Lay Bet

A lay bet is the opposite of a conventional back bet: instead of backing a selection to win, you bet that it will not win. In effect you take on the bookmaker's role. If the selection loses or does not occur, you keep the backer's stake; if it wins, you must pay out at the agreed odds. Lay betting is available only on betting exchanges, principally Betfair and Smarkets, where customers bet against one another rather than against the house. Worked example: you lay a horse at odds of 4.0 for a stake of 10. Your potential profit is the backer's stake, 10, which you collect if the horse fails to win. Your liability, however, is the stake multiplied by the odds minus one — that is, 10 x (4.0 - 1) = 30. So you risk 30 to win 10. If the horse loses, you are 10 better off; if it wins, you pay out 30. Why it matters: laying allows you to oppose selections you judge overpriced, to trade positions in and out of a market, and to hedge or green up an existing back bet. It is also the engine behind matched betting. The key caveat is liability: because the amount at risk can far exceed the stake, particularly when laying long-odds outsiders, careful exposure management is essential. A common mistake is to treat the stake figure as the amount at risk, when in reality the liability is what your account must cover. See also back bet, betting exchange and hedging.