Should You Cash Out Your Bet Early?

If you’ve placed a bet on any of the available online sports books, chances are you’ve been offered an early cash out on your bet at some point. Because Cash Outs tend to be most commonly offered while an event is running and before it ends, Cash Outs can be viewed as a live in-game betting feature. But Cash Outs may be offered mid-season on long-term futures bets as well, such as a wager on the MLB World Series Winner.

So, should you cash out your bet early? The answer depends on a number of factors, including the current score of the event and how long you think it will take for your team to come back or for the opposing team to extend their lead. Here is a post explaining why “Cash Out” is a terrible choice, 99% of the time.

What is a sportsbook Cash Out (or Buy Out)?

A Cash Out, also known as a Buy Out, is a function that allows sports books to pay out less than the full potential win before the event ends. The upside, if you take the offer, is locking up some profit that is yours to keep regardless of the final outcome of the event, however the downside is that you will not receive the full amount of the payout that you originally wagered on. For example, let’s say you wagered $100 at a -110 betting line for a full potential payout of $190. At halftime, you may be offered an early cash out for $150. You are locking up $50 in profit, but you are missing out on the potential of the other $40.

The premise of a cash out is built on the same one that fueled the popularity behind the Deal or No Deal TV show in the mid-2000’s. The players’ happiness of having something guaranteed immediately, rather than their regret of possibly having nothing – at the expense of value – is a common cash-out situation. In the Deak or No Deal example, if a player has two cases left containing either $1 or $1,000,000, their effective value is $500,000. However, the offer may come in at $350,000. This is the test. $350,000 is significantly more than $0, and it’s guaranteed! But you are missing out on the potential of $1,000,000. Many players would ignore the fact that their position is worth $500,000 in order to avoid what they are losing.

This is a powerful position that the oddsmakers and sportsbooks are aware of.

How to Calculate The Value of a Cashed Out bet

Calculating a sports betting cashout is easy to do, but not many people do it. Let’s set up the game first by looking at a moneyline example.

Pre Game:

  • San Francisco Giants: +120
  • Los Angeles Dodgers: -140

Betting on the San Francisco moneyline for $100 would payout $220.

Live Odds:

In the sixth inning, the Giants are ahead 3-0 and the current odds are:

  • San Francisco Giants: -200
  • Los Angeles Dodgers: +160

The oddsmakers are effectively saying that the Giants have a 66.7% chance of winning based on the current state of the game, while the Dodgers have a 38.4% chance of a comeback.

To calculate the fair value of a betting cash out use the following formula:

Cash Out Value = (Current Probability)×(Original Return)

Using the above formula with the existing example, we get a fair cash out value of 66.7%×$220 = $146.67.

Should You Accept an Early Cash Out for your Bet?

Should you take a cash out? We’ve learned what a cash out is and how to calculate the fair value, so should you accept it? Accepting a Cash Out offer from a sportsbook may be appealing since it allows you to lock up a profit or cut your losses, but more often than not, bettors should decline.

When you make a wager, you know how much you can lose and should set aside the maximum amount of time (the whole game or event) to win the bet and not cash out early. As always, we recommend never betting more than you can afford to lose and use some sort of bankroll management. In addition, always consider when you are thinking about accepting early cash out, will the amount you accept make a considerable difference to your life or bankroll? What I mean is, if taking an early cash out allows you to lock in $50 profit, will that make a meaningful difference?

Now from a math perspective you should evaluate the cash out using the formula above. You will never receive a higher payout offer from a sportsbook than the true value of the bet. Bookmakers will usually take a 12-25% commission for you to “lock in a profit” – meaning, if the fair value of your payout is $100, they may offer you a $75 to $88 payout. The amount of “commission” taken from the cash out offer is dependent on the overall vig paid in the original market. You’re probably paying 10% commission when betting on major sports sides and totals. In futures, parlays, and other similar markets, you may expect to pay upwards of 30% in some circumstances.

There are two situations where I think it’s good to consider accepting an early cash out.

  1. You have the opportunity to lock in a life-changing amount of money.
  2. Something has drastically changed in the game, and the odds have not moved to reflect these changes yet.

When I say the game’s environment has changed drastically, I’m talking about a situation in the game (severe injury, extreme weather, or coaching decision) that affects your bet. While these occur regularly, catching them fast enough is difficult. Cash-out is linked to current odds; you must move faster than the oddsmakers to beat them to a cash out.

Summary of Sports Betting Early Cash Out

The most essential point to keep in mind is that, if the amount being offered is a life-changing amount of money to you, cashing out of a bet is not necessarily a bad option. Similar to investing in the stock market, taking money off the table and selling before the “top” is entirely acceptable.

It’s also essential to remember that sports books have vig built into your bet, which is included in the cash-out equation and then has a profit taken off the top. They’re relying on a preference we all have as humans, namely that we value money now more than we do money in the future at risk of losing everything. It should be the goal of every bettor regardless of unit size to get to a point where they both understand and trust the situations that led them to make the bet in the first place before the game more than they trust impulses during the game to sacrifice value on cashing out.