Is Cash Out Worth It?
Bettors have never had it so good as they do in the modern era. From the ever-expanding list of markets to the wide array of new customer offers and an increasing list of betting options, the online betting landscape has never looked so good.
One of the most popular new developments which falls into the betting options category is that of the Cash Out facility. Quickly becoming popular with punters across a range of sports, Cash Out is now deemed a “must-have” for many players when considering whether to sign up at a new betting site.
Here we take a look at what exactly the Cash Out facility is and discuss its pros and cons for the punter.
What is Cash Out?
For most of the history of sports betting, the betting process followed a simple pattern. i.e. place your bet, wait for the result, collect winnings/curse your bad luck.
The advent of the Cash Out facility however provides an alternative option. As the name implies you are now able to Cash Out your bet at any point between placing it and the conclusion of the event on which you have a bet.
How Cash Out Values are Calculated
The amount you are offered to Cash Out is calculated using your potential returns from the bet, and the odds at the time of the Cash Out offer.
Say for example you have placed a £10 bet on Newcastle United to win away at Tottenham Hotspur at odds of 3/1 (4.0) creating potential returns of £40. In the game, Newcastle take the lead and are winning 1-0 at halftime, seeing their price shorten to Evs (2.0).
The formula to calculate a fair cash-out value is Potential Returns/Current Decimal Odds, which in this instance would equate to £40 / 2.00 = £20.
In reality, the offer would be slightly lower than this as the bookmakers build a profit margin into their cash-out offers. The decision of whether to cash out is then up to you. Do you want to let the bet run to its conclusion with the risk of losing, or take a smaller guaranteed profit now?
The Downside to Cash Out
The downside to Cash Out is that you are accepting the bookmaker’s profit margin both on your initial bet and on the cash-out bet.
To explain why this is a bad idea, we will return to the Newcastle United bet, using an example bookmaker’s profit margin of 6%, and the half-time fair Cash Out value of £20.
If you do not cash out, the theoretical value of your bet to the bookmaker is simply the profit margin multiplied by your initial stake:
- 6% x £10 = 60p
If you do cash out, on average the bookmaker will receive:
- 6% of your initial stake: 6% x £10 = 60p
- 6% of Fair Cash Out Value: 6% x £20 = £1.20
- Total = £1.80
As we can see, that is a pretty big difference which, over time, can only be in favour of the bookmaker rather than the bettor. However, that’s not to say that cash out should never be used - only that bettors ought to be very selective as to when they use it.
When To Cash Out
Cutting Your Losses
Rather than guaranteeing a profit, one of the main benefits of Cash Out comes from the ability to take a smaller loss. Specifically in the instance that you place a bet, but then change your view.
For example, say you have placed £10 a bet on Manchester United to beat Liverpool at Anfield at odds of 2/1. However, when watching the early stages of the game you are of the opinion that Liverpool are clearly the better side on the day and you no longer believe that Manchester United will win. Cash Out enables you to escape with a smaller loss.
Say the game is still goalless at the 20-minute mark, and Manchester United’s Odds are now 3/1 (4.0). Using the Cash Out formula, a fair offer at this stage would be your potential returns divided by the new decimal odds: £30 / 4.0 = £7.50. Taking this offer would result in a loss of £2.50 on your bet, but that’s not a bad result for a bet you are no longer at all confident about.
When the Offer is Too Big to Resist
The second instance where it may well make sense to accept a cash-out offer is when the offer becomes exceptionally large.
A classic relatively recent example is Leicester City’s Premier League title success in 2016. Say for example you placed a £100 bet on the Foxes at the start of the season at odds of 5000/1 and were offered Cash Out with three games to play, with Leicester’s price now into Evens (2.0). A fair cash-out deal at this stage would be calculated as: potential winnings (£500,000) / current odds (2.0) = £250,000. It would take a brave punter to resist the Cash Out offer and potentially end up with nothing should Leicester fail to win.
Partial Cash Out
In addition to the full Cash Out, many sites now also offer a Partial Cash Out facility. This option enables the bettor to cash out only a fraction of their stake, leaving the remainder to run at the original odds taken. If in two minds as to whether or not to cash out, partial cash out may be worth considering.
Cash Out: A Useful Tool, but to be Used Sparingly
To cash out or not, that is the question. Purely from a long-term value perspective, the recommended approach would be simply to never cash out. Of course, this is easier said than done when you have a guaranteed profit staring you in the face – particularly should that sum be for an amount which may make a significant difference to your life.
Good advice is to take a second when looking at a Cash Out offer and think it through. If you are still happy with your bet and believe events are going in your favour, you are most likely better off letting it run to its conclusion. If, however, the circumstances of the bet have changed, and you no longer feel happy with your bet, Cash Out may be an option.
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