In betting, liability is the amount of money you must have in your betting exchange account to cover your lay bet.
Let’s take an example:
if you have a lay of INR 100 and a liability of INR 500, you will need at least INR 500 in your exchange account to place the lay bet. When you place a lay bet, your account balance is automatically reduced by the liability amount.
In general, for matched betting, you might visit a betting exchange. In matched betting, you use free bets to back your bet at a traditional bookmaker and lay your bets at a betting exchange to ensure that you do not lose money overall.
However, to develop a proper matched betting strategy, it is critical to understand the liability in lay bets.
Now, Let’s talk about What is a liability in betting?
The simplest way to think about it is that you are the bookmaker. When you accept a Bet Request, you are essentially doing the same thing. Pro approaches you with a bet they want to place, and if you accept it and the bet wins, you pay the Pro their winnings. If their wager fails, you will receive their stake.
The liability is the profit they stand to make if their bet wins. The liability is the minimum amount of money you must have in your betting account before accepting a bet request, as this amount will be deducted when you do.
How do you calculate the Liability in Matched Betting?
Crickex and other betting websites will always show you the liability of each Bet Request you are offered. However, knowing how it’s calculated can help you understand it better.
The formula below can be used to calculate the liability of a Crickex bet:
Liability = (Odds x Stake) – Stake.
Let’s go through an example:
A-Pro logs into the betting website and places a £35 bet on AS Roma to beat Fiorentina at 21/20 odds.
Once a stake of £35 is entered, the bet’s liability (£36.75) is already displayed. So, how did we arrive at this figure?
First, we must convert the odds from fractional to decimal format. Simply divide the numbers by one and add one. So, in this case, (21 / 20) + 1 = 2.05 decimal odds.
We then put these odds into the formula along with our £35 stake.
Liability = (2.05 x 35) – 35
Simplified = 71.75 – 35
Liability = £36.75.
Now, let’s look at what liability in lay betting first is.
When you use a betting exchange to place a lay bet, you are acting in the role of a bookmaker. In a traditional bet with a normal backer, you are replicating what the bookmaker does. So, in the preceding example, you can assume the role of the bookmaker to obtain the liability or winnings on any payout. If the exchange bettor wins, you will lose your stake.
A lay bet stake is an amount you agree to bet against a backer. You agree to pay out the winnings to the backer once you agree to this amount. Because the lay bet is riskier than the back bet, liability enters the picture.
In lay bets, the liability is the amount you must pay to the backer at the exchange if they win the bet. When you place the lay bet, the exchange usually deducts the liability from your account balance. This is why, whenever you place a lay bet, your balance decreases in the form of a frozen amount. A lay bet cannot be placed without a balance sufficient to cover the full liability of the bet.
However, the exchange only accepts the lay stake and liability amount as a deposit from your account balance.
You are not required to pay the stake to the backer because it is secure with the bookmaker.
So, what is the lay bet payout when the final bet is settled and the outcome is declared?
- If you lose the lay bet, you will also lose your liability payout on the exchange method, but you may win it with the bookmaker.
- If your lay bet wins, your locked amount will be returned to your account along with your lay stake amount, but the exchange will deduct a small commission.
Because we are discussing matched betting, it makes no difference whether our lay bet loses or wins because the opposite bet is placed with a bookmaker who will return the money to our account. As a result, it is known as risk-free betting.
As a bettor engaged in matched betting, you should understand liability in matched betting. Indeed, you will not bear the risks in matched betting. But a successful matched betting strategy should take the liability of matched betting into account as well. A long-term matched bettor should make active use of the liability calculator.