Following on from the first of our 10 part educational series on the Betfair Exchange, we take a deeper look into the most important aspect of the Exchange: Backing and Laying.
As already discussed, there are two parts to each bet; 1) a person betting for an event to happen, which is backing & 2) a person on the other side betting against that event happening, which is a lay bet.
Unlike traditional bookmakers, the Betfair Exchange offers you the ability to take either (or in some cases, both) sides of the bet.
Punters can both Back & Lay on the Exchange, but first you should understand what both terms mean.
What is Backing?
This is what you do with traditional bookmakers. If you go to one of our betting partners and strike a bet, you’re backing that bet to win.
The bookmaker is the “layer” on the other side of the bet and stands to lose money should you win.
Punters can place back bets on the Betfair Exchange as well, but it’s another user of the Exchange taking on the role of bookmaker in this scenario. A punter places back bets on the Exchange by selecting one of the blue buttons and entering a stake, as shown below.
Calculating the potential returns from a back bet is simply a case of multiplying your stake by the decimal odds. So, say we’re backing Geranium to win for £10 today, the returns are:
Stake x Odds = Returns
Returns – Stake = Profit
£10 x 2.28 = £22.80
£22.80 – £10 = £12.80
Easy! Things are slightly different when taking the lay of the bet, however.
What is Laying?
When you strike a bet with a bookmaker, they take the other side of that bet. What they are doing is laying the bet, which is of course betting on something not happening.
With the Betfair Exchange, we as punters can take on that role, taking the other side of back bets that other Exchange users are placing. We can accept other users’ back bets or we can offer our own odds for backers to accept (which will be discussed later in the series.)
This is all done on the red side of the Betfair Exchange interface, as can be seen below.
Lay Betting, Liability & Responsible Gambling
There is one important difference to note down when placing a lay bet, and it’s labeled as your liability. This is an important concept to understand when following our Responsible Gambling Guidelines.
When posting your stake for a lay bet, what you’re actually entering is the backer’s stake. This is the amount you stand to win should your lay bet prove successful, rather than the amount you will lose if it doesn’t.
The amount you stand to lose is called the liability and is also the amount the backer stands to win if their bet comes in. Remember: You are betting against real people. If one person wins, another has to lose.
The easiest way to note this is to reverse the process of placing a bet. View the liability as your own personal stake and the Backer’s stake as your potential profit. Assuming we fancy Geranium to win the 5.00pm at Sandown, here’s how we would calculate our liability for a lay bet on second favourite Geetanjali at decimal odds of 4.30:
Backer’s stake x (Odds – 1) = Liability
£10 x (4.3 – 1)
£10 x 3.3 = £33
So, in this scenario we would have to risk £33 (our liability) to win £10 (the backer’s stake). To make life easier, the Exchange platform gives you all this information as you’re placing the bet. It’s just important that you realise that you aren’t betting a solitary £10 in this situation, you’re actually staking £33 attempting to win £10.
It may seem like a great idea to place £10 lay bets on 100/1 shots in a bid to double your money, but 100/1 shots do come in, and when one does you’ve lost £1,000!
As an example, we all remember Leicester winning the Premier League back in 2015/16. If you had laid that bet and accepted a backer’s stake for £10 at 5,000/1 you’d be down £50,000! The majority of bookmakers can absorb a sizable loss in any given betting market, but could you?
More in this series: