What is Liability in Betting? The Simplest Explanation…

Liability is a common term used in betting. It’s thrown around daily but can be confusing the first time you hear it mentioned. So in this article, we’re going to explain what liability means in betting, how it works and why it matters to sports betting.

Mainly, you’ll hear liability mentioned when talking about Betfair Exchange (or any other exchange). However, it applies to sportsbooks and bookmakers too!

What is Liability In Betting?

A liability is the amount of money you need to “cover” or “lay” a bet. That’s why it’s used so much with the Betting Exchange community because laying is a big part of using exchanges. As always the easiest way to explain something is with an example.

Check this link if you’re unsure how lay betting works (opens in new tab) first.

A good way of thinking about liability is just to reverse your mindset to think like a bookmaker. You are laying a bet, therefore becoming a bookmaker.

Let’s take a simple example:

  • Person A backs Manchester United at 2/1 for £100
  • Person B lays that bet, meaning if Manchester United win they have to pay Person A £200
  • Therefore, the liability of the bet is £200

If Manchester United win, Person A wins £200. If they draw or lose, Person B wins £100. In this example, Person B is basically becoming a bookmaker.

Technically, you could call Person A’s bet of £100 a liability too, because they risk losing £100 which is a liability. However, it isn’t common to speak like this without the betting community. Usually, a liability is referred to as a lay bet rather than the cost of a back bet.

How Do You Calculate Your Bets Liability?

Working out how much your liability is can be difficult. However, most platforms do it for you to be honest. The general practice is you click the lay button, put in your stake and the platform – whatever Exchange you use – will show you the liability. Imagine you’re having a bet, and just reverse the thinking. If you had £100 on at 10/1, you’d win £1,000. So if you laid a 10/1 for £100 you’re liability would be £1,000. Work backwards from there, and you get the idea quickly.

  • Lay 10/1 (11.0) for £100 = liability £1,000
  • Lay 9/1 (10.0) for £100 = liability £900
  • Lay 8/1 (9.0) for £100 = liability £800
  • Lay 7/1 (8.0) for £100 = liability £700
  • Lay 6/1 (7.0) for £100 = liability £600
  • Lay 5/1 (6.0) for £100 = liability £500
  • Lay 4/1 (5.0) for £100 = liability £400
  • Lay 3/1 (4.0) for £100 = liability £300
  • Lay 2/1 (3.0) for £100 = liability £200
  • Lay 1/1 (2.0) for £100 = liability £100

Your liability is the reverse of what your profit would be if you were to place a bet. Laying can be a tricky process for new bettors to understand, but it really doesn’t have to be that difficult to understand. It’s quite straightforward when you think about it; you’re becoming a bookmaker.

The most important thing when thinking about liability is that you get that stake back when you win. So for example, let’s say you lay Manchester United for £100 at 2/1 (3.0), your liability is £200 which is the stake you have to risk. If they fail to win, you get your £200 back, plus the £100 profit minus commission.

What Is Exchange Commission?

When you’re dealing with liabilities and laying, you’re going to be using a Betting Exchange. The four to choose from are Betfair, Betdaq, Smarkets and Matchbook. A betting exchange is just a platform where they create the market and people bet against each other. You aren’t betting against a bookmaker, you are betting against another person. This is where most laying takes place! Because an Exchange doesn’t act as a bookmaker, it profits by taking a commission from winning bets in each market. This is typically between 5% and 2% depending on the Exchange.

You can get a £30 free bet when you open an exchange account here.

For example, let’s say you win £100 on Betfair Exchange, you will pay 5% commission which means Betfair get £5 and you get £95. There is no commission on losing bets – all commission is paid by winning bets.

Liability In Matched Betting Explained:

Most new matched bettors will find the term liability difficult to understand. As we know with matched betting, you are aiming to profit with every bet. You are taking a free bet, or placing bets to qualify for a free bet. This process involves placing a back bet with a bookmaker and a lay bet on the Exchange. This is where liability will come into matched betting. You aren’t risking the liability however, because the liability you lose on the exchange will be the profit you win with the bookmaker.

The liability works the same way as in the above examples. Matched Betting is not betting however, it’s a completely different strategy and you won’t be risking the liability. The most you’ll lose is a small qualifying loss, possibly the cost of commission for example. It could be a case where you are backing 2/1 (3.0) with the bookmaker and laying 3.0 (2/1) with the exchange to qualify for a free bet – in this example, the only cost is the commission.

The best way to do this is always to use a matched betting calculator to work out the correct stakes to use. There’s a free one on the OddsMonkey website.

Liability For Bookmakers:

When talking about the term liability, it is very different for bookmakers. When discussing a liability with an exchange, it’s just your liability. However, for bookmakers, a liability is the sum they owe to everyone should something happen.

For example, let’s say a well-backed favourite wins at Cheltenham, the bookmaker’s liability would be quite large because it would have been a very popular bet. When you hear a bookmaker talking about their liability on a TV interview – in that sense it is their whole liability on the market as a whole, not just one bet as it would be referred to on a Betting Exchange.

Don’t Be Afraid To Place Lay Bets…

Finally, don’t be afraid to place lay bets – it’s just a different form of betting. When you place a lay bet, the liability is generally bigger than the return, unless you’re laying an odds on favourites. For this reason, it is scary to have a liability of say £300 to win £100. It’s like placing £300 on a 1/3 shot to £100. Lay betting isn’t for everyone, but it can be very profitable. Don’t shy away from lay betting – you just have to be comfortable with how liability works.

Related: Matched Betting Tips for MORE Profit Fast

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