Usually when you place a bet, you either stand to win a sum of money or you end up losing your stake. You can of course ‘cash out’ a bet in certain cases but the offered cash out price is not always greater than initial stake.
In truth, there are no legal ways to consistently win whilst betting. However, when it comes to back-to-lay and lay-to-back betting, you at least have the aim of placing bets in such a way that the returns exceed the stake, regardless of the outcome. Being in this position every time is impossible but with the aid of some smart predictions, you can end up with a good success rate.
It is a perfectly legitimate tactic but one that does require the require a keen sense of timing to get right. Skilled bettors will use the two approaches to their advantage though and regularly create win:win situations for themselves by taking advantage of shifting odds. This approach can also be called trading or hedging, though some might argue there are subtle differences between these various ploys. Call it what you will, here we explain all you need to know about this interesting approach to betting.
What Is Back-to-Lay Betting?
Back-to-lay betting is where you place a bet on an event, ideally at ‘generous’ odds and then lay (bet against) the exact same outcome later on when the odds have shortened. Typically, this kind of betting is used for horse racing so to give you a very brief example of how back-to-lay betting would work, say that Chacun Pour Soi is 4/1 to win his race at Cheltenham. We like his chances and believe that is a price that will shorten, so we stick £20 on him to win, a bet that would return £100 (£80 net win) if successful.
As the start of the race approaches, there is plenty of talk about how good he has been looking in training and how the ground is perfect for him and so on. This sees a flurry of late bets go on the race favourite and subsequently his price drops to 3/1. We then decide to place the ‘lay’ part of our bet which involves betting £70 on Chacun Pour Soi not to win by laying him at an exchange. As we are betting against the event happening, we will not be paid out at odds of 3/1 but instead would have to pay that to whoever accepts our lay bet at the exchange.
There are a range of online betting calculators that help you easily work out how much to lay to equalise your outcome on either outcome. Using these and allowing for a 5% commission at the exchange, we can see that laying Chacun Pour Soi on the exchange at 3/1 (4 in decimal odds) for £25.32 is the best strategy.
Should the race favourite fail to win, we would lose the £20 we originally staked but we would get back £25.32 less commission for an overall net win of £4.05. If he does the business, we instead have a liability from that £25.32 bet of £75.96 at the exchange. However, our initial bet with the bookie is a winner, yielding £80, so our overall outcome is a net win of £4.04.
In this case, the numbers are not particular large but say for instance the odds on Chacun Pour Soi dropped to 2/1 instead of 3/1. This would mean we could land £12.20 no matter what the outcome of the race. You could also simply scale up the amounts by betting more initially and then subsequently placing a larger lay bet. If you had been bold enough to place an initial bet of £200 on the race, your returns suddenly balloon to more than £120 and once again, it does no matter what actually happens on the track.
When to Place Back-to-Lay Bets
To get yourself in a position to secure a return with a back-to-lay bet, you need the odds on your original selection to shorten. If you are able to lay the bet at lower odds than you obtained with your ‘back’ bet, then you can put yourself in a win:win situation. Usually the reason why a price drops is because people’s confidence in a horse (or team/player) grows. This can happen pre-race if people start bigging it up, sometimes called “ramping”, or if a fresh weather forecast is predicting highly favourable conditions. There are a number of reasons why confidence in a particular horse might grow and if you think this will happen then you will want to get in their early.
You may also wish to consider placing your lay bet during the race however, as betting exchanges support live horse race betting. If you know one horse is an extremely strong starter, you can reasonably expect that their odds may shorten as the race progresses with punters impressed with their initial progress. This makes them a prime candidate for a back-to-lay bet as they are more likely than most to secure that in-play price drop, even though they still may not win despite their strong start.
What Is Lay-to-Back Betting?
Lay-to-Back betting works is an extremely similar way, only your first bet is a lay bet and then your second bet is for the selection win. For these bets, you are hoping that the odds will drift (widen), rather than shorten, after placing your initial wager.
Choosing a new horse this time, say we placed a £100 lay bet on Kemboy who was trading at 2/1. This means that if Kemboy loses, we win, and make £100 minus commission. On the other hand, if the French horse wins the race, we must pay out someone else’s £100 bet at 2/1 (3 on the exchange’s decimal odds), meaning a los to us of £200.
Before we know the result of the race, before it starts in fact, the odds on Kemboy go up to 4/1, drifting just as we predicted they would. If we want, we can choose not to have an equal outcome on either result (a Kemboy win or loss) and that is what we do. We place £50 on him to win (our back bet) at this price. If Kemboy proves to be a winner, we would receive £200 from our ‘back bet’ which would exactly cover the liability from the failed lay bet. If the gelding was denied victory however, we would get £95 (£100 minus £5 commission) for our initial wager, minus £50 from our ‘back’ bet, for an overall return of £45 with no loss even if he wins.
How Do I Lay a Bet?
In order to lay a bet, you will need to register at a betting exchange. There are a few options but Betfair dominates the market and is the preferred choice for many, though it is usually best to join more than one to take advantage of the various offers and the different benefits each has too.
Only at an exchange will you find the option to lay bets, in other words to bet against outcomes, effectively putting you in the position of the bookmaker. The ‘back’ part of your bet you can place at a traditional betting site but most of the time people would stay at the exchanges. You are more likely to see better odds at the exchange for starters and it is also just easier having all your bets in one place. It also somewhat mitigates the impact of commission, which is only typically paid on overall wins.
Another thing to mention, which we didn’t cover in our examples above, is that there are separate back and lay odds at the exchanges. You won’t simply see one price e.g., 3/1 (4 in decimal form) and then decide whether or not you want to back or lay at that price.
In events that have attracted a fair amount of interest, such as the one above, the difference between the back prices and the lay prices tends to be very small. In much less popular events though (below), you may stumble across significantly larger differences between the two prices. The below example was that of a minor race not due to start for several hours that had only had £5400 in matched bets.
When to Place Lay-to-Back Bets
Rather than hoping for the odds to drop, with lay-to-back wagers, you are always hoping that the odds will increase on the horse (or team or player) you layed. As before, there are several reasons that can cause the odds to shift pre-race. It could be an unfavourable weather forecast, the withdrawal of the first-choice jockey, a rumour of a minor injury or the horse looking extremely restless before heading to the start line. It could be that the racing and mainstream newspapers have all tipped another horse, whilst sometimes the markets may shift for no obvious reason.
Some of this information you will not have access to, nor be able to predict, but there will be times where you can make an informed assumption that punters will begin to favour other options. In addition, you may just feel that the selection was priced too short based on its realistic chances of winning. In this case, you can place your lay wager in the expectation that the market will correct the pricing error is due course.
For in-play betting, making a slow start or looking shaky over the earlier fences could well see confidence drop and thus the odds increase. If a horse is at the back of the pack, trailing by a full 10 lengths at the half-way stage, punters may begin to think they are out of the contest. If you know that the particular horse always starts slowly and likes to come from behind this could make for a prime lay-to-back option as their odds are likely to widen during the race, giving you the opportunity to back them at a much longer price than your bet against.
Is Back-to-Lay & Lay-to-Back Betting Right for Me?
This kind of betting is definitely not for everyone and it is not something we would recommend for more casual gamblers. First of all, it requires quite a lot of time as you will need to monitor the odds to check if they are heading in the right direction. You can set up alerts for this but it still means being ready and available at most times.
Another reason why back-to-lay and lay-to-back bets are not really suitable for recreational punters is that they can require quite a lot of capital to make it worthwhile. If you are betting £5 on a horse, even if the odds change in your favour, you might only stand to gain a return of £1. When setting yourself up for a win:win situation, the margins you are working with are often not particularly large. The betting exchange will take a small cut for themselves too as they all charge some commission (usually at least 2%).
For this kind of betting to work you also need to be fairly confident with your numbers because if you end up laying or backing for the wrong amount, you could end up losing money if the final outcome goes against you. As said, there are online calculators that can do the work for you so you do not need to rely on your own calculations. Even so, you still need to use these calculators correctly, often at speed, especially if you are laying or backing in-play.
Finally, it is important remember that the odds changes will not always go in your favour. Sometimes you may place a back-to-lay bet on a horse but the odds only increase after you make your bet (or vice-versa). In such situations you are only able to minimise your losses by placing the lay bet. In these situations, it is all too easy for the inexperienced punter to let bets ride and hope for the best, rather than accepting a small loss. Obviously sometimes this will pay off but equally when it doesn’t, your losses will be far larger than if you had simply taken your medicine and moved onto the next opportunity.
Conclusion
This type of betting, or trading, is reliant on you predicting which way prices will move. This can often seem easier than predicting who will actually win a contest and this is part of the appeal. It can be a less worrisome way of trying to win too as you do not need to wait for the outcome of the race or match and, in an ideal world, can have locked in a return before it even begins.
There are a huge range of strategies and tactics to try and assess which way prices will move. These range from simply spotting odds that you believe are out of line to closely monitoring weather forecasts, as well as reacting first to team news or media tips. In addition, many punters opt to back players, teams or horses that tend to start matches well but then fade in the hope of laying them off at a smaller price, or simply backing a team or player in a cup or tournament in the expectation that they can definitely advance a few rounds but may not have what it takes to go all the way.
To a large degree many of these factors will be priced into odds. So, let us imagine an example of a golfer who is renowned for their great opening rounds but inability to quite close tournaments out. You may assume such a player will be a great back-to-lay option. However, if they shoot an opening round of 65 their odds will not plummet as much as you might expect because it is not just you who knows they are a fast starter – the market and bookie do too.
As ever, knowledge and research are key and, sadly, there are no easy wins. If you decide to give this type of betting, or trading, a try, we suggest you begin with small bets.