Here is a simple guide to understanding a betting exchange lay bet. In explaining a lay bet it is also important to explain decimal odds so both are covered briefly below.
So, what is a “lay” bet?
To “lay” an outcome (short for “lay off”) is to take a bet on an event outcome that requires you to pay out on that event at “stake x odds” should the outcome “layed off” actually happen. For example, instead of you deciding that Manchester United are going to win the game and for you to “back” that event outcome accordingly, you are deciding to “lay” Manchester United which is to say that you think they are not going to win the game and you are inviting other people to bet against you that if they think Manchester United, will win. If Manchester United lose or the game is a draw, you win as the “layer”. If Manchester United win the game, you lose as the “layer”
The person betting against you is offering a stake and you are offering to cover that stake multiplied by the odds stipulated if the person betting against you wins. This is basically what a bookmaker does. He offers odds and let us say the odds offered are 2 to 1, which is 3 in decimal odds (more about that later) and you offer a stake and let us say that stake is £10. If the bet you make wins, the outcome falls in your favour, the bookmaker has to pay you 2 times the £10 stake and return your stake to you. So you start with £10 and you end up with £30.
When you “lay” this event outcome you would be responsible for paying the £20 profit just like the bookmaker does. If the event outcome falls in your favour, then you get to keep the stake from the other person, again, just like the bookmaker does.
So, in simple terms, when you “lay” an outcome you can win the stake only if the outcome you wanted happens. If you “back” an outcome you can win the stake x the odds if the outcome you want happens.
On a betting exchange this is all organised for you and all you need to remember when you “lay” is that the odds you lay at, less the stake you lay with will be paid out by you in the event that your “lay” bet loses.
To understand laying on a betting exchange, you need to also understand decimal odds.
Decimal odds are a breeze to use and you will need to be comfortable with these odds to get on well with the betting exchange. Once you are used to decimal odds you will wonder how you ever got by with traditional odds frankly. The most important thing to remember about decimal odds is that the odds always include your stake.
For example: if you have “evens” in the decimal format, it is represented by “2”. Odds of “2” mean that a successful wager will return £2 for a £1 stake and the £2 would include the stake so the profit is £1. Thus, odds of “3” will return £3 for a £1 stake including the stake and so on. When you see odds of “1.2” or “1.3” etc, these are “odds-on” prices and a stake of “1.2” would return £1.20p on a £1 stake and would include the stake and “1.3” would return £1.30p on a £1 stake and would include the stake.
So you retain your stake (get your stake back) and win the profit when you “back” an outcome.
To quickly calculate any winnings using the decimal system is very simple indeed. You need only remember to multiply your stake by the odds figure (say 5 for example) and then take off your stake to leave your profit figure (£1 x 5 = £5, less £1 stake = £4 profit).
On a betting exchange you need both of the action of “backing” and “laying” to be in place for there to be a bet.
You cannot “back” Manchester United to win on a betting exchange unless somebody else is willing to “lay” Manchester United (effectively to bet that they, Manchester United, will not win). You don’t need to worry about how this actually happens, the mechanics, because the betting exchange market will take care of this for you automatically and the amount of money passing through the betting exchange is, especially on big events, normally huge. All you need to know is that the bet you want to make (be it a “back” bet or “lay” bet) needs to be “matched” for it to be binding on you and matched simply means that someone has taken the bet.
So, just to be clear, what the “lay” bet does is assumes the risk from the “back” bet. So to bring this to an end, and to use a horse race example, if Tom goes on a betting exchange and wants to “back” Big Bucks to win he will simply set a stake and “back” at the odds available or at odds that he hopes will get matched. Tom then hopes that Big Bucks will win the race and, accordingly, if he “backed” Big Bucks at odds of 3 and Big Bucks does win the race, Tom will get his stake back and 2 times his stake in profit. If he “backed” for £10, he will receive £20 profit plus his stake at those odds.
If Harry does not think that Big Bucks will win the race, instead of “backing” every other horse which would be madness, he simply “lays” Big Bucks and let us assume that he specifically “lays” Tom’s bet at odds of 3. Obviously he wouldn’t know that it was Tom’s money and that doesn’t matter anyway as the betting exchange deals with all the details of who is doing what with their very sophisticated computer programmes.
Just for ease, let us assume it is Tom’s specific £10 bet that Harry is laying. If Big Bucks does not win the race, Harry wins and he gets to win Tom’s £10 but only the £10 and for Harry to win all he needs is for any horse other than Big Bucks to win the race but if Big Bucks wins the race, Harry must pay out at the odds of 3, so he needs to pay out £20 to Tom and Tom keeps his original £10 stake.
So, Tom wins, his betting exchange account grows by £20 and Harry’s betting exchange account shrinks by £20. Harry wins and his betting exchange account grows by £10 and Tom’s betting exchange account shrinks by £10.