Risk-Free Bets Can Actually Be Quite Risky, And Quite Profitable
Recreational sportsbooks love to lure customers with the promise of full refunds on losing wagers. In fact, so-called “Risk-Free Bet” promotions are now the sign-up bonus of fancy among most books, replacing the once-popular (and more +EV) free-bet offers.
The problem is the term “Risk-Free” is actually a bit of a misnomer, as bettors who partake in these promotions will always incur some risk. How much? Well, that depends on both promotional terms and the odds of the bets you place.
In this post, we’ll explain the nuts and bolts of risk-free bet promos, and why you’ll ultimately want to embrace volatility when claiming them.
What is a risk-free bet?
“You get nothing, you win, good day sir!” – Willy Wonka, the recreational bookmaker
If there is one common thread among all risk-free bet promos, it’s this: If the wager you place wins, then it’s like the promotion never existed. You get nothing, or that is you get nothing beyond your normal winnings.
This is the primary reason why recreational books prefer risk-free promos over traditional free bet offers, as in the latter case, the free bet is won regardless of the outcome of the initial wager. And that means the book loses more money. In case you haven’t noticed, books hate losing money.
So when you see a book offer a “Risk-Free Bet Up to $1,000” it simply means that if you lose you’ll get the amount of your initial wager back in something other than cash, and if you win, the book has decided that you don’t really deserve anything extra.
Beyond this universal caveat of risk-free bet promotions, there is a sea of additional fine print that you must wade through, and these terms and conditions can vary wildly from book to book. It’s critical to read through each term and to understand how it impacts your EV.
With that in mind let’s take a quick jaunt through the weeds that are a risk-free bet promo’s T&Cs.
Risk-free bet terms and conditions
There are five questions you want to ask before opting-in to a risk-free bet promo:
#1 How is the refund issued?
Most of the time, the free bet will be issued as just that, a bet. In this scenario, the book will stake you the amount of your loss, and you’ll use it to make another bet (or series of bets). If you lose, then you technically didn’t lose another dime, since the bet was on the house.
However, if you win, you must return the stake back to the house. So if you placed a $500 bet on an NFL spread at -110 and it wins, your balance will be $454.55, and you’re still down $45.45 on your initial deposit. Are you starting to see why the books like this promotional vehicle so much?
Not all books institute this caveat. For instance, FanDuel Sportsbook issues its refunds as a sportsbook site credit that can be spent just like cash, with the only condition being you must wager the funds 1x before withdrawing. Both the stake and the winnings are returned on successful wagers. This scenario is obviously much more advantageous for the bettor.
#2 How is the risk-free bet distributed?
It’s of the utmost importance to understand how you’ll be able to use your refund. On a book that issues site credit, you’ll typically have a high degree of freedom. It’ll probably be entirely up to you how to wager the funds.
That freedom is stripped when you receive the kickback as a free bet. Most of the time you’ll be forced to “risk” the entire amount in one go, which is quite at odds with the “risk-free” marketing verbiage used for this promotional vehicle.
Occasionally, books will issue the free bets in increments. BetMGM does this, rewarding bettors with five free bets, each one representing 20% of their initial losing wager.
#3 How much should I bet?
Ideally, you’ll want to bet the maximum that the book is willing to refund, and not a penny more. If a promo reads “Risk-Free Bet Up To $1,000,” then bankroll permitting, bet $1,000.
Of course, if you only have a $1,000 sports betting bankroll, then it might be more prudent to only utilize a portion of your sign-up offer. You’ll be giving up a ton of upside, but you’ll also preserve your bankroll while still maintaining a positive expectation. Alternatively, just bet at other books until you have the roll to take advantage of the really juicy sign-up bonuses.
If you do plan on low-rolling promos, just be cognizant of any minimum wagering eligibility requirements. Wagers less than $20 or $50 may not qualify you for the promotion.
Note: The amount books are willing to refund as part of their sign-up bonuses can range from as little as $100 up to $5,000 (Caesars).
One last point: Don’t assume that if you deposit $1,000 and lose 10 $100 bets that you’ll be getting all your money back. Most of the time, only your first wager will count toward the promotion.
#4 What can I bet on and at what odds?
It’s uncommon for a book to restrict the type of bet players can make, but it’s certainly something worth keeping tabs on. Is it inconceivable that in two years’ time, books will force players to use their initial wager and/or free bet on 3+ leg same game parlays? The way the U.S. sports betting industry is shaping up, certainly not.
More commonly, books will only accept bets at certain minimum odds, typically -200 or longer. In other words, bets of -200, -150, +100, and +1000 are perfectly acceptable, but a bet at -250 odds is not.
This is a confounding caveat, as for this type of promo, it’s actually in the bettor’s best interest to place longshot bets. More on why later.
If an instance ever occurs where the book only permits promotional wagers on favorites, it’s probably best to just move on to the next promo.
#5 How long do I have?
For sign-up bonuses, once you make your initial deposit, the clock starts ticking. It could be 30 days, it could be three, but at some point, you will no longer be eligible to receive a free bet. And even if you do manage to place an eligible wager in time, the free bet typically has its own expiration date. The lesson here is don’t dwaddle.
One point of interest, and this harkens back to our discussion of eligible bet types (Point #4): Some books require that a bet settles within a certain time frame (again, could be 3 days, could be 30) for it to be deemed eligible. This primarily impacts futures bets, which may not settle for months.
So if you’re looking to plunk down $500 on the Jets to win the Super Bowl, and it’s only July, you might find that your free bet balance reads $0 come February – and not because the Jets lifted the Lombardi Trophy.
Always read the fine print.
When are risk-free bets offered?
Risk-free bets are primarily a customer acquisition tool used by the books. And it makes sense why they’re chosen them as the primary device to lure bettors in. The language “risk-free” is bound to resonate with just any bettor, from pros on the lookout for +EV plays, to recreational players desperate to recoup a portion of their losses. In addition, because the actual +EV of a risk-free bet promotion is much lower than the advertised amount, books have no issue throwing big numbers like $1,000, $2,000, or even $5,000 around. All in the name of padding that customer database.
In short, you’ll mostly see risk-free bet promotions as part of welcome packages. Beyond that, you’ll rarely see them at all, and if you do find them as part of a book’s recurrent promotional schedule, or as a one-off offer, the monetary caps are going to be much, much lower. Think $10-$20 normally, or maybe up to $100 during big events, like NFL Week 1, March Madness, the NBA Playoffs, or the Super Bowl. The only folks who may receive risk-free promotions with monetary caps that approach those of sign-up offers are high-level VIPs.
Interestingly enough, recurrent promotional schedules are far more likely to feature free bet promos than risk-free offers, and again, that’s because the dollar amounts are so small. It doesn’t really cost a book that much more to award a $20 free bet to someone who places a $50 wager, as opposed to someone who loses a $50 wager.
Regardless, the trend of most recreational books is to tailor their regular promotions around boosts, multi-leg parlays, and other gimmicks. There’s often some value to be found here, but it requires more work to find it. And to be honest, rec books don’t think highly enough of their clientele to figure out where the value lies.
Maximizing risk-free bet profits
Risk-averse types aren’t going to want to hear this, but the key to maximizing your EV with risk-free bet promos is to place longshot bets, and not just on the initial wager, but (usually) on the free bet as well.
First, let’s look at how to approach the initial or risk-free bet.
Risk-free bet: Optimal approach
Our goal with the risk-free bet is to maximize our chances of winning a free bet, without sacrificing EV.
Well, because the only way to win a free bet is to lose, you should place a bet with low implied odds.
We calculate implied odds (for American odds) via the following set of equations:
For favorites: Implied odds = (-odds)/(-odds + 100) * 100
For underdogs or even-money: Implied odds = 100/(odds + 100) * 100
Let’s say you want to place a bet with odds of -400. For the purpose of these exercises, we’ll assume no vig. The implied odds are (400)/(400 + 100) * 100 = 80%. You have an 80% chance of winning, and your return on a $500 wager will be $625 ($500 stake plus $125 in winnings). So 80% of the time you win $125, and the other 20% you lose $500. Adding those two scenarios together give you your EV:
EV = (.80 * $125) – (.20 * 500) = $0
No big surprise here, as we’re betting a VIG-free line. The larger point is that in this scenario, you’ll only receive a free bet 20% of the time.
Now, let’s flip the script and place a wager on a big +600 dog. Here our implied odds of winning are 100/(600 + 100) * 100 = 14.29%, and our EV is still….you guessed it, $0. We haven’t sacrificed any EV compared to the -400 wager, but instead of having a 20% chance of locking up a free bet, now we have a nearly 86% chance.
Ok, so you might be thinking, “But I don’t want to incur that kind of risk on a single bet.” To that, I offer two pieces of advice: If you live in a state with online sports betting, then there’s at least a good chance that there are many books in operation. The more risk-free bets you take advantage of, the closer your actual results will align with the expected return, and the highest expected return is achieved by betting longshots. If your state only has one or two online books, then it’s perfectly fine to mitigate risk. Try to find a balance by betting a reasonable underdog, say +150 or +200.
Now that we know how to maximize our chances of winning a free bet, how do we avoid sacrificing EV in real-world scenarios? This part is actually pretty easy: Just make longshot bets with low, or if you can find them, negative, house edges. As tempting as it might be to parlay six heavy favorites, the VIG on this type of bet is astronomical, as is the variance. Instead, find yourself a nice straight bet, a solid 2-3 leg parlay, or look for a mispriced alternative line.
Important: Even though we’ll lose out on a free bet, our best-case scenario for the risk-free bet is for our underdog to defy the odds and win. So, try to find bets that have value.
Free bet: Optimal approach
So you lost your risk-free bet and you’re out 500 or 1,000 bucks. But you do have a handy free bet in hand. Now, what do you do with it?
Well, it’s really going to depend on whether the refund is issued as a free bet or a site credit. In the latter case, just continue to make the best possible wagers, regardless of the odds.
The situation gets a bit more complicated if you’re handed a free bet. Sorry to sound like a broken record, but in this case you’re going to want to bet an underdog.
Remember, with a free bet you don’t get your initial stake back, so in order to maximize our EV, we want the stake to be disproportionately small compared to the potential winnings.
Imagine betting a -500 favorite with your free bet. Sure, your VIG-free implied odds are really good (83.33%) but you’ll only win $100 on a $500 wager. The $500 will go poof, and you’re left with $100 83.33% of the time and $0 16.67% of the time, for a total EV of $83.33. That’s a pretty raw deal.
Let’s flip those odds upside down and see what happens. Now you’re betting a +500 underdog, with implied odds of only 16.67% but winnings of $2,500 if you get lucky. Your EV is $416.75, which is remarkably close to the amount you lost on your initial bet. Factor in a reasonable VIG, and it’s still right around $400.
The hard truth is that no matter how long the odds, your free bet EV will always be lower than the amount you lost. But you can substantially close the gap by inviting a healthy degree of risk.
What about betting on both sides?
Is scalping your refund a viable alternative? If you’ve received your kickback as a free bet, then there is no way to scalp your way to a profit, so just get the thought out of your head.
However, if you have a site credit to burn, then it’s a feasible option, especially for risk-averse types who are more than content to wiggle their way back to even. It’s also an option for those who don’t entirely trust themselves to make EV bets.
What’d you do in this scenario is the following:
- Find an appealing bet on Site A, which is the site where you received the site credit. Derivative markets are a good place to start.
- Search for a true scalp on another book. We’ll call this Site B.
- Bet the underdog on Site A with your site credit.
- Bet the favorite on Site B. Bet an amount where the winnings will be equal to the stake on Site A.
As a practical example, let’s say you’re fortunate enough to find a +200/-200 split, and you have a $500 site credit. Bet the entire $500 at +200 on the site where you have the site credit (Site A), and enough to cover the stake at -200 on the other site (Site B). In this case, you’d need to bet $1,000 at Site B because at -200 odds you’d win $500 — the exact amount of our stake on Site A.
- If the underdog wins, you’ll end up with $1,500 on Site A, and lose $1,000 on Site B, for a total win of $500. This is just the right amount to perfectly offset your initial $500 loss. Dead even.
- If the favorite comes in, you’re not out a penny of your own money on Site A, because it was site credit. On Site B, you’re up $500. Again your total win is $500, which neutralizes your prior loss. Dead even.
Of course, if you can find +200/-190 then it becomes an arbitrage and you’re guaranteed a small profit. More likely, the best pairs you’ll find will look more like +200/-210 or +400/-420, which will still allow you to recoup nearly all of your losses back “risk-free”. There! We finally got to use that phrase in an accurate context.
The following table accounts for a 4.5% house edge, making it more akin to a real-world scenario. It displays various odds on both your initial risk-free bet wager and your subsequent free bet wager, and how different betting odds impact your EV.
Just based on this small sample, it’s abundantly clear that you’ll generate more EV by placing longshot wagers on both the risk-free and free bets.
- Risk-free bet promotions are a common customer acquisition tool used by recreational sportsbooks.
- You will only receive a refund if your initial wager loses.
- The value of a risk-free bet is dependent on a number of factors, the most important of which is how the refund is issued.
- For the initial wager, strive to bet on appealing underdogs. Avoid futures, and if you bet parlays, strive to find ones that offer value.
- For the free bet, bet on a long shot unless you were issued a site credit. In that case, just make low-house edge bets.