How Lay Betting Works – Minimize Exchange Commission & Liability

How To Use Lay Betting

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”.

Watch the short video produced by Betfair (suggest use of Betfair Alternatives);

(You may want to check “How to Make Money on Betting Exchange” which explains 4 specific methods to earn money using betting exchanges.)

By placing the lay bet, you have effectively become a bookmaker and you can place a lay bet in betting exchanges like Betfair (suggest the use of Betfair Alternatives), Smarkets & Matchbook where you need to pay the commission (BTW, for opening their accounts, see 4 Best Betting Exchange Sign-Up Offers & How To Monetize Bonuses).

Understanding how lay betting works and learning the best way to save your exchange commission & minimize liability enable you to make more money from lay betting.

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.

For those who are not familiar with matched betting at all, suggest taking 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 the 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 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 use 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.
• The 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 equips a 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’s 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.

Betting Exchange

As said, the lay bet can be placed only in a 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;

Betfair (suggest use of Betfair Alternatives)

Smarkets

Matchbook

BetDaq (Warning)

And, in case you are not familiar with the betting exchanges, the below 2 documents will be of good help;

How to make money from Betting Exchange

4 Best Betting Exchange Sign-Up Offers with Cash Extraction Process

The above 4 betting exchange’s latest sign-up includes Betfair’s £100 Free Bet, which is supposed to be one of the best offers in the industry, just FYI.

For your quick start, I prepared a step-by-step guide for how to sign-up for Smarkets and extract cash from its £10 Risk-Free Bet bonus. Actually, this is one of the easiest offers to lock in a 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;

Sky Bet & Smarkets - Step By Step Matched Betting Process with Screenshots

Before Sign-Up, T&C, T&C, T&C —

• Firstly, read both the bet exchange (again to ensure you follow everything required) & bookmaker sign-up bonus T&C. Allow me to reiterate that it’s boring stuff but never try to save time by skipping it to avoid any unpleasant future surprises. They can change & update T&C anytime, therefore it’s essential to follow their latest guideline. Some of the key points are; Minimum Odds (1.5 Over etc.), Device (via PC, Mobile, etc), Deadline (by when such as within 7 days after deposit), and as said in the Sign-Up process, Deposit Method (often Skrill / Neteller deposit is not eligible for the sign-up offer), etc

Sky Bet Sign-Up

• After reading the T&C, start registration by clicking “Join Now”;
• No-brainer, just fill in your personal information as usual sign-up form;
  
  

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• Finally, Deposit page, you need only £5 to deposit for the qualifying bet though, suggest depositing at least £10 to be seen not as a bonus hunter but as a casual bettor;

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• After you complete the successful registration, you will receive the confirmation e-mail as below;

Account Verification

• If you are required to verify your account, do it as quickly as possible. Sky Bet says “We need Proof of ID (Passport/driver’s license) and proof of address dated within the last 3 months (utility bill/bank statement). You can email these off to docs@skybet.com and we will look to get your account verified in 24 hours.”

Now, Time To Start Matched Betting – Find Sports Events & Calculate

• Go Free Odds Matcher to look for the appropriate (means the tightest odds gap between Sky bet & Smarkets) sports event. You chose Sky Bet as a bookmaker;
  
  

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Odds Selection Tactics – Qualifying Bet

• For the qualifying bet (which means not a free bet but your own money), the Shorter (means smaller) the better. Because the shorter odds usually allow you to find the narrower gap between bookmaker odds & bet exchange lay odds, thus better profit. Sky Bet requires a minimum of 2.0 odds. So just use the filter function to set something like 2.0 – 6.0 (you can set the highest as you want) and select the event.

• The oddsmatcher displays the list as below;
  
  

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• The best event (which means, the narrowest odds gap between Sky Bet & Bet Exchange) is Fontwell horse racing at 15:45, Puppet Warrior. So, let’s check if these odds are still available in both Sky Bet & Smarkets.
• Unfortunately, Sky Bet already reduced the odds from 2.88 to 2.75;
  
  

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• However, Smarkets lay odds also lowered;
  
  

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• The odds always change like this, so don’t worry. What we do is to see if the updated odds are still worth it by changing the lay calculator (it appears when you click the “i” icon at the right end of the event in the oddsmatcher table) manually as below;
  
  

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• The calculator indicates that with the new odds, our qualifying loss will be 12p, 2.4% loss, no matter whether our horse Puppet Warrior wins or loses, which is an acceptable level.
• So, all you need to do is to follow the calculator. Namely, back £5 on Puppet Warrior at 2.75 at Sky Bet while laying £4.98 on the same horse Puppet Warrior at 2.78 at Smarkets.
• The race result doesn’t matter though, the final result is;

Just FYI.

Odds Selection Tactics – Free Bet

• After settling the above qualifying bet, Sky Bet will give you a £20 Free Bet.
• Now, all that you need is to repeat the process of back & lay that we just completed. However, when it comes to the odds, unlike the Qualifying Bet Case, the Longer (means larger) the better because your free bet will not be returned when you win. This type of bonus is called SNR – Stake Not Returned (see further details), and the free bet is usually SNR.
• So, let’s set the odds range, say between 6 – 15;
• You can always find a list of the candidates as shown below. Let’s see the top 2, which are both horse racing of Lingfield, “Goodbye Lulu” & Kempton “Royal Birth”. Although Lingfield one is positioned the best it’s based on SR (Stake Returned, which means normal betting case). But, we’re using Free Bet which is SNR (Stake Not Returned). Therefore the 2nd one of Kempton of which odds is longer must be a more appropriate choice (See the calculation later).
  
  

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• You click the “i” mark at the right end, which will navigate you to the screen highlighting the action. That is Backing “Royal Birth” at 10.00 in Sky Bet and Laying off “Royal Birth” at 10.50 in Smarkets;

Automated Calculation

• You click the yellow “Calculator” mark, which will navigate you to the calculator below;
  
  

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• Actually, it gives you everything you need to know. Although the necessary inputs are automatically done, you need to select Stake Not Returned mode at the right top since it is a Free Bet (the default mode is Qualifier, so you have to change manually).
• The key inputs you need to double-check are; Stake £20 in Sky Bet. Back Odds 10 & Lay Odds (in Smarkets) 10.05. Commission, Sky Bet 0 but Smarkets 2%. Then, the calculation says you need to lay £17.18 at Smarkets, and your final profit will be £16.83 regardless of the outcome. This means no matter whether “Royal Birth” wins or loses, you will earn exactly £16.83.

If Chose The Top Rated Kempton “Goodbye Ludu”

• If we chose the Kempton “Goodbye Lulu”, the final profit is £15.90 which is lower than £16.83;
  
  

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Note – Lay Liability

• Although the longer odds are preferable to achieve a better profit for the Free Bet case, we need to be careful about Lay Liability. The longer the odds, the bigger the lay liability is. In the above case, laying “Goodbye Lulu” requires £94.10 but “Royal Birth” needs £163.17. So, if you don’t have enough balance at the exchange (Smarkets), choosing “Goodbye Lulu” is an optional approach.

Placing Bets

• Now, we will construct the matched betting by placing the stake both in Sky Bet & Smarkets. Firstly place a bet at Sky Bet. Remember, you should place the bookmaker’s bet first, this is an important theory (don’t think too much at this stage just follow this principle, you will know why in due course). So, go to Sky Bet, and confirm if the odds are still 10.00. If it changes, you need to recalculate the lay stake & profit by just updating the number in the calculator. You can change it manually very simply. If it’s 10.00, then place £10 on “Royal Birth”;
  
  

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• Then go to Smarkets. The same practice. Confirm if the odds are still 10.05. In Smarkets (basically more or less the same among all bet exchanges), there are 2 parts of Blue Colour (right side) & Green Colour (left side). You need to choose Blue Colour for the Lay. The green colour is the Backing. In bet exchange, you can also back, but at this stage, I don’t want to confuse you, so just remember you chose Blue to lay;
  
  

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Final Profit

• That’s it. Just wait for the outcome. The below shows the final profit no matter whether “Royal Birth” wins or loses;
• Qualifying Bet: (-12p) Loss
• Free Bet: £16.83 Profit
• Total: £16.71 Net Profit

Actual Result

• Do you want to know the actual result of the race?
  
  

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• So “Royal Birth” didn’t win but finished at 2nd, any way you will not be bothered by any results, just FYI.

If it’s your first betting experience, you may take 10 minutes each to sign-up for Smarkets & Sky Bet. And took probably 30 – 40 minutes to complete the whole matched betting process (both qualifying bet & free bet). Or I would say you’d better take enough time to avoid careful mistakes. After you construct a few matched betting, you should be able to finish the same process within 20 minutes. The important thing is to keep doing and your efficiency will be improved exponentially.

In case you can’t access any betting exchanges in your country, don’t worry use Betfair Alternatives, which enables you to access the Betfair market.

Lay Betting Commission Saving At Exchange

Now, let’s get down to the key subjects of this document.

Exchange Lay Betting Commission – How Does It Work & Affect You?

Let me quote a Pinnacle article that summarizes how the exchange commission works & affects your profit;

Well, advertising Pinnacle Sports is not my intention here (although I believe Pinnacle is the best bookmaker for smart punters in the world – go to 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 a 5% standard commission and there are the 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)

Say, you bet £200 bet on 2/2.1 odds, 2% exchange saves £6 of commission compared with 5% of Betfair. It will be a significant impact in long term for matched betters who bet thousands in exchange.

B) Offset Lay Betting Commission

The next method is to offset the commission. Remember the exchange charge commission Only To Net Winnings, which means if you make multiple bets on the same markets, your commission will be against (Total Winning – Total Loss). This tactic can be used together with the next topic to 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 the 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, 2^nd & 3^rd 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 bettings all win £20 x 3 x 2% = £1.2 no commission offset
• 1 of 3 wins (remember winning country is only 1) – so your 2 lays win but your winnings will be offset by your 1 lost lay amount. Thus the final lay betting commission will be reduced. Say Brazil wins, then £27.6 lay loss will be deducted from £20 x 2 (2 lay wins). So your net win in this market will be £12.4 and the commission charged will be £0.248. This is a 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 a 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 Smarket’s 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 tactic saves your Betfair commission hugely even up to 0.

C) Dutching

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 tactic to ensure winnings while reducing risk.

Essentially it covers all the outcomes of the event with a back bet. This means instead of laying at the exchange, placing all the bets at bookies can avoid paying lay betting commission at the exchange. This is also a simple & handy option, especially for the football 1×2 market.

Minimize Lay Betting Liabilities

Remember, laying a bet is betting on something to not happening. 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 simple:

Lay Betting Liability =  Lay Stake x (Decimal Odds – 1) 

The reason you subtract 1 is that on an exchange, the price includes having your stake returned to you. So assuming your lay stake is £10 and the lay odds are 3.50, then Lay Betting Liability = £10 x (3.5 – 1) =£25. And if the odds are 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 funds to cover the Lay Betting Liability in Exchange.

Because your trading must be increasing rapidly and you need to choose longer odds to extract Free Bet (although qualifying bet requires the opposite, which means shorter odds are preferable). Let’s use the above Rio Olympic Football Outright market as an 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 change 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, which means if Argentine wins;

Well, this single Lay Betting liability itself is not a big amount. However, if 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 well matched betting opportunities due to the lack of funds.

How You Can Reduce Your Lay Betting Liability

We can apply the exact same approach as the 2. Offsetting Commission introduced in the above Commission Saving. So, we make multiple bets (again don’t be confused with Multiples as Accumulator bets, what we talk about 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 at £249.90. Because the winner is only 1, both Argentine & Germany’s win will not happen thus these 2 liabilities 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? 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 maximum 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 be 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 tactic to Football Game 1X2 market where only 3 outcomes (home wins, draw, away wins) exist. 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 maximum 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 2^nd & 3^rd offer (this case gives me the guaranteed profit) 2nd Place Refund Horse Betting Calculator For A Guaranteed Profit for details;

  

• + Bet £25 to achieve Sky Bet Club weekly mission for £5 Free Bet
• Paddy Power – Refund 2^nd & 3^rd offer (but this requires the condition of beaten by favourite)
• Boylesports – Refund 2^nd & 3^rd offer (but this attaches the condition of beaten by A Head or Less)
• Betfair (suggest use of Betfair Alternatives) – 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 a Weekly mission for £5 Free Bet

So, what happened finally? The race result was; I placed an £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 only 1 horse won, means I won 4 lays)
• The final profits from this race were £17, and my horse in Skybet finishes 2^nd thus I got a £25 refund; But as said I already locked in the profit for Sky taking this refund into account. My horse in Paddy Power finished 3^rd but unfortunately, the SP Favorite didn’t win but finished 7^th, thus I couldn’t get the refund. Again you understand how this Refund If Your Horse Finishes 2nd Beaten By SP Favorite additional condition makes it extremely difficult. Since I took early prices in all bookies, 2 horses were in arbitrage, which means Lay odds were lower than the back odds. Therefore earned profit via straightforward matched betting I did.
• I completed Sky Club qualifying bet to get a weekly £5 Free Bet.
• I also completed Bet Star weekly mission qualifying bet to get a £5 Free Bet

Summary

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

Our Betting Strategy

Finally, allow us to talk a bit about our betting strategy. Many people automatically think of 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, casinos & bingo.

When it comes to Sports Betting, we use Matched Betting / Sports Arbitrage / Value Bets On Proven Tipsters to lock in a profit or consistently earn extra income for the 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 about us.

We at 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 inquiries 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)

Editor – Global Extra Money (GEM)