What Is Liability on Betfair?

If you've ever placed a lay bet on the Betfair Exchange, you'll be familiar with liability. This key metric tells you exactly how much money you'll lose if your bet is incorrect. In this article, we'll take an in-depth look at liability, explaining what exactly it is, how it's calculated, and why it's removed from your balance when placing a lay bet.

What Is Liability?

When placing a lay bet, liability is the total amount of money you risk losing if the bet is incorrect. Liability can be a confusing concept, since laying an outcome works very differently to backing one. So, to help you understand exactly what liability is, we need to discuss how laying works.

How Does Laying Work?

When you bet on (back) an outcome at a traditional bookmaker, the bookmaker takes the other side of your bet. On betting exchanges, you can take the role of the bookmaker, and bet against (lay) an outcome. Since laying is the opposite of backing, the amounts you can win and lose are reversed. For example, let's imagine you backed Manchester United to Win for £100, at odds of 1.6. If Man Utd wins, you'll walk away with your £100 stake, plus a profit of £60. If they lose or the game results in a draw, you'll walk away with nothing, losing your £100 stake.

Now, imagine the person on the other side of the bet. If you're right, they're wrong; and if you're wrong, they're right. In other words, if Man Utd wins, the person laying you walks away with nothing. Since you win £60, you know that's how much they had risked. If Man Utd loses or the game results in a draw, the person laying you walks away with their initial stake of £60, plus the £100 you lost. What's confusing about this is the terminology. Instead of saying that the person on the other side of the bet layed Manchester United for £60, which is how much they risk losing, we say that they layed Manchester United for £100. This is because they are betting against the original £100 bet.

How Is Liability Calculated?

If you paid close attention to the previous example, you might already know how liability is calculated. In any case, we'll run over the process. Do know, however, that there are a number of betting calculators out there which will allow you to calculate liability at the push of a button. When you lay a bet for £100, the liability can be calculated by multiplying the size of the bet by the odds of the bet, minus 1. In the previous example, the odds of the bet were 1.6. After subtracting 1, we're left with 0.6. Multiply this by the £100 size of the bet, and you get £60, which is the same liability we had in the example above.

Why Is Liability Removed from My Balance?

You might have noticed that when you place a lay bet, the liability is removed from your balance until the bet is settled, which can lead to some confusion. Continuing the example above, even though you're supposedly laying for £100, you can only lose £60, so only £60 will be removed from your balance. If the odds of a lay bet are greater than 2, then the liability will be greater than the size of the bet. For example, if you place a lay bet for £200 at odds of 2.2, then your liability is £200 x (2.2 - 1), or £240. In this case, £240 is removed from your balance, despite what seems like a smaller bet.

The reason your liability is removed from your balance is simple. Since liability is the maximum amount you can lose from a bet, bookmakers temporarily remove that amount from your account, so that they can settle the bet fully in case you lose. If liability wasn't removed from your balance, you might be able to withdraw the money or place bets with it, which could make it impossible for the bookmaker to settle the bet.

Liability in Matched Betting

Matched betting is the process of covering all sides of a bet using bookmakers' free bets. Then, no matter who wins, you get to keep the free bets (minus some commission) as cash. It's like arbitrage betting, but the profit comes from free bets, and not differences in odds. You might see liability come up in matched betting, since it requires you to place lay bets. When matched betting, it's important that you don't pay attention to liability. For example, if you back a bet for £100, you should lay the bet for £100, ignoring the liability associated with that. This is because the liability from laying a bet is directly related to the upside from backing a bet.

Liability Tips

For those who regularly place lay bets, liability is an incredibly important piece of information. It's easy to get confused with how much you're actually betting when you place both backs and lays; that's why you should always pay attention to liability. Another great reason to double-check your liability is that it'll tell you whether you've made a mistake with the size or odds of your bet. If you put the decimal point in the wrong place, your liability will be ten times greater, immediately drawing your attention to the fact that you made a mistake.

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Liability can be a tricky concept when you first start out with lay betting. With that said, liability is simply the total amount you stand to lose if your bet is incorrect. It's important that you always pay attention to the liabilities of your bets, so as to prevent any mistakes or confusion.