Back and lay bets are two different types of bets that can be placed on any betting exchange.
With the help of these two, our activity is closer to trading than to classic sports betting. It’s just that most people don’t know how to take advantage of these features and use them like gambling.
Back bet
A back bet should be simple to understand by any bettor. If you have experience in betting, this term shouldn’t cause you much trouble.
It’s similar to a classic bet at a traditional bookmaker. You simply wager on a certain outcome to happen.
The bettor puts money on a team or player to win an event. For example, if a bettor backs a football team to win a game, they will win money if that team wins.
You can think about this “back” bet as a “buy” option. Instead of buying gold (expressed in price), you buy an outcome of the sporting event (expressed in odds).
Odds
You can see that we have more odds to pick from. The back odds are usually on the left side, in blue.
In the example above, the available odds for backing Arsenal are 3.10. The bet will get matched instantly. You can even ask for better odds. Just that you won’t get matched until another trader will accept that price.
The higher the back odds you get, the better!
Return
The return on a back bet depends on the amount of the bet and the odds you get matched at.
To calculate the potential return on a back bet, you can use the following formula:
Potential Return = Stake x Odds
To obtain the profit, you need to extract your investment from the return.
Potential Profit = Stake x Odds – Stake
or
Potential Profit = Stake x (Odds – 1)
In the same example with Arsenal vs Man City, let’s say you place a back bet of €300 on the home team to win at the available odds of 3.10. Using the formula above, the potential return and profit would be:
Potential Return = (300 x 3.10) = €930
Potential Profit = (300 x 3.10) – 300 = €630
Of course, there will be a commission applied to your winners. Meaning that the Net Profit will be a little less.
Risk
You saw the profit you can make if the team you backed wins.
You will notice that we will use the term “risk” more. And we will explain why…
In traditional betting, the risk is equal to the stake. On the other hand, when it comes to the betting exchange, this is no longer necessarily valid. The risk can be higher or lower than your stake.
Regarding the back bet, indeed, the risk is the same as the stake.
Risk = Stake
Therefore, if Arsenal loses or the game ends in a draw, you will lose your entire stake of €300.
In short, there are not many differences between the back type bet and the classic one placed at bookies. Only the fact that we can ask for better odds. And that we have a commission applied to our winnings.
Lay bet
On the other hand, a lay bet is a bet that a certain result will not happen. It’s the opposite of a back bet. If a bettor places a “lay” bet on a football team to win a match, they will win if that team loses or ties the match.
This is an unfamiliar term for most gamblers, but well known by traders, in any market.
Here comes the great part…
You can act as both bettor and bookmaker on a betting exchange by giving your own odds on a certain event. When you make a “back” bet, you accept the odds that another trader, who is acting as a “bookmaker,” is offering. When you make a “lay” bet, you offer your own odds on a certain outcome, and other traders can choose to take that bet and act as the “punter”.
If the back bet is the “buy” option, the “lay” bet is the “sell” correspondent. So, you will not sell gold, you sell an outcome that you think won’t happen.
Another great thing with sports trading is that you can sell (lay), even if you don’t own it (a previous buy).
Odds
Same thing. You have more odds to pick from. The lay odds are usually on the right side, in pink.
In the example above, the available odds for laying Sassuolo are 5.90. The bet will get matched instantly if we choose these odds.
But you can even ask for a better price (odds). And you should !! Almost every time.
In this case, there is a gap between back odds (5.70) and lay odds (5.90). So, we asked for 5.80 and we’ll be first in the queue to sell these odds. But remember that your bet won’t get matched until other traders buy (back) that price.
The lower the lay odds you get, the better!
Return
The return on a lay bet depends exclusively on the amount of the bet. Your stake is your return. Odds don’t matter when we talk about returns.
The potential return and the potential profit for a lay bet are the same:
Potential Return = Potential Profit = Stake
Why is that?
Remember that the lay bet gives you the opportunity to act as a bookmaker?
Now imagine that a punter (Joe) wants to bet on the home team – Sassuolo at odds of 5.80. Joe will give you €100, the stake you want to sell. If Sassuolo doesn’t win – meaning that the final result is a draw or away win (X2), you keep his stake.
Potential Return/Profit = Stake = €100
You Net Profit is calculated after deducting the commission.
Risk
For this type of bet, the risk is called liability.
As mentioned, in a betting exchange the risk may be different than your stake.
A lay bet will give you a higher or lower risk, depending on the odds.
The liability (risk) will be the backer’s profit:
Risk = Stake x Odds – Stake
or
Risk = Stake x (Odds – 1)
Let’s get back to Joe…
He backs (buys) and you lay (sell) €100 on the home team Sassuolo for odds of 5.80. You already know that if Sassuolo doesn’t win, Joe losses the bet and you get to keep his €100 stake.
But what if he is right?
You, acting as a bookmaker, have to give Joe his winnings.
Liability = (100 x 5.80) – 100 = €480
This is the money you lose if you are not right.
But hey! This is nothing special. You can place an opposite bet at any traditional bookmaker. Where is the magic?
Yes, instead of placing a lay bet on the home team, you can bet on “Draw or Away Double Chance”, that X2. So, that’s right! If you think like a gambler…
You need to think as a trader. The back bet and the lay bet need to go side by side in any trade. You buy your position and you sell it. Enter and exit the market. No other bookmaker can give you that.
If you simply lay or back and stick to your position, there is no magic.
Also, for example, there is no chance you can bet against a 2-1 correct score without losing value at any traditional bookmaker.
Conclusion
In conclusion, back bets and lay bets are two different types of bets that can be made on a betting exchange. A back bet is a bet that a certain outcome will happen, while a lay bet is a bet that a certain outcome will not happen. Betting exchanges let you place both kinds of bets, which gives you more freedom and control as a bettor.
But don’t use them as simple bets – that kind of “bet-and-forget”… Nothing special there, if you want to become a trader.
You should choose right now!
Do you want to use exchange betting to seek profit as a gambler and rely more on luck?
Or, do you want to try making some money as a sports trader and rely more on numbers?
Think that by simply offering odds of 1.99 instead of 2.00, you can act as a bookmaker and get your own “margin”.
It is also important to note that the odds on a betting exchange can change rapidly as traders offer and accept bets. Therefore, it is important for you to monitor the odds and act quickly if you see an opportunity to place a bet at a good price.
Last but not least, always ask for better odds! To quote the Bible…“Ask and you will receive, and your joy will be complete”.