A betting exchange is a platform where punters can bet against other punters on any sporting events that are hosted on that particular exchange. There is no bookmaker and the odds that you get are much more favourable (up to 20% more value). Furthermore, there is the chance to trade in-play and lock in profits or reduce losses as the sporting event progresses (goals are scored during a football match, or your horse is going very well during a race). Once the event is settled the exchange will make money by charging the winning account a commission of up to 5% of the net winning amount.
What does Back and Lay Mean?
The ability to back and lay bets is a key difference between traditional bookmakers and betting exchanges.
In the simplest terms:
For example, if you think that Liverpool is going to win their next home match you could place a back bet on the home win. But if you think they are not going to win, you could lay the home win. In that instance, your bet would win as long as Liverpool did not win, ie if the match ends in a draw or an away win.
By placing a lay bet, you are effectively taking on the role of the bookmaker by offering odds that can then be taken by another user. So if you lay Liverpool, Betfair will find another trader who wants to back Liverpool at the price you’re offering and match the two sides - back and lay.
Back and Lay Betting Explained
Here is the Betfair Match Odds market for Wolves vs Newcastle on Monday the 11th February 2019
As you can see by the odds offered on Betfair, Wolves are the favourites to win this match. In case you don’t know already, the back odds on Betfair are listed in blue, while the lay odds are coloured in pink.
With back odds of 1.86 for Wolves, you would win £8.60 for every £10 you choose to stake (less commission).
However, when you are laying a bet you are betting against that outcome.
The lay odds (in pink) for Wolves in this match are currently set at 1.87.
This means that for every £10 you choose to stake, your lay bet liability is £8.70. If you lay Wolves and they go on to win the game, you lose £8.70 but if the match ends in a draw or a win for the Newcastle, your profit is £10 (less commission).
You can back and lay at the prices shown in the market, or you can set your own odds. If you decide that 1.87 is not the right price to lay at, you could opt to lay Wolves at 1.84 instead. You would not get matched right away as other users would be happily backing at the higher price of 1.86, but the price may move once team news is announced if the market decides that Wolves have become stronger favourites.
The figure shown below the odds is how much money there is in the market at this time. So, in the example given above, another £6560 could be laid on Wolves at 1.87 before the price would change, while there is £6225 available to bet on Wolves to win at the price of 1.86.
Football matches between the most popular teams (in the English premier League, Spanish La Liga, Italian Serie A and the German Bundesliga) have a lot of money in the Match Odds market, especially as kick off time approaches. However, some of the other markets that are offered on the main sports exchanges - for instance the correct score market or first Goal scorer– may not have a lot of money on them. Other markets such as Horse Racing are very popular and the matched bets usually run into many millions of pounds.
Backing and laying for profit is how football traders make their money, so make sure you fully understand what you are doing before you start placing your bets on Betfair. Getting it the wrong way round can be an expensive mistake! So start with small stakes and slowly increase them as you gain more confidence. Good luck!!