Lay bet
A lay bet is a wager that a selection will not win, placed on a betting exchange, where you take the bookmaker’s side and pay the backer’s winnings if that selection does win. Lay a horse and you collect if any other runner in the race comes home first. The catch is that what you risk is not your stake but your liability, and that figure grows with the odds. On longer prices, a modest stake can tie up several times its own value in your account.
How is lay liability calculated?
The formula is simple: liability = lay stake × (decimal odds – 1). The lay stake is the backer’s money you accept, and the liability is what you pay out if the selection wins.
Take a horse at 3/1, or 4.0 in decimal, which implies a 25% chance of winning. If you lay it for €20, your liability is €20 × 3 = €60, and the exchange holds that sum in your balance until the market settles. If the horse loses, you keep the backer’s €20, minus the exchange’s commission on net winnings; at a 5% rate that leaves you €19. If it wins, you lose the full €60, and no commission is charged on a losing position.
Commission is where operators differ, so the rate on your own account is the one to check.
Betfair applies 2%, 5% or 8% depending on the rewards package you choose, while Smarkets publishes a 2% rate, and both figures can change.
Lay bet or simply backing the field?
A lay bet is often confused with a back bet on every other outcome, and the two are close but not identical. Backing the field at a bookmaker carries the bookmaker’s margin built into each price, whereas the exchange quotes a single lay price and takes its cut as commission afterwards.
It also gets mixed up with matched betting, which uses lay bets to cover a bookmaker free bet. That free bet usually returns winnings only, without the stake, so the lay stake must be smaller than it would be on a cash bet, or the cover is wrong.
Odds-on lays carry less liability than the stake; long-priced ones carry far more.
