How Lay Betting Works – Minimize Exchange Commission & Liability
Estimated Reading Time: 33 minutes
Understand how lay betting works and learn the best way to save your exchange commission & minimize liability, which enables you to make more money from lay betting!!
The “Show” box underneath displays Full Contents & Jump Links for your convenience.
- 1. How lay betting works
- 2. How Do We Make Money From Lay Betting?
- 3. Lay Betting Commission Saving At Exchange
- 4. Minimize Lay Betting Liabilities
- 5. How Lay Betting Works – Wrap Up
How lay betting works
You can use a “Lay" bet on the outcome when you think not to happen such as “Horse A not to win" or “Football team A not tow win". By placing the lay bet, you are effectively become a bookmaker and you can place a lay bet in betting exchanges like Betfair, SMarkets & Matchbook.
Watch the short video produced by Betfair;
How Do We Make Money From Lay Betting?
Lay Betting for Matched Betting
You may ask “Is Lay Betting Profitable?" We use lay betting in Matched Betting, and yes lay betting is profitable because we can lock-in profit via matched betting. If you’re already familiar with matched betting, just skip this section. For those who are not familiar with the matched betting at all, suggest take a look at Matched Betting For Dummies.
However, for your convenience, I’ll briefly explain how it works by using Sky Bet Sign-Up Offer as the simplest example for your easy understanding.
The offer is “Bet £5 Get £20 Free Bet"
What we basically do are;
- 2 transactions of Back (bet on win) £5 on Team or Player A or Horse A at odds of 2.0 < at Sky Bet & Lay (bet on NOT win) appropriate £ (stake can be calculated by free lay calculator) on the same Team or Player A or Horse A at Betting Exchange like Betfair or SMarkets so that you cover all outcomes.
- Regardless of the outcome, your losing & winning will cancel out each other. In the real practice, usually, 2 bets are not perfectly offset due to the odds difference & exchange commission. Therefore you make a small loss called Qualifying Loss.
- But now, you get £20 Free Bets. You repeat the exact same process but using the free bet for the back bet at Sky Bet. Then, this time free bet value (minus qualifying loss) will become your net profit.
- You may be able to extract around £15 – 18 pure profit from this offer Without Any Single Risk.
- Success factor is how to minimize the qualifying loss by selecting the player whose odds gap (between Sky Bet & Betting Exchange) is the narrowest. You can use Free Odds Matcher (which also equip lay calculator) to locate such opportunities. For the step by step process, take a look at Risk Free Betting Starting Guide (3) – How To Extract Profit from Free Bet. You will find William Hill sign-up bonus case as an example in this instruction.
So, it is a simple back and lay strategy, and matched betting is effectively laying bets to make money.
BTW, many people imagine matched betting is for only UK & Ireland, wrong, by using this approach everybody in the world including US citizens can make decent profits from this risk-free betting technique.
As said, the lay bet can be placed only in betting exchange. Therefore, it’s critical to adopt the right approach toward the betting exchanges from the beginning, which will affect your long-term profit. There are 4 established betting exchanges as below;
And, in case you are not familiar with the betting exchanges, the below 2 documents will be of good help;
The above 4 betting exchange latest sign-up includes Betfair £100 Free Bet, which is supposed to be one of the best offers in the industry, just FYI.
Again, for your quick start, I prepared a step-by-step guide for how to sign-up SMarkets and extract cash from its £10 Risk-Free Bet bonus. Actually, this is one of the easiest offers to lock-in profit in the industry. Please click “+" mark to open the instruction;
Matched Betting Specific Process Between Sky Bet & SMarkets
Then, I will quickly show you how to make your 1st matched betting between SMarkets & Sky Bet by using Sky Bet Sign-Up Offer. Click the below “+" which opens the step-by step process with the screenshots;
In case you can’t access to any betting exchanges in your country, then don’t worry use this method, which enables you to access to Betfair market.
Lay Betting Commission Saving At Exchange
Now, let get down into the key subjects of this document.
Exchange Lay Betting Commission – How Does It Work & Affect You?
Let me quote Pinnacle article that summarizes how the exchange commission works & affects your profit;
Decimal odds = return / stake
Decimal odds = 1 + (profit / stake)
As we have explained, betting exchanges charge commission on net profit on the market. That means, in this example above, you will get your £100 back untouched, but the £86 that you won will have commission taken off first. Let’s suppose that you live in a country that has not been affected by commission increase, but unlucky enough to collect sufficient points for commission discount; that means betting exchanges like Betfair will charge 5% of your winnings, or 0.05 * £86 = £4.3; you will pocket the remaining 0.95 * £86 = £81.70. To summaries, you risked £100 to win £81.70; therefore, you effectively got your bet at 1.817 – or some 3% worse than the odds available at Pinnacle Sports. By now, you understand how to calculate net odds after commission; if COMM is your exchange commission in %, and ODDS available back odds, then your actual odds, in decimal format, are calculated as:
Actual odds = 1 + (1 – COMM/100) * (ODDS – 1)
Exchanges are a useful weapon in a bettor’s armory but the way that commission is deducted after the bet often leads them to misinterpret the extent of their value. Now you have the tools to make the calculations yourself it is up to you to decide where to bet, but we think smart bettors will choose Pinnacle Sports.Pinnacle
Well, advertising Pinnacle Sports is not my intention here (although I believe Pinnacle is the best bookmaker for smart punters in the world – go Pinnacle Sports Exclusive Review – True Voices of Insiders if you want to know it further), I just would like you to understand how the exchange commission works, and realize the importance to reduce it especially for those who do Matched Betting because 50% of their trading is through Exchange.
3 Ways To Save Betting Exchange Commission
Having been aware of the impact of the lay betting commission, you may want to try the following 3 methods;
A) Use Lower Commission Exchange
This is the simplest way. Betfair is by far the largest exchange with 5% standard commission and there are following contenders;
- Betdaq (2% depending on the amount you bet)
- SMarkets (Flat 2% on net profit)
- Matchbook (Flat 2% on net profit)
- Ladbroke Exchange (5% depending on the amount you bet)
B) Offset Lay Betting Commission
The next method is to offset the commission. Remember the exchange charge commission Only To Net Winnings, means if you make multiple bets on the same markets, your commission will be against (Total Winning – Total Loss). This tactics can be used together with the next topic of Minimize Lay Betting Liability.
Let me use an example, the below shows SMarkets Rio Olympics Men’s Football Outright market (since I originally prepared this guide in 2016 thus the examples are relatively old, but the principle can apply permanently unless betting exchange changes their condition, and we keep updating this guide if it requires);
Assuming you make multiple matched betting (don’t get me wrong, I’m not referring to multiple accumulator betting but multiple single betting), say, chose 3 top countries (there are many reasons behind such as Simply Close Odds with bookies, 2nd & 3rd Place Refund or Extra Places offered by bookies etc.) and place lay bet £20 each just for the sake of simplicity.
The possible scenarios would be;
- None of 3 win – so your 3 lay betting are all win £20 x 3 x 2% = £1.2 no commission offset
- 1 of 3 win (remember wining country is only 1) – so your 2 lays win but your winnings will be offset by your 1 lose lay amount. Thus the final lay betting commission will be reduced. Say Brazil wins, then £27.6 lay lose will be deducted from £20 x 2 (2 lay win). So your net win in this market will be £12.4 and the commission charged will be £0.248. This is much lower commission than the case you bet only 1 country and win (£0.4 commission). If Argentine or Germany wins, your total lay bets will become loss (don’t worry your loss in exchange means your win in bookmaker in Matched Betting, you simply save the commission in exchange). It means you don’t have to pay any commission although your other 2 lays win.
If you apply to Betfair 5% commission rather than SMarkets 2%, the impact is bigger.
Actually, there is an Extra Place Strategy please check 2 Best Techniques, which covers all horses in the same market where this tactics save your Betfair commission hugely even up to 0.
The above Extra Place Strategy also covers Dutching. If you’re not familiar with Dutching, please take a look at Dutching Betting – Advance Technique, which is a very useful tactics to ensure winnings while reducing risk. Essentially it covers all the outcome of the event with back bet. Means instead of laying at the exchange, placing all the bets at bookies which can avoid paying lay betting commission at the exchange. This is also the simple & handy option especially for football 1×2 market.
Minimize Lay Betting Liabilities
Remember, laying a bet is betting on something to not happen. If the selection does not win, you win the backer’s stake. However, if it wins, then you pay the winnings. This is the point you need to fully understand “What Happens If You Lose a Lay Bet."
Lay Betting liability (liability at Exchange) is the amount you could lose when the selection does win. When you back at the bookies, your liability is just the stake you place. When laying however it’s the amount it will cost you if your selection wins.
Lay Betting Liability Calculation
The Calculation formula is simply:
Lay Betting Liability = Lay Stake x (Decimal Odds – 1)
The reason you subtract 1 is because on an exchange, the price includes having your stake returned to you. So assuming your lay stake is £10 and the lay odds is 3.50, then Lay Betting Liability = £10 x (3.5 – 1) =£25. And if the odds is 6.00 Lay Betting Liability is £10 x (6.00 – 1) = £50 So be careful, the liability will be increased significantly when the odds get longer. With that said, many Matched Betters especially newbies may struggle to prepare enough fund to cover the Lay Betting Liability in Exchange. Because your trading must be increasing rapidly and you need to chose longer odds to extract Free Bet (although qualifying bet requires opposite, means shorter odds is preferable). Let’s use the above Rio Olympic Football Outright market as the example again. If you lay £20 on Argentine, your Lay Betting Liability based on the current odds of 13.5 is £249.90. The odds changes rapidly, when I took the previous screenshot it was 8.6, but it increased to 13.5 now. Anyhow it will be back to around 9 soon. This is the amount you lose if your lay bet loses, means if Argentine wins;
Well, this single Lay Betting liability itself is not a big amount. However, you as a matched better who make possibly several or even tens of laying every day, then the total Lay Betting liability will become thousands of £. This will squeeze your cash flow and may miss good matched betting opportunities due to the lack of fund.
How You Can Reduce Your Lay Betting Liability
We can apply the exact same approach of the 2. Offsetting Commission introduced in the above Commission Saving. So, we make multiple bets (again don’t be confused with Multiples as Accumulator bet, what we talk here is multiple single bets) in the same market. If you bet Germany in the same Olympic market, the liability will be £151.96 as below;
However, when you bet Germany in addition to Argentine, your £151.96 liability will not be added to your Argentine £249.90 liability but the total liability will stay put as £249.90. Because the winner is only 1, both Argentine & Germany win will not happen thus these 2 liability will be offset. And the exchange imposes only £249.90 as the highest liability you need to bear. The same applies to Brazil, although you add £27.99 of laying Brazil will not change the total liability of £249.90.
So, what are the implications? The Multiple Lay Betting on the Same Market requires much less cash compared with laying in different markets.
The extreme case is the Extra Place Offers Scalping / Dutching Tactics introduced before. For the Win Market, the total liability will be the max liability of all the horses LESS the stakes of the remaining horses, since only one horse can win. For Place Market, assuming the exchange offer 4 places, the total liability will the sum of the 4 highest liabilities LESS the stakes of the remaining horses.
Although I used the examples of many outcomes (horse racing / Olympic outright), you can conveniently apply this tactics to Football Game 1X2 market where only 3 outcomes (home wins, draw, away wins) exists. Let’s use International Champions Cup 2016 Bayern Munich vs real Madrid as below;
Assuming you make 3 matched betting to all the 3 outcomes with each £100 lay amount, the lay betting liability for each outcome is £132 Bayern Munich wins, £310 Draw, and £275 Real Madrid Wins.
What you will find are;
- Your total highest Lay Betting Liability is not even £310 of the Draw but will be £110 based on the below scenarios.
- If Draw Happens, your Exchange Balance will be -£110 = (-£310 + £100 winning + £100 winning). This is the worst case from the perspective of not reducing the remaining balance in the exchange. When real Madrid wins, the balance will be -£75 while Bayern Munich wins the balance will be even positive of £68.
If you do the 3 matched betting with the same odds in 3 different markets, your max liability will be £717 rather than £110. And your worst scenario of the exchange fund balance will be -£717 rather than £110.
Don’t get me wrong, since you are doing matched betting your loss in exchange should be compensated by the winnings in the bookmakers. The point here is how we can make the best use of the limited fund in the exchange.
Combined Multiple Promotions & On-Going Bookies Reload Offers
Just 1 more example which I did at Ascot Sherger Cup Challenge at 14:20 on 6 Aug. I combined multiple bookies’ promotions while achieving qualifying bets for regular Free Bet Offers, meaning;
- Sky Bet – Refund 2nd & 3rd offer (this case gives me the guaranteed profit) 2nd Place Refund Horse Betting Calculator For A Guaranteed ProfitSpecial Report by GEM for details;
- + Bet £25 to achieve Sky Bet Club weekly mission for £5 Free Bet
- Paddy Power – Refund 2nd & 3rd offer (but this requires the condition of beaten by favorite)
- Boylesports – Refund 2nd & 3rd offer (but this attaches the condition of beaten by A Head or Less)
- Betfair – Refund if your horse wins at SP odds of 3/1 or greater on live Channel 4 or More 4 race Refund if your horse wins at SP odds of 3/1 or greater on live Channel 4 or More 4 race
- Bet Star – Bet £25 to achieve Weekly mission for £5 Free Bet
So, what happened finally? The race result was; I placed £80 bet in the 5 bookies and more or less the same lay bets in SMarkets.
- The Total Liability: Around £105 rather than over $500 if I spread among different races.
- I saved commission by over £4 compared with I won lay bets in separate markets (since I layed 5 horses and the only 1 horse won, means I won 4 lays)
- The final profits from this race was £17, my horse in Skybet finishes 2nd thus I got £25 refund ;But as said I already locked in the profit for Sky taking this refund into account. My horse in Paddy Power finished 3rd but unfortunately the SP Favorite didn’t win but finished 7th, thus I couldn’t get the refund. Again you understand how this Refund If Your Horse Finishes 2nd Beaten By SP Favorite additional condition make it extremely difficult. Since I took early prices in all bookies, 2 horses were in arbitrage, means Lay odds were lower than the back odds. Therefore earned profit via straight forward matched betting I did.
- I completed Sky Club qualifying bet to get weekly £5 Free Bet.
- I also completed Bet Star weekly mission qualifying bet to get £5 Free Bet
Net Earnings £17 + Commission Saving £4 + Free Bet £10 = £31 for say less than 1 hour work, Not bad, isn’t it?
How Lay Betting Works – Wrap Up
Reduction of Lay Betting Commissions & Liability
- Although I use the term Lay Betting Commission, actually exchange charges the commission when you back at the exchange as well. Therefore, the proper description should be Exchange Commission rather than Lay Betting Commission. I expressed Lay Betting to emphasize that we are referring to the commission when you lay, which is common for matched bettors. Just for clarification.
- The amount of money you need for lay betting is based on your maximum potential loss. So the most you will lose is whichever selection has the larger liability and the liability with lower liability should be ignored.
- The final balance after the multiple lay bets will be the result of offsetting total gains & losses therefore it will always be more balance than the case of losing single lay bet.
- Consequently, doing multiple lay bets on the same market can effectively increase your profit (saving commission) and make your cash flow more efficient.
- You can use this approach on any event which can only have 1 outcome. You can use it for every occasion, from high odds markets such as horse racing, golf outright, or football correct score etc especially for Free Bet use to very low odds market like Football 1X2 for Qualifying Bets.
Our Betting Strategy
Finally, allow us to talk a bit about our betting strategy. Many people automatically think Betting = Gambling. Big Misconception. We do bet but don’t count on luck. Instead, we do 6 Advantage Plays based on mathematical edge to beat the bookies, casino & bingo. When it comes to the Sports Betting, we use Matched Betting / Sports Arbitrage / Value Bets On Proven Tipsters to lock-in profit or consistently earn extra income for long-term. With that said, one of our policies is “Betting On Chance Is For Losers, Stop Gamble Betting But Bet on Only +EV (Expected Value) To Win Reliably“.
It is effectively our way to promote Responsible Gambling, and we strongly support GambleAware being explained in about us. We Global Extra Money (GEM) would like our readers to exploit such reliable money making opportunities as many as possible. Providing the Solutions To Reduce Lay Betting Commission & Liability by understanding how lay betting works is part of our efforts to achieve that vision.
If you have any inquiry or need any help from us, please contact us anytime (don’t worry, we will not charge you any fee, everything is free here).
Good Luck On Your Betting!!
Joshua Walker (bio)