Advice

Are You A Backer Or A Layer?

(Last Updated On: October 12, 2015)

The majority of bettors place bets on something to win. Obviously that make sense, it’s where betting began. But over the decades and centuries more complex bets came about that involved requiring multiple wins or combinations of wins.

Then the betting exchange was invented and the possibility of laying came about.

Now the most common bets are backing to win or laying to lose.

There is a common perception that it’s easier to make profits by laying. After all, most of the time you’re not going to select the winner. And that means…

…most of the time you’re going to be selecting the loser!

But it’s not that simple.

In fact, in my experience, it’s far easier to make a long-term profit by backing than by laying.

And in a minute I’m going to explain why.

But first I want to look at the three main perceptions as to why it’s easier to profit from laying.

  1. It’s easier to pick a loser
  2. The downswings are less
  3. You don’t have long losing runs

Now let me explain why I disagree with these points.

While it is easier to pick a loser, it’s a lot more complicated to understand how a lay bet works.

Everybody understand how a back bet works. You place £5 at odds of 3/1 and if your selection wins you make three times your stake, in this case £15, in profit and get your stake money back.

Simple.

Lay betting is not so simple. If you lay £5 at odds of 3/1 and your horse loses then you take the stake money (minus the betting exchange commission).

Okay, that makes it sound pretty easy.

But it’s when you lose a lay bet that people start to get confused. That’s because when you place a lay bet you are, in effect, becoming a bookmaker. This means that you’re offering someone odds of 3/1 on their back bet.

And that means…

If their back bet wins (and your lay bet loses) then you need to pay them out at the odds you offered them.

You place a lay bet at 3/1 for £5 then you have offered a back bettor that they can place their back bet with you for £5 and if the horse wins you will pay them out three times their bet in profit and give them their stake back. This means that you’re going to lose three times £5 or £15 if the horse wins.

So when you place a lay bet of £5 at odds of 3/1 you are actually risking £15 to make £5.

I know that can get kinda confusing, so read it through a few times to get your head round it. If you’re still struggling then just leave me a comment and I’ll help you to understand 🙂

While it’s easier to pick a losing bet, a lot of punters jump into lay betting for this reason but don’t understand how much they’re risking and how much they’ll win. And if you don’t understand the bet your making completely then you’re not going to make a profit in the long term.

Number two and number three from above I’m going to tackle together. Your downswings are less and the losing runs are shorter.

Both of these are true.

But that’s what can lead punters astray.

Probably the biggest difficulty most bettors face is being able to cope with downswings and losing runs.

So if there’s anyway to minimise these then so much the better.

Lay bets seems the obvious choice. Just laying the favourite will mean you win about 57% of your bets, which is a hell of a lot better than winning 33% when you back them.

However don’t be misled. Because lay betting works on this principle:

Win often and small but when you lose you lose big.

And that’s the opposite to back betting which is:

Lose often and small but when you win you win big.

Which means it requires a different mindset.

If you simply laid horses at odds of 3/1 then you’re going win roughly 75% of those bets and, in theory, you would end up break even.

Over 100 bets you would win £5 seventy five times for £375 and you would lose £15 twenty five times for £375.

That means you need three winning bets to make up every single losing bet.

But unfortunately it’s not that simple because the betting exchange charge commissions of 5%.

So when you win a bet you’re not actually getting £5, you’re getting £4.75. And that means you are only making £356 from your winning bets.

Effectively that means you’re starting from a 5% negative position.

With back bets you don’t have to bet on the betting exchanges, which means you don’t get a commission on your winning bets.

Let’s say you have a 5% edge, which is pretty good, and are actually winning 79 bets and losing 21 bets. Now you’re winning £375 every hundred bets, and losing £315.

Not bad… a £60 profit every single bet.

So that means you’ve placed 100 bets at £5, so you’re making a 12% return on investment right?

Wrong.

Don’t forget you’re actually risking £15 to win that £4.75. So you’ve actually placed £1500 in bets which means you ROI is just 4%.

A big difference.

What you will find is that although you don’t need to be able to cope with losing runs, you do need to be able to cope with most of your profit being wiped out every time you have a losing bet.

And this can be just as difficult to deal with as long downswings and losing runs.

Finally, and most importantly, the reason that it’s harder to make a profit laying is that betting exchanges are geared towards back bettors.

You can see this very quickly by looking at Betfair’s claim that their odds are 20% higher than bookmakers.

Bookmakers build in their edge, usually about 20%, and this is what allows them to make regular profits.

Betfair remove this edge as they take a commission from whoever wins, but that means by definition it’s harder for lay bettors to profit. Not only has the 20% edge that bookmakers build in gone, but they’re also charging a 5% commission on your winnings.

These are the reasons I always recommend punters start by placing back to win bets. They’re easier to understand and easier to make profits from.

Let me know which type of betting you prefer by leaving a comment below.

Michael Wilding

Michael started the Race Advisor in 2009 to help bettors become long-term profitable. After writing hundreds of articles I started to build software that contained my personal ratings. The Race Advisor has more factors for UK horse racing than any other site, and we pride ourselves on creating tools and strategies that are unique, and allow you to make a long-term profit without the need for tipsters. You can also check out my personal blog or my personal Instagram account.

23 Comments

  1. Hi Michael,

    Whilst I understand where you are coming from, I believe it is possible to make money from laying, using a systematic approach.

    One thing is for sure, you are not going to have your account shut down when laying!!!

    I honestly believe that if you want to make consistent profits, especially if you want to make an income, there is no future in backing. We are constantly told that we have to look for value for our back betting, but when you find it, and take the generous early prices being offered by bookmakers, which shorten later, proving you right, they will close you down, even if you are not actually winning money from them!

    We have moved way beyond the days when bookmakers closed accounts of people who have won large amounts of money, to closing accounts due simply to “betting patterns”, as I have found to my cost recently.
    Stan James closed my account due to “betting patterns”, and Corals simply refuse my bets. It has taken me months to get Corals to actually admit they have restricted my account, by restricted they mean I cant place any bets, whilst my money remains in the account, work that one out!!

    I had won £40 in 3 months from Stan James, and just over £5 quid in a month from Corals.

    So, the point I am making is, if anyone has any aspirations of success, make sure you can make your profits on the exchanges, or forget it…..

    Good luck,

    Gordon

    1. Thanks for the comment Gordon. I didn’t meant that you can’t make a profit from laying, as you say you most definitely can. But for people new to betting I think that laying looks a lot easier than it actually is. I would disagree that there is no future in backing, I think there is as long as you’re doing it on the exchanges. But I do agree it’s effectively impossible to use bookmakers unless you’re betting very large and can use one of the companies who specialises in placing large bets.

      1. Michael – which is it? In your email shot with a link to this post you have said “laying is never going to make you rich”. Now in the comment to Gordon you have said “I didn’t mean that you can’t make a profit from laying, as you most definitely can”. You have made yourself look quite silly there.

        I understand where you are coming from RE beginners, but this sort of attention grabbing claim in your email shot is deceptive as evidenced by your own statement / admission. Poor form Michael.

        For me Gordon makes a lot of good points. At the end of the day that’s how bookies make money, by laying bets. Exchanges now let us regular punters do the same, the difference being we don’t have to lay every race every day and every outcome in that race. It is possible to make money lay betting even after commission. The key is to only lay bets when you are getting value. For example if you could lay the outcome on the toss of a coin at odds of 1.8 every time, you will clean up in the long run even taking commission into account.

        The tricky thing is finding situations where such value exists and the market prices are out of kilter with how you assess the chance of the outcome. No easy feat, but there are people who do it.

        1. It is possible to make profits in almost every form of betting, it’s just a lot easier to do it some areas than others. As you say bookies make their living laying bets but they do it by creating markets where they have a 20% edge and they’re in control of the entire market. That makes a massive difference to attempting to do it on an exchange where the average market for layers is already a few % in a negative edge which is then amplified by the commission structure and (for most punters) they’re only laying a few of the outcomes in the market.

          I wasn’t saying it is impossible to make a profit laying, of course it’s not. What I was trying to do was make punters who are new to it or even new to betting entirely aware that laying isn’t actually as easy as it sounds.

          We get a huge amount of support tickets from bettors asking why they’re not making money laying when they’re laying so many losers (winning bets).

          The above post is the reason why.

          I would also still hold that if you want to make big money betting, then laying would not be the way to do it. I don’t know a single bettor earning five or six figures from laying but I know quite a few who do it from backing, exotics, trading etc… and that’s again because you’re starting in a far worse position laying than you are the others on Betfair.

          Now when Matchbook open up horse racing this may change the game because their commission structure is different. We will have to wait and see how their markets are forming before we’ll be able to tell.

  2. Hi Michael
    I’m a backer only (and mainly on the exchanges). What surprises me is that since most other punters are also, it would appear to follow that a lot more money is going into win bets on the exchanges than is going into lay bets. So how can Betfair match back bets to lay bets?

    1. Hi Paul, thank you for the comment. An interesting question. The way the markets work is that it moves if there is a lot of money at an odds level with nobody wanting to lay it. Quite simply the market will drop until there are layers prepared to take the bets offered by backers. At that point the punters who’ve placed back bets would be cancelling their bets and accepting lower odds in order to get matched. There are also liquidisation companies who provide liquidity in betting markets to make sure that there is enough to allow people to bet. There is a new, and very exciting, exchange opening horse racing markets in the not too distant future which is going to make a big impact on Betfair. I for one will be moving most of my betting they moment they open horse racing.

  3. Gordon, you’re absolutely spot on, since the spawning of sites like Profit Maximiser with its mass of people taking advantage of bookies offers normal betting at the beter known sites is almost impossible, I managed 9 bets with Stan James before I got the chop, Betfred and Ladbrokes even worse just by trying to take advantage of their Saturday offers.

    1. Absolutely, although we’ve managed to find a way to use the offers bookies make without getting accounts shut down in Betting Bounty. There have been a handful of people who’ve had accounts closed, normally they’ve already heavily used bonuses, but very few. However you do have to put some effort in to stay below the radar with them and limit yourself to certain offers.

  4. I think it’s a trap alot of newbie layers fall into – the liability outstripping any profit.

    To minimise the fluctuations caused by different odds (and their liabilities), I tend to prefer ‘fixing’ my liability, in the same way you would with a ‘back’ stake.

    In your example, I would fix my liability to £5 by setting the ‘backers stake’ to £1.66 (5 divided by 3).
    If the selection won, I would have lost £5.
    If the selection lost, I would gained £1.66 (minus any commission)

    Using this method, I would never lose more than £5 on any lay, but do make varying profit when selections ‘lose’. The profit would be varying on the odds of the selection – just as it does when backing.

    Of course calculating the ‘backers stake’ is a bit fiddy. Also betfair don’t allow a ‘backer stake’ of under £2, but there are ways around this, which I’m sure you know.

  5. I have tried laying here in australia with limited success but is not the disadvantage offset if i lay several runners when only payout on one.

    1. Great question James. Unfortunately it isn’t offset because you are laying at higher odds on some horses than others. Just for your own interest, next time you lay check out the lay odds available and the back odds available with a bookmaker or on the tote and check the difference.

  6. I’ve tried laying a few times but now given up on it. The problem, for me, is getting the right price to make it pay. If one accepts the argument that Betfair SP represents the true chances of a horse winning then laying at that price will break-even without commission but you would be down after commission as you have pointed out. To make a reasonable return, therefore, you need to regularly get a lay price that is close to 10% below Betfair SP. Being able to calculate the price to ask for on a regular basis is sadly beyond me.

    1. It’s definitely harder than it looks at first glance, which is what I was hoping to convey in this post. I haven’t actually done the analysis on this, it would be interesting to do, and Betfair SP probably would convey a “true price”. However, the SP is also a “true price”. There is in fact only one “true price” and that gives 100% chance of the winner winning and 0% chance to all the other runners. Everything else is an accurate estimate, e.g. you take the 30% chances at Betfair SP and find they win 30% of the time. However you can take 30% chances from SP and also find they win 30% of the time even though they contain different horses.

      The concept can be a tough one to get your head around, but between 100% for the winner and 0% for everyone else running there are many “true prices” because it becomes based on an average. The key is to finding your own “true price” for races and then bet when you are getting odds over it because you know on average your “true price” is accurate.

  7. Among all the analysis I do I noticed what looked like a good laying angle. I watched the first 35 runners lose and then backed the next one to lose. It won! Never lost much as it was only 6/5 and since then another six have lost (without me backing them). So maybe there is a good laying angle there. It’s just getting prices right.
    Do you have a maximum price for laying Michael – above which you don’t bet?

  8. It is possible to find value on Betfair with back bets provided the odds are 5% (or better) higher than best bookies odds. For example for Evens at the bookies you would need 21/20 or better at Betfair, or at 5/1 you would need 21/4. Using the Oddschecker site I found Betfair to be profitable on only around 50% of the bets I was striking so decided t0 stop using it. When it comes to laying, you are usually required to lay at higher than bookies odds, which means you need to be a lot more certain about the lay. Whilst keeping an eye on your liabilities is important, I would say quality of selections is also a major factor.

    1. It’s definitely possible to find value on Betfair, but it can be harder. Timing on Betfair is key, some selections there is loads of value mid-morning, others just before the off. It depends on the type of selections you’re picking.

    1. Hi Penny, the exchange isn’t new. It’s called MatchBook. Unfortunately I’m not allowed to say when it will open it’s doors for horse racing but it will be next year and I’ll be sure to let you know as early as possible 😉

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Back to top button
Close