Things are going well. Your team is leading. The clock is winding down. But then the heavy favorite starts mounting a rally. The button is right there. You could lock in a win. You start to wonder: Should I cash out my bet?
The short answer is “no.” The long answer is “almost always no.”
When considering whether to cash out, you need to figure out your equity in the bet at the time of the offer and compare it to the cash out price.
To do that, first work out the implied probability of your bet and multiply it by the expected payout.
Hypothetically, say you took the Grizzlies over the Lakers on the moneyline at +200 for $100. The implied probability on a +200 ‘dog is 33.3 percent. (You can get the implied probability of any bet using our Odds Converter.) Your equity in the bet is 33.3 percent of the $300 payout, or $100.
Ja Morant goes off in the first half and Memphis is up by 15. The cash out button lights up and offers you $175. Lock up $75 in profit before LeBron James gets feisty?
Before you accept any offers, look around at sharp books and see how they have the game lined. If a market-making book you know is great at live NBA has the Grizzlies -200, use it as your source of truth.
The implied probability of a -200 favorite is 66.7 percent. Multiplied by the $300 payout, and your equity in the bet is $200.
Another way to check it is to use the Hedge Betting Calculator where you can see if you’re in a spot where taking the money makes sense. Typically, you’ll see “Let it ride” come back as the response. The math isn’t going to work out in your favor.
“I think what you’re going to find in most sports books is the cash out offer is about 50 cents on the dollar of what it should be,” Captain Jack Andrews said. “A better way to play that would possibly be just to bet the other side. Or you could just let it ride because you know that’s your best total EV in that situation. When you take that cash out offer you’re basically accepting that you’re not going to reach your full EV.”
Maybe you don’t care about surrendering equity in your bet. You just want the money because it’s a sure thing and it’s a large chunk of change. If you find yourself tempted by a cash out offer because the money is significant, it’s a sign you’ve bet too much in the first place.
When Should You Cash Out?
The times where a cash out is acceptable are few, but they do exist.
Some books offer a full cash out on a bet before a game starts. If you see a better number at a different book and can get out of a position free and clear, hit the eject button and go out to re-bet elsewhere with a clean conscience.
Cashing out parlays where multiple legs are in but there are still several legs to go may end up getting you a slightly better offer than on a straight bet as the books try to limit their exposure to variance, but the offers likely won’t reflect your actual equity stake in the bet.
Another situation where you can cash out in a way that doesn’t severely diminish your equity is if you’re betting on exchanges. They’re low margin, designed to let you close out positions, and allow you to only sell off
“It gives you a lot more flexibility,” Andrews said. “The offer you’re getting to cash out there is about 97 percent of the equity versus 50 percent at most spots. It’s a far better way to play.”
The only friction is the commission, which is charged on winning positions. Otherwise you’re able to get in and out seamlessly so long as the markets have liquidity. If you had bought Memphis in our hypothetical for $33 per share before the game started and it’s trading at $66, you’re realizing your equity by selling (less the commission).
Cashing out may not be as onerous in the future as it is now. Third-party sites like PropSwap and WagerWire let you set your price on a bet you want to sell. With futures, you can ensure you’re getting the right price, so long as you account for the commission you’re paying on any secondary market.
Use equity as your beacon, though, and you’ll know which way to go whenever you’re getting out of a bet.