The ability to cash out was once at the very cutting edge of bookmaker technology but now it is so common that most punters expect to see it as standard. An oft-used feature, it allows punters to settle their bets early, before the event (or events) have run their course. No matter if it’s simply people unable to hold their nerve or a calculated decision based on a change in circumstances, there are many reasons why people choose to cash out their bets.
Few punters, however, know how cash out offers are calculated so this is one thing we will look at during this article. We also want to question whether cashing out is ever the best approach for you and if so, in what situations. By furthering your understanding, you can stand a better chance of successfully beating the bookie.
How Do Bookies Calculate Their Cash Out Prices?
Fundamentally, a cash out price is shaped by three factors: your stake, your potential winnings and the live odds. The formula itself is actually very simple and will only take you a few seconds to calculate if you have a calculator to hand. There is no need to actually do this though as if your bet is eligible to be cashed out, the bookmaker will produce the cash out figure themselves. Nevertheless, it is still useful to know how they produce the figures they offer.
To show you how a cash out price will be generated, let us keep things nice and simple to begin with by providing an example involving a single bet. Imagine we put a £10 bet on Leeds to beat Manchester United at Old Trafford before kick-off at odds of 5/1. The Yorkshire outfit take the lead and go into the half-time break with a nice 2-0 lead. Given their advantage, the in-play odds on Leeds to collect all three points have now dropped to 5/4. Now a ‘fair’ cash out price will simply divide your potential returns by the current odds.
Potential Returns ÷ Live Odds
In this example, the potential returns were £60 (£10 x 5/1 plus our £10 stake back) while the current odds are 5/4, or in decimal terms 2.25. So, £60/2.25 would give us a figure of £26.67. Now, this won’t be the exact figure you will be offered because bookmakers slap their own margin/cut on top of this. In reality, the formula is as follows.
Potential Winnings ÷ Live Ddds x (1 – Bookmaker Margin, e.g., 10%)
This would mean that we would receive a cash out offer of £24 based on the above example. If Leeds were to grab another, say a few minutes into the second half, their odds might drop further to odds of 1/4, which would be 1.25 in decimal odds. Our ‘fair’ cash out price would then jump up to £48, with the actual offer being n the region of £43 or £44.
Multiple Concurrent Bets
You can apply the same calculation when placing bets with multiple selections. To run you through another example, let us say you picked Manchester City, Manchester United, Chelsea and Liverpool to all win their weekend fixtures. Pre-game all were the comfortable favourites at 4/6 and you decided to whack £5 on them to prevail, a bet that would return £38.58 overall. All are leading with 20 minutes to go and subsequently two teams find themselves trading at 1/5 (1.2) and the other pair are 1/4 (1.25).
To calculate the fair price we would first divide all our four selections so £38.58 ÷ 1.2 ÷ 1.2 ÷ 1.25 ÷ 1.25 = £17.15. After the bookmaker margin this would end up being around £15 to £16.
You will find that it only takes one team struggling to make a huge difference to the cash out value. Instead of being 1-0 up with 20 minutes to go, let us say that Chelsea were a goal down and were subsequently trading at odds of 5/1 to win rather than 1/5. Dividing all the odds together would see us calculate £38.58 ÷ 1.25 ÷ 1.25 ÷ 1.2 ÷ 6 producing a total of £3.43 as a ‘fair’ cash out price.
Note that the cash out price is not a net win, so if your original bet cost you £5 and you were offered £3 for a cash out, this is you effectively agreeing to a £2 loss. Obviously, it is not very often you would willingly accept a loss but losing £2 is preferable to losing the full £5. Most people would probably agree though that they are better just to stick with the bet and hope Chelsea manage to turn things around.
Multiple Bets (Different Times)
You can easily find yourself in a situation in which most of your selections have already concluded (and won) but you are just waiting on or two others. This is particularly common in horse racing as you seldom have races starting at the same time, certainly not within the same racecourse. In such cases, there are no ‘live odds’ but all you need to do is use the currently available odds, rather than the price you backed at the time.
This is one example that made the headlines during the 2021 Cheltenham Festival. With one horse left remaining and standing to win £511,225, the bookmaker offered a sizable cash out figure of £275,000. The reason the amount was this high, with a 9/2 shot left outstanding, was that the odds on Envoi Allen has been slashed to 1/2 by this point. This had a huge impact on the cashout price as rather than relying on something still quite unlikely, the punter only had a strong favourite to come in.
In this case, calculating a ‘fair’ cash out value would follow the usual process but you are just taking the ‘current’ odds rather than the in-play odds. Here there was just one horse left so the calculation would be £511,225 ÷ 1.5, totalling £340k. Now, this is distinctly higher than what the punter was actually offered but the bookmaker did not need to be overly generous in this instance. An offer of £275k was still a huge amount and tempting enough without it needing to be larger.
The punter ended up hedging his bets and accepting a partial cash out, which combined with his other bets on the race, meant receiving £250k if Envoi lost and £300k if Envoi succeeded. It proved a wise decision too as the odds-on favourite didn’t even make it to the end of the race after suffering a fall.
Had the odds-on Envoi not dropped in price before the race, the cashout offer would not have been anywhere near this high. If, for instance, they had lengthened a little to 5/1, we would be looking at £511,225 ÷ 6, giving us a total ‘fair’ cash out of £85,204 and an actual figure of around £70k.
The Cons of ‘Cashing Out’
There is nothing inherently wrong with cashing out a bet. It is a fully transparent feature that has secured net wins for countless punters who otherwise would have lost a bet. To purely focus on the success stories though would be a foolish thing indeed as there are plenty of others out there who have reduced their winnings, quite substantially, by not holding out.
You should always be mindful that overall, it is a feature that ultimately favours the bookies. If it was not the case then they would not be offering it to their customers, especially as it is no longer a big unique selling point that can help attract new players. ‘Cashing out’ works in the bookmakers’ favour because you are effectively giving them yet another margin to benefit from.
When initially placing your bets, the bookies will be taking a cut usually between 4% and 12%. The lower percentages are typically reserved for more high-profile matches across the most popular sports. If we take a Premier League game involving Tottenham and Man City, for example, the odds offered by a few bookmakers are 3/5 on City, 31/10 on a draw and 9/2 on Spurs. The implied probabilities for each of the odds are 3/5 (62.50%), 31/10 (24.39%), 9/2 (18.18%) giving us a total of 105.07%. The amount above 100% is the bookmaker margin so in this case, they are taking a 5.07% buffer for themselves.
When you cash out, they will take yet another margin for themselves, however. Earlier on we showed you how the ‘actual’ cash out calculation is different from the ‘fair’ calculation because of this. You, therefore, end up with the bookmaker taking two additional slices of your pie. Now the slices may be very slim but in the long-term, they do add up and ultimately, they mean that cashing out is something you should do sparingly.
The Alternative to Cashing Out?
As opposed to cashing out, you are likely to find there is better value in ‘laying’ your bet at an exchange. In our very initial example, the bookmaker was offering odds of 5/4 on Leeds to win the game and we were expecting a cash out figure of £24 in the circumstances. This amount includes our stake so we would be looking at a net win of £14. Rather than taking this amount though, what we could do is bet against Leeds winning and potentially gain a little more money.
Odds at the exchanges tend to be very close with what are available at the bookies (if not better) so in this instance, we could realistically place a ‘lay’ bet against Leeds winning with a £33.33 liability. As we are betting against an outcome of 5/4, this means if successful, we would be paid out at odds of 4/5, meaning a total return of £60. So, this would leave us with two situations. Remember that initially we would be offered a cash out figure of £24, meaning £14 net win from our original stake.
If Leeds win, our bet with the bookmakers wins (£50 net win) but we lose our ‘lay bet’ for which we say goodbye to £33.33. This would mean a total overall net win of £16.67 and £2.67 more than the cash out price. If Leeds fail to win, our bet with the bookmaker loses (-£10) but we would scoop £26.67 net win at the exchange. As a result, we would end up with a net win of £16.67, again £2.66 more than the cash out offered. So, by hedging our bets in this way, we could obtain more money than was being offered via a cash out. The only tricky part is knowing how much money to ‘lay’ but a simple online arbitrage calculator will tell you this in an instant.
The Limitation to ‘Laying’
In some cases, laying your selection can be a better alternative to cashing out. Should you wager the correct amount with a lay bet, you will most likely be in a position to claim superior returns regardless of the outcome of the event. Lay betting is not always a better option though as it does feature limitations. Firstly, it is simply not worth the hassle for smaller cash out offers. When you have a cash out price within the single figures, you will only potentially be a matter of pence better off, so you might as well take the bookie’s cash out offer.
Only when you stand to win a lot of money are you likely to find it is worthwhile heading to the betting exchange to lay a bet. You have the problem here though that when hedging your bets, you will need to bet a large sum of money. If you initially bet £100 on Leicester to win at 2/1 and the odds have now dropped to evens, you would need to bet £150 against them winning to guarantee a net win of £50 in either eventuality. Having access to this much extra capital is not feasible to all players and, if not, it means the option to lay is not something they can explore.
Another issue with laying is that it is only really manageable when placing single bets. If you have a five-fold accumulator, trying to calculate how much money to put on each event to beat the cash out price is not an easy task. Not only is there is a chance you can make a mistake but the odds might change while you are placing your other lay bets. Not all exchange bets are ‘matched’ either so you could be in a position in which four of your bets are matched but not the other. Basically, there is just too much that can go wrong with multiple selections, particularly if the games are all live (as opposed to being during a half-time break).
Finally, be mindful that betting exchanges charge a commission for their services. This commission will most likely be less than the bookmaker vigorish (margin) but it still will eat into the benefits a little. Typically, an exchange will charge between 2% and 5% commission.
When Should I Cash Out?
We know that cashing out will not provide long-term value for money so you might be wondering if it is ever worth doing? It absolutely is but you need to pick your moments wisely. It should really never be done if you are simply feeling a bit nervy because if repeated enough times, with average luck, you will unquestionably be better off holding.
Cashing out should really only be utilised in cases in which an event you have bet on has witnessed a potential turning point that has not been fully reflected in the odds. To give you an example, say you have put a £10 bet on Wolves at 3/1 (4.00) and they are now trading at 1/1 (evens or 2.00) thanks to their 1-0 lead. At this stage, a cash out offer would be around £18 and there has been no change even though Connor Coady has just limped off the pitch with an injury. You know however that Wolves are much worse without Coady on the pitch and their win rate without him playing is 25% lower. As such, the ‘true’ odds on Wolves winning, in your mind at least, might be 6/4 so a cash out offer of £18 is well worth taking.
Similarly, you will want to consider cashing out if you believe something is about to happen that will cause a significant reduction in the odds, or effectively rule out your selection. This could happen in a tennis match in which your injury-prone selection appears to be showing some signs of discomfort. Although they won the first set and are leading in the second, you are mindful that they could retire at any moment given their history. So, before they do this, you can cash out a net win while you have the chance.
In both cases, you will probably be able to get more money by laying the selection, rather than cashing out. You would, however, need to ensure you have the time, the understanding and the extra money available for this. If you are worried the odds could change in an instant, or you don’t have the funds to lay a bet, then simply stick with the cash out.