To make a hedge; to secure a bet, or wager, laid on one side, by taking the odds on the other, so that, let what will happen, a certain gain is secured, or hedged in, by the person who takes this precaution; who is then said to be on velvet.
Definition taken from The 1811 Dictionary of the Vulgar Tongue, originally by Francis Grose.
See also the definition in Nathan Bailey's 1736 dictionary of canting and thieving slang.
Hector * Hedge AlehouseNathan Bailey's 1736 Dictionary of canting and thieving slang
John S. Farmer's collection of canting songs and slang rhymes