What is a lay bet?

Very simply a lay bet is the opposite of a traditional back bet. Instead of betting on something to win we are betting on something to lose. Placing a lay bet puts you in the position of the bookmaker, other punters are betting against your lay.

A simple way to explain a lay bet is by using a football match as an example. There are 3 outcomes on any standard football match: home win, draw & away win.  Usually when we bet with a bookmaker we pick one of these outcomes for our bet, so we might pick Manchester United to beat Arsenal for example. A lay bet on the same game would be betting on Arsenal not to win.

So our back bet would look like this: Manchester United vs Arsenal – Our Pick: Home Win

Potential Outcomes

• Man Utd Win: Bet wins
• Draw: Bet loses
• Arsenal Win: Bet Loses

However with a lay bet it would look like this: Manchester United vs Arsenal – Our Pick: Home Win (So we lay Arsenal)

Potential Outcomes

• Man Utd Win: Bet wins
• Draw: Bet Wins
• Arsenal Win: Bet Loses

As you can see the lay bet gives us more chances to win. As if there is a draw we will win because we have chosen Arsenal not to win. This is the position of the bookmaker when you place a back bet. They have 2 chances to win and you have 1.

This becomes even more powerful when we bet on events with more outcomes like a horse race. Taking a horse race with 10 runners as an example. If we were to back a horse that horse would have to win for us to win. But by laying a horse, any horse can win except our pick and we win.

The theory is it is far easier to pick a loser than it is a winner. I’m sure anyone who has spent time placing back bets will testify to this.

How Lay Betting Works

The maths and mumbers behind a lay bet are a bit more complicated than a standard lay bet which tends to put a lot of people off. However it is really simple once we break it down.

First of all the odds at the betting exchange are displayed as decimal odds. We have written about that here but very simply:

Bookmakers odds + 1 = Exchange odds.

So for example the bookmakers odds of 5/1 is in fact 6.0 in decimal odds.

Calculation: (5 divided by 1 equals 5) plus 1 = 6.0

Or as another example traditional odds of 5/2 would be 3.5 in decimal odds.

Calculation: (5 divided by 2 equals 2.5) plus 1 = 3.5

So let’s look at an example, here is a horse race from today’s racing.

We are going to choose to lay Poets Prince. We don’t think this horse will win. So we click the pick lay box of 3.55 odds. We enter our stake of £10. The backers stake is the amount of money we will win if the bet wins. Our liability is therefore £25.50, this is the amount of money we might lose if Poets Prince wins the race. This is something we must be aware of with lay betting. We can lose more than our stake.

By clicking place bets our bet will be placed and as long as there is plenty of liquidity in the market our bet will be matched. You can see the liquidity displayed below the odds on the odds ladder. So for our bet there is £65 available for us to get matched with. If this number is less than our stake then we won’t be able to get matched and the bet will not place or it will partially match.

So that is it. Instead of picking a horse to win which is notoriously difficult. We are picking a horse to lose which is much easier. The only thing we need to bear in mind is we can lose the liability if our horse does win the race.

In order to place lay bets we need to have an account at a betting exchange like Betfair. We have already written about Betfair in detail here.

Benefits of Lay Betting

• More chances to win
• Easier to pick a loser
• Better value odds
• We can cash out our bet at any time

A great thing about betting with Betfair is that we can cash out our bet at any point. So if you are watching the race and think that Poets Prince is going to win we can cash out and minimise our losses. If Poets Prince is leading the race the odds will have likely come in meaning we will make a loss by cashing out but it will be less of a loss than letting the race finish and losing the bet.

We can also cash out before the race starts. If the odds on Poets Prince drift further out we can cash out for a profit without the horse race even taking place. This is how Betfair traders make a lot of money. The ability to predict what odds will come in and go out can mean you can trade the odds and make/lose money before the event even starts.