The arrival of Betfair's betting exchange in 2000 allowed gamblers, for the first time ever, to bet against each other instead of being forced to place bets with (and against) a traditional bookmaker.
It was a new concept, and a revolutionary one.
Not only did it threaten the age-old betting industry, it also gave birth to a new type of trading where people like myself could trade betting markets just like I used to trade stocks: Buying low and selling high or, in this case, laying low and backing high.
In this article I'll explain how backing and laying on Betfair works, and show you some lay-betting strategies you can use to generate regular and substantial profits from very low-risk sports bets.
What Does Back And Lay Mean?
The term 'Back and Lay' is normally used to refer to trading rather than gambling.
Gamblers bet on events, usually backing but sometimes laying instead. Never both.
To back and lay (on the same event) means you're trading, and you're either backing first then laying to close your trade, or vice versa.
As shown in my article, Strategies for Sports Trading, a trading strategy requires both back bets and lay bets. This is usually done after finding a statistical edge or expectation of something occurring during the event (i.e. goals) to cause the prices (odds) to change significantly, giving us our profit.
If you back at high odds, and then the odds drop dramatically (for instance after a team scores a goal), you then use lay bets to close your position and bank your profit from the trade.
I will explain both types of bet separately so you have a full understanding before moving on to discuss some of the best laying strategies being used by professional Betfair traders in 2023.
What Does Backing Mean?
It may sound obvious and for many it is, but not for everyone, as my email inbox often shows!
Most people think 'backing' just means 'betting on something to win', i.e. a team/horse. That isn't wrong, as most of the time it's true, but not always. To be 100% accurate, I would define backing as:
Betting that an event WILL happen.
Yes that 'event' is usually a 'win', but not always as you can bet on other events happening.
When you 'back' a horse, you can of course back it to win, but you can also back it to get 'placed', i.e. to finish 1st, 2nd, 3rd (and sometimes 4th). I am sure you've heard of an Each Way bet?
An Each Way bet is actually two back bets. If you back Red Rum for £10 to win the National, that bet costs you, duh, £10! But if you back it 'Each Way', it costs £20.
This is because you're actually placing two back bets. The first half of your stake goes 'on the nose', i.e. backing the horse to win the race. But the second half of your stake, which is still a back bet, is a bet on the horse 'placing'. This shows that not all back bets require a 'win' for your chosen selection.
This may seem 'academic' and an insignificant point, but if you know anything about me you'll know that I believe accuracy matters, and the distinction becomes much more important when you're learning how lay betting works.
What Does Laying Mean?
To Lay something does not mean to bet on a selection 'losing', as many also wrongly believe.
A lay bet is the exact opposite of a back bet.
If backing is a bet that an event will happen, then laying is to bet that the event will not happen.
If you back a horse to win, the horse must win the race for us to win our bet. If we lay that same horse, it can finish the race 2nd, or 18th, or anywhere in between for us to win our lay bet. It has to do anying but win!
Again, this is not just an 'academic' difference. It's a big one, as it renders backing and laying 'binary'. If one wins, the other loses, if one loses, the other wins. This is why they are often viewed the same way traders view buying and selling. One cancels the other, and this binary nature is what enables us to trade sports on the betting exchange.
If you 'lay the favourite', you're betting that the favourite will not win. If you lay the draw outcome in football, you're betting that it will not end in a draw.
This means there are usually many more ways to win with a lay bet. As an example, if you think Arsenal will beat Man City, you could back Arsenal. But if you instead LAY Man City, you'll win your bet if Arsenal win, but you'll also win if it ends in a draw, as both are not a win for Arsenal.
Before betting exchanges existed, the only people making lay bets were bookmakers. As laying is the opposite of backing, bookmakers were laying thousands of bets per day. Every time someone backed a horse in a bookie, the bookie was laying that same horse, or 'taking the other side of the bet'. In bookie-speak, they were actually taking the other side of the book. Hence: 'Book Maker'.
Lay Betting on Betfair
Betfair removed this middle man, hence why the arrival of betting exchanges caused a lot of concern regarding the future of the bookmaking industry.
Imagine you and a friend have a bet between you about the outcome of a football game.
You tell your friend you think Celtic will win, but your friend disagrees. So you have a £20 bet between you. If they win, he has to give you £20, if they lose you have to give him £20 instead.
This is the simplest form of betting without involving a middleman and this is exactly how Betfair works.
There are just two differences, and they are worth understanding before trading on the platform.
Betfair Odds (Prices)
Since Betfair has more than just two people involved in any market (and then some!), there needs to be a way to calculate odds or prices for all bets.
Betfair does this in the purest form possible, using the 'free market' approach. In other words, they allow users to negotiate the odds between themselves, via their betting decisions.
Let's say you want to back Celtic and you think 2.0 (i.e. "evens") is a good price. You place your 'order' of £20 at 2.0. Your £20 then sits in a queue on the exchange and is visible to everyone else.
Now let's say someone else thinks Celtic will not win the game, and they fancy laying them for £20. They will toddle along to Betfair, look for prices to lay at, and see your £20 sitting there in a pink box which they can click on and instantly accept your offer to back at 2.0, and lay your bet.
(Remember: Backers want the highest possible odds to maximise their winnings, layers want the lowest possible to limit their liability.)
At this point you've reach an agreement that the price of 2.0 is a 'fair' price, and both of you are now committed. If Celtic lose he pays you your winnings. If Celtic win, he keeps your £20 back stake.
Bear in mind that 2.0 is the only price where both backer and layer 'risk' the same amount.
Your back bet will take £20 from your account as it's your stake, and his £20 lay bet will take £20 from his account as that's your winnings which he has agreed to pay by laying your bet (so Betfair deduct it from his account until the outcome is determined).
The layer pays your winnings when you win, and keeps your stake if you lose, exactly as bookies do.
But what if nobody was interested in your order of £20 to back at 2.0?
That's where it gets interesting, along comes the powerful effect of the 'free market'!
If nobody matches your bet (by laying £20 at 2.0), but someone wants to lay at 1.8, you might move your bet down (to get a bet on the game) and accept the slightly reduced price of 1.8.
At that instant, your exchange of bets at 1.8 makes 1.8 the LTP, or 'last traded price' on the betting exchange, for that Celtic game. You have just 'set the price' in the market, congratulations, and you never thought you had a say in anything?!
Obviously there are millions of pounds being exchanged in this way every day, often every minute! And this is why the greater the volume or liquidity in any market, the greater the stability of prices. It's like democracy, but with money!
It is what traders sometimes refer to as a “pure” market, it has much less manipulation going on like some of the financial markets. It is clean, simple and uncorrupted.
Buyer and sellers, backers and layers, deciding what the “right” price on any outcome should be. This is great, as they sometimes get it wrong! In which case, a value bet might be on the cards!
Of course this is a detailed explanation of what's going on 'under the bonnet', and it all takes place in a split-second with a click of your mouse on Betfair (or in your betting exchange trading software).
The only other difference between using Betfair and betting against a friend, is the commission Betfair take from the transaction. Obviously they want to make a profit here somehow.
Betfair takes a commission from winning bets only. If you lose, you only lose your stake. But if you win, you win the calculated winnings (stake x odds) minus Betfair’s commission.
Lay Bet Liabilities
For the complete beginner, this is very important. Many novices are not aware that, whilst a back bet carries a fixed risk or 'liability' (your stake), lay bets do not.
A lay bet is an agreement to pay the backer's stake multiplied by the odds. I sometimes feel a bit bad when I win a very high priced bet, as I often drop £2-£20 stakes at odds between 500-1000.
Imagine being a novice who thought it was 'safe' (as many do!) to lay something at crazy odds like 500-1. And imagine paying out £Thousands when you only had a chance of winning £2-£20! I have never understood people laying at such high prices! Remember the mantra..
Back HIGH, Lay LOW
Beginners should consider laying under 2.0 as the safest type of lay due to the liability being lower than the stake. It also (therefore) means you stand to win more than your 'liability':
A lay at 2.0 means you risk the lay stake, so you can win the same as you're risking:
But laying at any price higher than 2.0 means you risk more than your stake. And you only have to move the odds from 2.0 to 3.o to double the risk!
So you see a team is losing 3-0 and you're tempted by an 'easy' or 'obvious' opportunity for 'free money' (I hear these phrases all the time!), so you lay them.
Surely they can't lose from a 3-0 lead! Well you're probably right, but how would you feel if you lost a grand in pursuit of that 'easy' £20?
Never EVER get tempted to lay at high prices. Strong favourites get 'overturned' all the time, and there is just no risk-reward value in high priced lays. You could have winner after winner after winner. But that first loser will wipe all of the profit from your bank, and a load more to boot.
There is only one exception and that's when it's part of your trading strategy such as trading the lay the draw strategy where you never intend to let the game play to the end before trading out, so the total liability shown when you place the lay bet is not relevant as it won't actually be at risk. But even then, I almost never lay the draw at a price higher than 5.0.
Well that’s lay betting hopefully explained to death! Now let's look at a few examples of some low-risk profitable laying strategies.
Laying Strategies: Low-Risk Betfair Profits
I will finish with a few examples of what are often called 'lay betting strategies', but I prefer to call them 'lay trading strategies'.
Because bettors/gamblers place a back bet or a lay bet, and then just wait for the result.
Traders on the other hand, as I said at the start, always use both on the same event. The examples below therefore always include both, but begin with a lay bet as the opening part of the trade.
Lay the Draw
This is a football strategy where you research to find strong home teams which are likely to score at least 2 goals, ideally in the first half.
You lay the draw on the basis that the home team will score before the odds come down to your 'stop loss' exit point (which is your real liability, even though the full 'bet' liability of your lay is much greater).
Lay The Field
This is a very simple 'shotgun style' trading strategy for horse racing which works by selecting race tracks where races usually have a close finish. You then pre-order a lay bet on all runners in the hope that 2 or more of your lay orders get matched in the final run to the finish line.
This is a good example of safe laying, as you can start with very low priced lays around 1.2 - 1.4, and move up from there, monitoring your success rate and results accordingly until you find your 'sweet spot'.
It's an ideal introductory strategy for those completely new to racing trading. You can read more about it in my lay all ebook.
In Play Football
This is one of my favourite approaches and certainly one of the best demonstrations of the power of lay betting techniques for trading Betfair football.
There are many different strategies which begin with low-risk lay bets on football matches in-play. Some of the best are what I'd call 'opportunistic' ones where you sit and wait for an unexpected scenario to occur, for example a weak team going 2-0 up against a much stronger team.
In such cases the markets go into disarray, prices go all over the place, and the weaker team (now ahead) often gets priced much too low due to the price being forced down rapidly by gamblers trying to escape (lay off) their now 'wrong' positions! This can present very profitable trading opportunities from relatively low-risk lay bets.
I recently published an article about Trading Football In-Play. I may soon produce another Betfair course for it as well, as it's just so dang profitable! (Subscribe for updates on that if interested.)
Well I hope this article helps a few novice traders get to grips with lay betting.
It's fairly crucial to understand these fundamental dynamics of the betting markets before moving on to learn even the most basic methods, never mind trying to earn a living on Betfair.
Quite a few people start learning trading by jumping straight into dedicated software rather than practicing some simple methods first via the Betair website in the browser (as I did when I started).
And that's not to mention that using the website makes it much easier to see what your liabilities are before you hit the 'submit' button! Software provides 'one-click' order submissions, remember that. Great once you know what you're doing, pretty dangerous beforehand!
I wish you all the best with your trading.
P.S. If you found this article useful, please say thanks by sharing it,
Frequently Asked Questions
How do you make money from back and lay betting?
How do winning lay bets make money?
Lay bets win by keeping the 'backer's stake'. If someone backs Chelsea for £10 and you lay their bet, you win if they don't win the game. You keep the £10 stake. If they do win, you pay the winnings.
Is back and lay betting the same as Betfair trading?
In theory no but in practice yes, usually. If you back and lay on the same event then you're trading. A back and lay is like a buy and sell of stocks. Your profits come from the difference in prices.
What are the risks of lay betting?
The liability of a lay bet is calculated as your stake multiplied by the price in odds, because you pay the backer's winnings which are calculated the same way. So make sure to check odds carefully!