What is the Redemption Bet and How is it Calculated?

In this training article on the “Bookmaker Rankings” we’ll figure out what the buy-back function, known as Cash Out, is, why it’s needed and how the bookmaker calculates the amount of winnings or losses in the event of early betting.

The Cash Out function is an opportunity to request an early settlement of a bet in a bookmaker’s office or on a stock exchange – before the outcome of the bettingtakes place. You either fix a profit that is less than a potential one, or fix a loss that is less than a bet.

In fact, this function is bet insurance, reduced to the click of a button. On Exchange Betfair you would need to make calculations and put the right amount against the bet made before the match to insure yourself against its loss. At the bookmaker, to insure a bet on Home, you would need to put the right amount on X2 – its opposite.

The first in the Cash Out industry was offered by the Betfair betting exchange in February 2011. After that, the technology began to introduce online bookmakers. Today this function has reached a new level: it can be used in more events, you can order the early calculation of part of the bet, and leave the other part in the game.

How Cash Out Calculates?

There is a formula for calculating the net profit / loss when redeeming the bet without taking into account the margin:

(A * (B – 1) – A * (C – 1)) / C,
where A is the bet amount, B is the initial bet coefficient, and C is the bet coefficient at the time of redemption.

It is better to disassemble by example. Take the game “Spartacus” against “Zenith” in Moscow. Let’s say that bookmakers give 2.8 to Petrograd. You bet $1000 to win over Muscovites. And, about a miracle, Zenit opens the score to the middle of the first half. Time goes by, and now the coefficient for the victory of “Zenith” is already 1. 4. But “Spartacus” wakes up and begins to attack more vividly.

How much do you get if you now insure your bet on the victory of Zenit? We consider:

(1,000 * (2,8-1) – 1,000 dollars * (1,4 – 1)) / 1,4 = (1,800 – 400) / 1,4 = 1,400 / 1,4 = 1.000 dollars

That is, you will get 1000 dollars of net profit if you close the bet now, while the potential net profit at the bet is 1800 dollars. Not bad!

Similarly, you can calculate the net loss, if the match went on an unexpected path, and the coefficient on your bet increased in live. For example, you bet $ 1000 onZenit with a coefficient of 2. 8. But in the course of the match due to negative events for you, this coefficient has grown to 3. 5. You want to fix the loss and not lose the entire bet:

(1,000 * (2.8-1) – 1,000 dollars * (3,5 – 1)) / 3,5 = (1,800-2,500) / 3,5 = -700 / 3,5 = -200 dollars

But this formula does not take into account the margin of the bookmaker to use Cash Out. In practice, you will receive not $ 1,000 of net profit, as in the example, but $ 850-950 depending on the bookmaker. Some have a redemption margin, others have more.

Pros and Cons of Buyout bets

Cachet should be considered in terms of how much benefit it brings to the player. This function has both positive and negative sides.

Positive sides

1. It’s comfortable. You just need to press one button, instead of making calculations for insurance bets manually.
2. Possibility to fix profit. If you made a risky bet and the events develop in your favor – for example, your middle peasants Examples scored a goal to Barcelona – you can get a pleasant profit and do not wait for Barcelona to wake up and shoot twice more into the gate of an insolent opponent.
3. Possibility to save part of the bet. If the events do not develop in your favor, you can agree with the loss of some of the amount and get the rest back.
4. This adds excitement. Now you not only watch whether the bet passes or not, but also literally every second you analyze whether it’s time to buy it or wait.

1. This is less profitable than self-insurance bets.  You pay a margin twice when using the Cash Out function in the bookmaker’s office.
2. The redemption bet-express margin is usually even higher than the single bet. 
3. You can be wrong.  Thousands of players refused to use Cash Out after they changed the crane to a titmouse: they took an early settlement of the bet with less profit, when only a little patience was left before the big win.  Indicative story of a man who bet on the championship of “Leicester” 50 British pence with a coefficient of 5,001 and took a profit of 45 pence on Cash Out after the victory of “Leicester” over “Sunderland” in the first round.  After the championship of the “fox”, his winnings would be 2500 pounds.      

Is it worth using Cash Out?

On the Betfair Betting Exchange, which does not place margin in the coefficients, it facilitates trading. But in bookmakers, given their margin in odds and a surcharge for early betting, using Cash Out will worsen the results of your game at a distance. However, if you play for excitement, and Cash Out warms it up, why not?