Lay Betting Explained – Learn What Is a Lay Bet
Sports betting is often considered an activity in which punters try to beat the bookies. And although this traditional view of things is not by any means wrong, there are also instances in which bettors can take on the role of bookmakers.
This unconventional way of betting is called lay betting and, in this article, we will dissect everything you need to know about this way of betting.
What Is Lay Betting?
When punters place bets in the traditional way, they are essentially betting on certain events to happen. On the other hand, lay betting allows punters to place bets on certain events not happening.
This means that lay betting is the opposite of traditional betting.
Let's say we want to bet on the outcome of the English Premier League.
A traditional way of betting would mean that we need to pick the winner of the competition, for example, Arsenal. If Arsenal wins the Premiership, our bet will be a winning one.
To place a winning lay bet, we need to pick the team that we think will not win the competition, for example, Everton. If any other team wins the Premier League Title, our lay bet is won.
If you are thinking to yourself, I have never seen a market that offered lay bets, don’t worry we will explain where you can find them and how you can place these types of bets.
How to Place a Lay Bet
To place a lay bet, you first need to find an online betting platform that gives punters a chance to place lay bets.
These specialized betting platforms are called betting exchanges and they allow bettors to compete against other bettors.
One of the most popular betting exchanges in the world is the Betfair sports betting exchange. To place a lay bet on this platform you need to follow these steps:
- Open the exchange and select the match that you want to place a lay bet on
- Make your selection
- Enter your stake
- Place the lay bet
Finding the Match
After you open the match on which you want to place a lay bet, you will be offered all the traditional betting options + the lay bet option. In most cases, the lay bet options will be of different colors so that bettor can easily notice it.
Make Your Selection
After you decide on which option you want to place your lay bet, click on it with your mouse, and the selection will show in your bet slip. Remember you are predicting that the selected event will not happen.
Determining the Stake
This is the biggest difference between traditional bets and lay bets. When placing a stake on a lay bet, you are essentially determining the amount of money that bettors can place on the selection.
In this case, you are in the position of the bookmaker and you are entering the amount that the bettors need to stake.
Placing the Lay Bet
When you place the bet, the amount you staked will go into the betting pool and is available for other punters to match.
If there is enough money staked in the betting pool from another bettor, the platform will match it with your bet instantly.
Otherwise, you will have to wait for other bettors to place bets with the betting odds you offered.
It is very important to note that the platform also takes a commission percentage from the bettor whose bet wins and this is how the operator makes money.
Liability in Lay Betting
An important part of lay betting is a liability. The liability is the amount of money the punter is risking when placing a lay bet. In other words, liability is the amount you will have to pay out to other bettors if your lay bet is lost.
Let's take a couple of lay betting examples to explain liability a little better.
If you lay a bet on Arsenal to win the Premier at odds 5.00 for 10€ you are liable for 40€ if you lose the bet.
To calculate your liability when laying a bet you need to multiply the stake with the odds and deduct the stake from the result.
- 10€ x 5.00 – 10€ = 40€
This means that with this lay bet you are risking 40€ to win 10€.
On the other hand, if you lay a bet with lower odds, let's say 1.60 for 10€ you will be liable for 6€ which means you are risking 6€ to win 10€.
- 10€ x 1.60 – 10€ = 6€
As you can see, lay betting can be very expensive and volatile, and if you are a beginner we advise you to start with lay betting at low odds.
How Does Liability in Lay Betting Work
Let's say you deposited 100€ in your sports betting exchange account and you want to place a 10€ lay bet with the liability of 60€.
As soon as you place this lay bet, 60€ will be deducted from your account and the bookmaker will hold on to them until the event is finished.
You can check how much of your funds are “frozen” at any moment by visiting the “exposure” section.
There are two possible scenarios after the event finishes. If your lay bet is a winning one, 60€ will be returned to your account + the stake amount. However, if your lay bet losses you will lose the entire 60€.
What Does Layoff a Bet Mean?
The term layoff is used in the sports betting industry to describe an activity during which bookmakers place bets with other bookmakers to reduce their liability on a certain outcome.
In some instances, if bookmakers estimate they have received a lot of action on a certain outcome of an event they will place the opposite bet with other bookmakers to reduce their exposure.
For example, let's say a sportsbook took exactly 1 million dollars in bets on an NBA game between the Bulls and the Celtics, and most of the money, around 900 000 dollars was placed on the Bulls to beat the spread.
In this case, a layoff would be a good idea because almost all of the public money is on the Bulls to beat the spread and the sportsbook will take a big hit if the Bulls beat the spread.
Lay Betting vs. Cashing Out
Today, most sportsbooks have the option of cash out which allows bettors to take a part of their potential winnings on both single and multiple selections before the events finish.
However, if you decide to take advantage of the cash-out option, the bookmaker will charge you a commission of 20%. This commission makes the cash-out option pretty unfavorable for bettors.
Lay bets on the other hand have a much lower commission and they can be used in situations when you are waiting for one outcome on an accumulator bet. You can use the lay bet to cover your bet and guarantee yourself a profit even if your primary bet losses.
Advantages of Using Sports Betting Exchanges
There are several advantages of using sports betting exchanges:
- Better odds
- Monitoring the market
Exchanges can offer up to 20% better odds for backing (traditional betting) than bookmakers. This is especially the case for higher odds and smaller markets.
However, we should also mention that in most cases the difference in odds between traditional bookmakers and exchanges will be much lower.
As the name suggests, exchanges allow bettors to trade and trade on events. This allows punters to lock in a profit by predicting market moves even before the event takes place. It works on the same principles as the stock market.
We should mention that to make money by trading bettors have to spend a lot of time and implement correct betting strategies like adjusting stake.
Monitoring the Market
Exchanges provide a great way for bettors to monitor betting markets which allows them to see where the public money is going.
This information can then be used to make better predictions on both the exchange and traditional betting platforms.
Disadvantages of Using Sports Betting Exchanges
Sports betting exchanges are not perfect, and if you are planning to use them to place bets you should be aware of some drawbacks:
- Unmatched bets
It is not uncommon for newbie bettors that are not too familiar with exchange betting to forget about some unmatched bets.
And if the circumstances of the market change (injuries, news, non-runners) the odds they offered might become too high, which can cost you money.
Sports betting platforms that host exchange betting make their money by charging a commission on winning bets. In most cases, the house commission is around 5%.
The percentage can vary depending on how many bets you place and which exchange you are using. In any case, be sure to check all the rules and calculations before you start betting.
Because you are betting against other punters, there is a liquidity issue. Bettors rely on other bettors to offer odds and markets.
This means that the number of markets will always be lower than with traditional bookmaking sites. It also impacts the smaller markets which can have much lower limits.