What is liability in lay betting? | OddsMonkey Bites
What is liability? When you use a betting exchange, there are two separate amounts of money you need to be aware of: your lay bet stake and liability. In this video, we look at liability in terms of traditional lay betting, as well as how it works in matched betting.
USEFUL LINKS:
What is Matched Betting?: https://www.oddsmonkey.com/matched-betting/what-is-matched-betting/
Start your Free Trial: https://www.oddsmonkey.com/OddsmonkeyNewUser/tabid/157/Default.aspx?returnurl=https%3a%2f%2fwww.oddsmonkey.com%2fHome.aspx
OddsMonkey Premium features: https://www.oddsmonkey.com/matched-betting/features/
OddsMonkey Bites video: https://www.oddsmonkey.com/matched-betting/oddsmonkey-bites/
TRANSCRIPT:
Liability
As well as the amount of money you use to place bets with – known as your stake – there’s something else you need to know about when placing lay bets at the exchange. It’s called ‘Liability’. Liability is the amount of money that the lay bet will cost if it loses.
That sounds scary, right? However when you’re matched betting, if your lay bet loses, then you’ll cancel this out with the amount you win at the bookmaker. That means that you won’t really lose.
Let’s take a look at an example. For this, we’ll imagine that the exchange doesn’t charge a commission, to keep things simple. However, the OddsMonkey Calculator will always work out your correct lay stake and liabilities based on the commission rate offered at the exchange you’re using.
I’m going to place a back bet of £20 at odds of 6. The lay odds for the same event are also 6, which means my lay bet will also be £20. To work out the liability (if you weren’t using the OddsMonkey Calculator, of course) you’ll need this equation: You times your stake amount by the decimal odds and then take away the stake. That’s your liability amount.
So in this example, 20 times 6 minus 20, equals £100. In order to place this bet, I’ll need to have at least £100 in my betting exchange wallet to cover the liability. If I have less than that, I won’t be able to place the bet. But remember, if I were to lose the ‘lay bet’ and therefore lose that £100, then I would also win at the bookmaker and cancel out any losses.
Let’s look at the two possible outcomes now and what would happen in each scenario.