When thinking about placing a wager on the outcome of an event, such as the winning of a sports match or political polling station results, you may wonder: What is staking?
For those new to the world of betting, staking simply refers to the amount of money you are prepared to risk on a single wager. Though the term may be used in a variety of ways, when referring to a sporting event, casino gaming and poker, among other things, stake usually means the amount of money you are willing to risk on the outcome of the event.
So what is the risk, you may wonder?
The risk in betting, as in any other area of life, is the possibility of losing. The more you stake, the greater the potential loss. To calculate the potential loss in your specific situation, you need to add up the amounts you have staked on each of the possible outcomes of the event, as well as the amount you would need to stake to cover the costs associated with the wager.
For example, let’s say you are backing a horse in the upcoming Melbourne Cup and have $100,000 staked on its winning. If the horse wins, you win your $100,000. If it loses, you lose your $100,000. So the risk in this case is $200,000.
Let’s say you have twice as much money on the losing side. In this case, you would need to stake $400,000 to have the same level of potential loss, or two times the amount you are backing, on the losing side. This is known as ‘hedging your bet’ and is a technique commonly used in gambling to reduce the risk of loss.
How Does Staking Work In Practice?
When placing a wager, you need to consider how it will be settled. For some bets, such as poker and some types of casino gaming, the odds are usually set based on the amount you stake. So, if you are playing Texas Hold’em with $100 and the other player bets $200, your stake will control the odds in your favor. In most other types of gambling, the house advantage, which is the advantage the casino/poker house has over you as a player, can vary from slightly to significantly, based on the amount you stake.
Because the amount of money you have staked is used to calculate the risk in most cases, it follows that the more you stake, the greater the potential reward. However, this is not always the case. For instance, if you have 10 coins on a scratch card and you bet one, does your stake increase the potential reward?
The answer is no, because in this case you are only increasing the risk. The greater the amount you stake, the greater the potential reward – but only up to a point. In some cases, such as slot machines and some types of roulette, the more you stake, the greater the house advantage and lower potential payout, respectively.
What Are The Different Types Of Stakes?
While the general concept of staking is to indicate the amount of money you are risking on the outcome of an event, the term staking can also be used in relation to different aspects of a wager. Some of the more common types of staking include:
Covering/Insuring The Stake
If, for some reason, you do not want to risk the amount of money you have staked on an event, you may insure it. Most betting providers offer insurance against the amount of money you have staked on a specific event. In these cases, if the event you backed loses, you will be reimbursed for the full amount you have staked. This type of insurance is commonly referred to as ‘betting insurance’ or ‘wager insurance’.
In certain types of gambling, such as poker and some types of casino gaming, if you are dealt a terrible hand and the casino wants to avoid having to pay out huge sums of money to players, they will adopt a strategy of making sure players risk only what they can afford to lose. In these types of gambling, if you are dealt a bad hand and the house wants to avoid paying out, they will simply take your money (assuming you meet their minimum stake requirement). In other types of gambling, such as slots and some types of roulette, if the player does not meet the minimum stake requirement, the house advantage and probability of winning do not change, regardless of the amount the player risks.
Maximum/Minimum Stake
In some types of gambling, such as poker and certain types of casino gaming, your stake can limit the amount you risk per round. In other types of gambling, such as slots and some types of roulette, your stake can set the minimum amount you need to risk per turn. This type of staking is designed to encourage long-term betting activity by limiting the possible negative outcomes for those who place small bets. This type of staking is also commonly referred to as ‘timing’ or ‘minimum bet’.
Multiple Stakes On 1 Bet
Though not common in sportsbooks, you may make multiple bets on the same wager. Let’s say you place a wager on the winner of the 2017 Australian Open. You also have an additional $100 bet on the Australian Open on the same day. In this case, the first $100 will be matched, and you will win twice the amount you staked on the original wager. This type of staking is commonly referred to as ‘cherry picking’ or ‘sucking up’.
In general, when selecting a horse/dog/fish to back, you need to consider the type of staking you are willing to make. Though this may seem obvious, given the nature of wagers, not all horses/dogs/fish are created equal. Some may be inherently more profitable than others. This can be partially determined by the type of staking you are willing to make and how much you are willing to risk. Before committing to any wager, especially one involving the possible loss of a large sum of money, you should consider all the angles.