He could put $5k on the Bills and only be out the vig if he wants. Or, he could put $2.5k on the Bills if he can afford to lose $2500.
Hedging is usually done with futures. Say you bet on the Bills to win the Super Bowl and you put $1k on it at 500-1. They make it to the Super Bowl. Well, you'd be an idiot not to hedge here. I'd put at least $250,000 on the other team to win. That way, I'm guaranteed to win.