Betfair Horse Trading Mastery
Introduction to Betfair Exchange
The Betting Marketplace
A traditional bookmaker sets the odds, and you bet against them. If you win, they pay you. If you lose, they keep your stake. A betting exchange, like Betfair, is different. It's a marketplace that connects people with opposing views on an outcome.
Instead of betting against a company, you bet against other users. Betfair simply provides the platform and holds the money, taking a small commission from winning bets. This peer-to-peer system creates a dynamic environment where odds are constantly shifting based on supply and demand, just like prices on a stock market.
Backing vs. Laying
On an exchange, you have two options for every outcome. You can either back it or lay it.
Backing is the traditional bet. You are betting for something to happen. If you back a horse, you're betting that it will win the race.
When you back a horse, you choose your stake, and the odds determine your potential profit. If you bet $10 at odds of 4.0, you stand to make a $30 profit (plus your $10 stake back).
Laying is the opposite. You are betting against an outcome. If you lay a horse, you're betting that it will not win the race. In essence, you are playing the role of the bookmaker.
When you lay a bet, you're not choosing a stake. Instead, you're deciding how much money you want to win from another bettor. The odds then determine your potential risk, or "liability." This is the amount you'll have to pay out if the horse does win.
For example, if you lay a horse for $10 at odds of 4.0, you are accepting a $10 bet from someone who thinks the horse will win. If any other horse wins, you keep that $10. If the horse you laid does win, you must pay out $30 to the backer. That $30 is your liability.
| Action | Your Bet | You Win If... | You Lose If... |
|---|---|---|---|
| Back | The horse wins | The horse wins the race | The horse does not win |
| Lay | The horse does not win | Any other horse wins | The horse you laid wins |
Odds and Liquidity
On an exchange, the odds aren't set by a central authority. They are determined by the collective actions of all the users backing and laying. The odds you see displayed are simply the best prices currently offered by other people.
The blue boxes on the Betfair interface show the best available odds to back a horse. The pink boxes show the best available odds to lay it.
Below the odds, you'll see a monetary value. This is the liquidity. It represents the total amount of money available to be bet at those specific odds. For example, if you see $500 below back odds of 3.5, it means you can place back bets up to a total of $500 at that price right now.
High liquidity is crucial. It means there are many active participants in the market, so you can get your bets matched quickly and at fair prices. Popular races, especially closer to the start time, will have much more liquidity than obscure ones.
Because the market is live, these odds and liquidity figures change constantly. As money comes in to back a horse, its odds will shorten (decrease). As more money comes in to lay a horse, its odds will drift (increase). This fluctuation is what creates opportunities for trading.
What is the primary difference between a betting exchange and a traditional bookmaker?
If you 'lay' a horse, what outcome are you betting will happen?
That's the basic mechanics of how a betting exchange works. It's a marketplace of opinions, powered by backing, laying, and the flow of money.