One of the more challenging concepts to understand when Matched Betting is Matched Betting Liability, and how it applies to your lay stake when placing a matched bet.
Whenever a lay bet is placed at a Betting Exchange, a proportion of funds are tied to that bet in the form of liability. Should that lay bet lose, liability is lost based on the odds at which the lay bet was placed.
Whilst I understand that can sound like a scary statement, liability is an essential piece of the Matched Betting puzzle, and by the end of this post you will be comfortable with Liability and it’s application to Matched Betting.
Definition Of Liability
Liability is a state in which you are liable for something, usually in the form of money. The definition of liable is to be answerable by law.
Liabilities usually come in the form of loans, mortgages and accrued expenses. Liability is a form of debt, but payable in the future.
How Does Liability Apply To Matched Betting?
When it comes to Matched Betting, liability is an agreed monitary value risked when placing a lay bet on a sporting outcome, payable in the future, should your lay bet lose.
When placing a lay bet, you are taking on a role that’s of a Bookmaker and are offering odds for another customer to back. If that back bet wins, you must pay that customers winnings.
Even though you are liabile to pay out winnings when placing a lay bet, Matched Betting is still risk free as liability is fundimental in placing a matched bet.
Let me explain using an example from the Oddsmonkey Oddsmatcher.
Let’s say I place a £10 back bet on the Modus Icons Live League Michael Warburton v Mark Webster match.
Based on the information shown in the calculator, if I place a £10 back bet on Mark Webster to win odds of 2.25, my payout would be £12.50 should Mark Webster win the event. If Mark Webster loses the event, I will lose my £10 back bet.
To match this bet, if I then placed a £10.14 lay stake at the Exchange against Mark Webster to win at 2.24, I would be liable for a potential loss of £12.57 should Mark Webster win the event. If Mark Webster loses the event, I will win my £10.14 lay bet.
a) Mark Webster wins the event.
Should Mark Webster win the event, I will win £12.50 at the Bookmaker, but lose my liability of £12.57 from the Exchange. This leaves my matched bet with a net loss of £0.07.
b) Mark Webster loses the event.
Should Mark Webster lose the event, I will win £10.14 at the Exchange (my initial lay stake) but lose my £10 back stake from the Bookmaker. This leaves my matched bet with a net loss of £0.06 (£0.14 profit less 2% Exchange commission).
The important thing to take note of here is the total budget balance in each example. Whilst funds are lost at the Bookmaker or the Exchange, the total balance is only adjusted by the qualifying loss my matched bet.
How To Calculate Matched Betting Liability
There are multiple methods that can be used to calculate your liability when placing a lay stake.
If you have calculated your lay stake for a matched bet, liability can be worked out using the following equation:
lay stake*(lay odds-1) = liability
For example, if I placed a lay stake of £10 on Gorodeya at odds of 3.25, my total liability for the bet would be £22.50.
£10*(3.25 – 1) = £22.50
Should Gorodeya win the event, £22.50 would be lost from my Exchange account which includes my £10 lay stake.
With A Betting Exchange
Liability is automatically calculated on Betting Exchanges when you input a lay stake into your bet slip.
With A Matched Betting Calculator
Matched Betting requires close sporting matches to minimise qualifying loss yet maximise profit.
Therefore it is worthwhile having access to multiple Betting Exchanges to find the best lay odds available, for your bet selection.
In the UK, there are three main Betting Exchanges worth considering for Matched Betting.
Smarkets is a Betting Exchange with offices in the United Kingdom, Malta, and Los Angeles. A customer-focused business, the company focuses on providing political and sporting exchange markets. Smarkets charge 2% commission.
Founded in 1999, Betfair is the first and the largest betting exchange in the world. The company offers a complete portfolio of sports book, exchange odds and casino offerings. Betfair charge 5% commission.
Betdaq is the second largest Betting Exchange in the world. The company provides a large range of national and international Sporting markets for peer to peer betting. Betdaq charge 2% commission.
Questions about liability and how it applies to Matched Betting? Leave me a comment below.