Exchanges, liability and commission
The exchange is where most beginners get stuck, so this lesson takes it slowly. By the end you'll know:
- how an exchange works, and why it lets you lay
- how much money you need in your exchange account
- what commission is, and what to do if a bet isn't fully matched
How an exchange works
At a bookie, you bet against the bookie. At an exchange, you bet against other people.
One person wants to back Arsenal. Another is happy to lay Arsenal at the same price. The exchange pairs them up, and the bet is matched. When you lay, you're the person on the other side, playing the role of the bookie.
Each outcome on an exchange shows two sets of prices:
- Back prices, for betting that it will happen
- Lay prices, for betting that it won't. This is the side you'll use for matched betting
Under each price is an amount like "£1,250". That's how much money is waiting to be matched at that price. On busy matches, there's usually plenty.
The available amount is a stake, not your liability, and it can change quickly. Check the stake that actually matched.
Liability: the money you need
When you lay, your liability is what you'd pay out if the selection wins. It's worked out like this:
Liability = lay stake × (lay odds − 1)
You need at least that much in your exchange account before you can place the lay. Here's how it grows with the odds, for the same £10 lay stake:
| Lay stake | Lay odds | Liability |
|---|---|---|
| £10 | 2.00 | £10 |
| £10 | 4.00 | £30 |
| £10 | 6.00 | £50 |
| £10 | 11.00 | £100 |
This is why free bets at higher odds need more money in your exchange account. If your balance is tight, pick slightly lower odds. You'll make a little less, but need less up front.
The exchange always shows your liability on the bet slip before you confirm, so you never have to work it out by hand.
If you have several bets in the same market, check the exchange's own breakdown of what you could win or lose.
Commission: how exchanges make money
Exchanges don't win when you lose. Instead, they take a small commission from your winnings, usually somewhere between 0% and 5%. Commission normally applies to your net winnings in a market. You pay no commission on a net loss in that market.
Say your lay stake is £9.90 and the lay wins. With 2% commission, the exchange keeps 20p:
| Amount | |
|---|---|
| Lay stake won | +£9.90 |
| Commission (2%) | −£0.20 |
| You receive | +£9.70 |
That's why your lay stake is set slightly higher than it would be with no commission: it makes up the difference.
Rates differ between exchanges and can change, so check your own rate in your exchange account and enter it into the calculator. Get it wrong, and your numbers will be slightly off on every bet.
Several bets in the same market can change the commission compared with a single-bet example. See Betfair's charges.
Matched, partly matched and unmatched
A lay bet only protects you once someone has taken the other side. After you place it, the exchange shows one of three states:
| State | What it means | What to do |
|---|---|---|
| Matched | Your whole lay stake has been taken | Nothing. You're covered |
| Partly matched | Only some of it has been taken | Wait a moment, or cancel the rest and lay it at the next available price |
| Unmatched | No one has taken it yet | Cancel and re-lay at the current price, recalculating your stake first |
Your back bet at the bookie is already live, so don't leave a lay unmatched and walk away. If the match kicks off with your lay still unmatched, you're betting for real.
If you try to lay £10 and only £6 matches, the other £4 isn't covering your back bet yet. It could still match later. If you're replacing it, cancel the outstanding part and confirm it's cancelled first. Include the £6 already matched in your new calculation; don't place the back bet again. See Betfair's matched and unmatched orders.
Common mix-up: "where's my money gone?"
When you place a lay, your exchange balance drops by the liability. That money isn't spent. It's held until the match finishes.
Say you lay £10 at 4.00, so £30 is held:
- If your selection loses (your lay wins): you get the £30 back, plus the £10 lay stake, minus commission.
- If your selection wins (your lay loses): the £30 is paid out, but your back bet wins at the bookie, which covers it.
Either way, it all balances out once both bets settle. A lower balance while a bet is open is completely normal.
Recap
- At an exchange you bet against other people, and laying puts you in the bookie's seat.
- Liability = lay stake × (lay odds − 1). It's held in your account, not spent.
- Commission comes off your winnings only. Enter your rate into the calculator.
- Always check your lay is fully matched before you walk away.
Put it into practice: open the calculator, set your exchange's commission rate, and try the £10 lay at 4.00 from this lesson.