What is Lay Betting?
Traditionally we have always seen the bookie as the enemy, why not, he is responsible for setting the odds in his favour so if we did win on a good horse it's hardly worth it and when we lose he takes the money and makes it very difficult for us to get it back!
Well along came a guy called Andrew Black who was a bit fed up with the fat cat bookies and decided there had to be a better way and turned to the New York Exchange for inspiration, using their model Black designed a way to match both sides of a bet via the Internet, bypassing the bookmaker altogether.
Betfair was born and they haven't looked back.
So how does it work?
Well as already mentioned traditionally you go into a bookie and place a bet based on their odds, hand over your cash and wait to see if you win or lose, well at Betting Exchanges you can make a choice of whether you want to bet as normal or offer odds for a horse you think wont win, but other people think will!
Lets go over that again…
There is a horse running at the 2.00 at Randwick, that you are pretty sure will not win, but he just happens to be the favourite of the race, so this means a lot of people think it will.
You log onto to your Betfair account and "Lay" $50.00 at the going odds being pretty sure that the horse is going to lose, all you have to do is wait for someone to match your $50.00 on the other side, once they do you just have to wait for the outcome.
But what happens if the horse wins, your are in effect acting as a bookie so you will have to pay out in the same way, so lets look at your liability.
Betting exchange odds are normally shown as decimals so you may have offered odds on a horse at 2.64, this figure represents what the winner will get back including their original stake.
But for our calculation we have to -1 because we are only concerned with our actual liability.
2.64 - 1 = 1.64 X 50 (our $50 lay) = $82.00
So if the horse does win then we have to payout $82 to cover the bet.
Betting Exchanges actually take your liability at the time of the bet, so that you cant do a runner if the horse does win!
But what do you win if the horse does lose the race?
Simple, you offered $50.00 and someone matched it, so if they lose you get to keep their $50.00.
In effect all "Lay" bets are placed at evens, so what ever stake you offer, as long as it gets matched and you win, you get the same amount back in profit.
One thing to be aware of with betting exchanges is that they take a percentage of all winnings, which at the time of writing this is anywhere between 2 and 5% although you do not pay if you lose.
Why are betting exchanges so popular?
There are two answers to this question. Firstly because the "Layers" are trying to get their offers matched and they do not have to offer odds on every horse in the race (unlike normal bookies) so they can afford to be a bit more generous with their odds, so if you want to bet to "Win" then the odds on offer at betting exchanges are normally better and there have been occasions when they have been substantially better.
Secondly because only one horse can win a race and 2 out of 3 favourites lose then some will argue that the "Laying" a bet is far less risky than betting to "Win".