the profit on a particular outcome.
- In almost any scenario you will lose small percentages compared to manual or software hedging. These cents ad up in the long term.
- There are situations where the profit is distributed even on impossible outcomes. For example, the Correct Score market. If the score is 1-1 and you hit the cashout button, some of the profit will be dispersed to close impossible scores like 0-0.
Solutions
✓ Plan your exit ahead. Even before your entry point.
✓ Do the hedging by yourself. Use an excel sheet or a hedging calculator.
✓ Manually hedge your position on the betting exchange platform. It’s a good option when you have enough time. Especially while you are still learning, so you can understand better how this works).
✓ Use specialised software like Bet Angel (this is the easiest way possible).
Of course, if the situation is super urgent and you have to exit the trade immediately, then it is more than justified to press the cashout button.