Leading on from the first of our 10 part educational series on the Betfair Exchange, we delve into the most important part of the Exchange: Backing and Laying.
As you already know, there are two sides to every bet: There’s a person betting for an event to happen, which is called backing, and 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.
You can both Back and Lay on the Exchange, but first you should understand exactly what both terms mean.
What is Backing?
This is what you do with traditional bookmakers. If you head to one of our many betting partners and place a bet, you’re backing that bet to land.
The bookmaker is on the other side of that bet and stands to lose money should your bet land.
You can, of course, place back bets on the Betfair Exchange as well, with one key distinction being that it’s another user of the Exchange taking on the role of bookmaker. You place back bets on the Exchange by selecting one of the blue buttons and entering your 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 Derby to win against Bristol City for £10 tonight, the returns would be:
Stake x Odds = Returns
Returns – Stake = Profit
£10 x 2.18 = £21.80
£21.80 – £10 = £11.80
Simple. Things are slightly different when taking the other side of the bet though.
What is Laying?
When you place a bet with traditional bookies, they obviously take the other side of that bet. What they are doing is laying the bet, which is simply betting on something not happening.
On the Betfair Exchange, we can take on that role ourselves, taking the other side of back bets that other users are placing. We can accept other users’ back bets or we can offer our own prices for backers to accept (which we’ll discuss later in the series.)
You do all this via the red side of the Betfair Exchange interface, as you can see below.
Lay Betting, Liability, and Responsible Gambling
There is one very important difference when placing a lay bet though, and it’s called liability. This is a very important concept to understand when following our Responsible Gambling Guidelines.
When entering your stake for a lay bet, what you’re actually inputting is the backer’s stake. This is how much you stand to win should your lay bet come in, rather than the amount you stand to lose if it doesn’t.
The amount you stand to lose is referred to as the liability, and is actually the amount the backer stands to win if their bet comes in. Remember: You’re betting against real people here. If one person wins, another has to lose.
The best way to remember this is to reverse the process when placing a bet. Think of the liability as your stake and the Backer’s stake as your potential profit. Assuming we still fancy Derby to get a result against Bristol City, here’s how we would calculate our liability for a lay bet on Bristol City at odds of 4.0:
Backer’s stake x (Odds – 1) = Liability
£10 x (4.0 – 1)
£10 x 3.0 = £30
So, in this situation we would have to risk £30 to win £10. Fortunately, the Exchange platform actually gives you all this information as you’re placing the bet. It’s just important that you realise that you aren’t betting £10 in this situation, you’re actually betting £30.
It might seem like a good idea to place bets on 100/1 shots at £10 backer’s stake in a quick bid to win a tenner, but 100/1 shots do come in, and when one does you’re in the hole for £1,000.
Just remember Leicester winning the Premier League back in 2015/16. If you’d had a lay bet on that for £10 at 5,000/1 you’d be down £50,000, all for the chance to win a tenner! The bookies might be able to absorb that sort of loss, but could you?
More in this series
What is the Betfair Exchange?
Advantages of Using the Exchange
Placing a Back Bet on the Exchange
Placing a Lay Bet on the Exchange
How to Set Your Own Odds and Why You Might Want To