UNDERSTANDING LAY BETS AND LIABILITY
Lay Bets and Liability
To Lay a bet is to bet that an event will not happen. For example, to Lay Hammarby to win their match versus AIK is to back them not to win, so you would win your bet if they either lose or draw their match versus AIK.
Laying a bet is made possible with exchanges such as Betfair and Smarkets. When you sign up to wager with an exchange, you accept odds placed by members of the public. Exchanges have no interest in whether the Back bet or Lay Bet win as their profit comes from a small commission collected on the winnings.
When you wager with an exchange, you are playing the role of the bookmaker and as with bookmakers, all you can win is the stake. Liability is the amount you could lose should the Back Bet win and so this is locked away by the exchange until the event is complete.
Back Bet example
Back Sweden to win for 100 kr at odds of 4.0
When you place a back bet of 100 kr at odds of 4.0, the stake is deducted from your balance.
If the bet loses, the stake is permanently removed from your balance.
If the bet wins, your stake is returned to you, plus a profit of 300 kr, so you now have turned 100 kr into 400 kr.
100 kr x 4.0 = 400 kr
Now if you think about it, the bookmaker who layed the bet to you took the exact opposite deal.
So when you placed the bet, they agreed to give you 300 kr if the bet won, and in return you would have given them 100 kr if the bet lost.
This is how a lay bet works.
Let’s say you were going to lay the exact same match and outcome:
Lay Bet example
Lay Sweden to win for 100 kr at odds of 4.0
So now, when you place your lay bet, 300 kr in liability is removed from your account balance and set aside.
If Sweden win, your lay bet loses, and the 300 kr is permanently removed from your account.
If Sweden fail to win (draw/loss), then your liability of 300 kr is returned to you, plus your 100 kr in profit.
Don’t be apprehensive when you see the high liability whilst placing a bet though! We are backing and laying the same outcome remember, so anything we lose at the exchange we win at the bookie, and vice versa.
Lay Betting Terms
Lay stake: This is the amount you want to win. Let’s say that your backer’s stake in the lay bet example above was 100kr. Because you layed Hammarby, you will win 100kr (minus commission, explained below) if AIK wins or the match ends in a draw.
Commission: Exchanges such as Betfair and Smarkets charge a commission on your winnings. This percentage is by default 5% at Betfair, but the more you turn over at Betfair, the more discount on the commission you receive.
Lay odds: This is the odds of your lay bet. The higher the odds are, the higher the risk (liability) will be.
Liability: The liability of a lay bet is correlated with the stake and odds. A selection where the backer’s odds are 5.0 means that if you lose your lay bet you will lose 4 times your stake. At 2.0 odds you would lose an amount equal to your stake and so on.
Matched/Unmatched: As with any exchange, you place your bets at Betfair/Smarkets against other Betfair/Smarkets customers, not against Betfair or Smarkets itself. Therefore, there must always be a backer and a layer for any bets made. If there is a backer for your lay bet, your bet will be matched. Once a bet is matched it cannot be cancelled, other than by Betfair. If your bet has not been matched, or only partially matched, you can either; cancel your unmatched bet, leave your bet unmatched and hope that it is matched before the event starts, or accept the remaining unmatched portion of the bet at worse odds.