Gambling is defined as “wagering something of value on a random event with the intent of winning something else of value.” There is evidence of humankind engaging in gambling during the Paleolithic era (which ended approximately 12,000 years ago) and before written history.
However, the first bookmaker didn’t exist until 1795. For the next 200 years, the bookie controlled the market and was the person you dealt with when placing a bet. The process involved choosing an outcome and betting on it, with the bookie as your rival.
By the early 2000s, however, betting exchanges were created and changed the face of betting forever. It had then become possible for the bettor to act like the bookmaker, taking on fellow punters to earn a profit. Exchanges introduced the concept of ‘lay’ betting, which vastly expanded the betting opportunities available to gamblers.
This article looks into the practice of back-lay betting on an exchange. It also analyzes the back-to-lay trading strategy, which could help you earn low-risk profit.
It is an online betting marketplace where bettors compete against each other instead of a bookmaker. You can offer to or request odds from your fellow punters. Unlike traditional bookmakers, which assume a certain risk element, a betting exchange takes on no risk. It acts as an intermediary between bettors and takes a commission on your winnings for its trouble.
Unlike typical bookies, where you bet on an outcome happening, an exchange lets you bet on something NOT happening. It is effectively a stock market for betting.
The creation of betting exchanges is a huge boon for bettors, as it significantly increases their options. In the past, you had no recourse if a bookmaker wouldn’t give you the odds you wanted or was unwilling to accept the size of your stake. However, you can now find another bettor willing to assume the risk with an exchange.
In general, exchanges offer better odds than traditional bookmakers, especially close to events when the liquidity in the market is high. Major exchanges, such as Betfair, have huge numbers of users, so there’s a strong chance that someone will ‘match’ your bet.
Betting exchanges also allow you to trade similarly to the stock market. After all, the value of a bet can increase or decrease. If you place a bet on a football team to win and it scores first, you can trade your position to guarantee a profit regardless of the outcome. It is far more difficult to do this with a traditional bookie, especially since their cash-out options usually offer poor value.
Back betting is the most basic wager on a betting exchange. You bet on an outcome to occur, and if it does, you win. If it doesn’t, you lose. When using an exchange, things differ from when you use a regular bookie. Instead of competing with the bookie, you’re up against a fellow punter in a back-and-lay betting scenario. When you back an outcome on the exchange, you need someone to match the amount you’re betting, which means they are laying the bet.
If no one matches your wager, you must wait. During that time, something could happen in the event that changes the odds, and your stake might be returned.
In the above example, you want to back Supreme Gift to win but don’t like the available odds of 2.90. You believe the horse represents value at 3.20. In this instance, I placed a ‘back’ bet on Supreme Gift at 3.20 and selected ‘Keep.’ This leaves the possibility of the price being matched once the event is in play. If you select ‘Cancel,’ you get your stake returned if the odds of 3.20 are NOT matched by the time the race starts.
The above screenshot shows that the odds on Supreme Gift fell since the morning. I needed other punters to match the hundreds of pounds of lay bets at odds of less than 3.2 before anyone accepted the requested price.
As it happens, someone matched the bet, and Supreme Gift won!
In back-and-lay sports betting, laying involves betting on something NOT to happen. For instance, if you believe Chelsea will not beat Liverpool at Anfield, you ‘lay’ Chelsea in the match. It is the equivalent of selecting Liverpool or Draw (also known as Double Chance) on a traditional bookmaker’s site.
Here’s another example. In this race at Fairyhouse in Ireland, you’re not convinced that the favorite, In Excess, is as good as advertised, and believe it could lose. Rather than backing the second favorite or an outsider, you decide to lay In Excess at odds of 1.56. If the hot favorite wins, you lose £28. You earn a £50 profit minus the Betfair commission if it wins.
Before making lay bets, you need to understand liability. Otherwise, you could expose yourself to a significant loss without realizing it. With regard to In Excess, the horse was odds on to win. Therefore, the liability is less than your potential profit.
However, once the odds in the pink ‘lay’ box go beyond 2.00, you risk more than the potential profit, as it is the equivalent of an odds-on-win bet. The higher the lay odds, the more money you lose if things go wrong.
For instance, you don’t think Busby has much chance of winning the above race and lay him for £10 at odds of 28.00. If the horse doesn’t win, you earn a profit of £10. However, if Busby springs a surprise, you lose £270! It is the same as placing a back bet at odds of less than 1.04!
Back-lay betting (or lay-to-back) is a trading strategy many professional bettors use. With the aid of trading software, these individuals look for opportunities to profit from the exchange. The process involves placing a back bet and waiting for the odds of the lay bet to fall below the current back price.
For instance, you bet on a horse at odds of 2.20 in anticipation that the price will fall. At this point, the lay bet is available at 2.24, but you want it to fall to 2.18 or below to guarantee a profit.
In the screenshot above, you can see that I put £10 on Originally to win this race at Newcastle at odds of 1.91.
I then placed a lay bet at odds of 1.86. Once it matched, I could let it ride and have a free bet on Originally or cash out for a guaranteed profit.
One tactic often used in horse racing is to find a horse known for being a front-runner. I previously mentioned the race involving Busby and how a lay bet on the horse could prove disastrous if it won.
As it happens, this horse has a recent history of front running. You can find information on a horse’s history on various sites, including the Racing Post, Geegeez, Race Advisor, Timeform, and many other locations. There are also websites that provide information on front-running horses in action each day. Please note that some of these sites charge you for certain features.
In any case, I backed Busby at odds of 27.00 and placed a lay bet at 18.00. Sure enough, Busby moved to the front quickly, and its price fell to 10.5 within seconds of the race starting. He remained at the front until the last couple of furlongs before weakening and falling away. Even so, I had created a free bet with a possible £45 win if Busby had a surprise win or a £3.33 cash out.
A lay-to-back bet is the opposite. You lay an outcome, such as over 3.5 goals in football, at odds of 3.0. Back is available at 2.96. You want the odds on the ‘back’ bet to go to 3.05 or higher to profit.
In the screenshot above, I placed a lay bet of £2 on over 1.5 goals at odds of 3.8, which meant a liability of £5.60. Next, I placed a back bet of £2 on over 1.5 goals at odds of 4.00. The price decay was rapid, as the game was almost an hour old, meaning the bet got matched quickly. Once again, I had the choice of a free bet or a cash-out.
A back-to-lay or lay-to-back bet where the aim is a fast profit (within seconds) is called scalping. However, traders also look for wins during an event. For instance, they may back a soccer team to win at odds of 1.78. If that team scores first, the bettor can close the trade for a guaranteed profit or a no-loss scenario.
Long-term back lay betting is also possible in markets such as tournament winners. For instance, you decide to back a tennis player to win Wimbledon at odds of 81.00. They performed well and defeated the #9 seed in the third round. Suddenly, their odds drop to 21.00, allowing you to cash out or eliminate liability.
In previous articles, we have mentioned that crypto gambling sites are starting to provide better value than their fiat counterparts regularly. Betting exchanges are known for offering more value, which is seen through both the back and lay sports betting opportunities. Exchanges have a far lower overround than traditional bookies, which is why the odds are usually more attractive.
Look at this game between Nottingham Forest and Manchester United, for example. The Betfair exchange offers better odds on home win, away win, and the draw than Bet365.
The fiat bookmaker’s overround is 4.89% for the above market. The exchange’s overround is less than 1%!
Suppose you believe United won’t win but aren’t sure whether the game will end as a draw or a home win. In that case, you can lay United at odds of 1.64 on the exchange. This is the equivalent of backing the double chance (Forest or Draw) market at 2.53. In contrast, Bet365 offers odds of just 2.30 on that outcome, an extremely poor price!
Back betting is the industry standard and is what most punters do. It involves placing a wager on an event to happen. If your prediction is correct, you win money.
However, lay betting is something very different. It gives you greater control of your betting and increases the number of opportunities available. Instead of relying on a bookmaker to give you a price, you can set the odds and see if they are matched. In effect, betting exchanges enable you to become the bookie and potentially gain an edge over your fellow punters.
Occasionally, a Betfair exchange user will make a mistake and offer a far better value bet than intended. If you spot the price before anyone else, you can take advantage.
With research, patience, and a big enough bankroll, you can earn either a nice second income or pocket money, depending on your goals.
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