What is Liability on a Betting Exchange?
When using betting exchanges, it is crucial that you understand what liability is and the difference between stake and liability.
This article will explain betting exchange liability and what you especially have to look out for when placing a lay bet.
Liability is something that can cause confusion, especially when laying bets. The liability is what you stand to lose if your bet loses.
When you place a normal bet at a bookmaker, the liability is easy to calculate as it is equal to your stake. So, if you bet €10 on a game, the amount you stand to lose is €10. However, when we lay bets, the liability looks different. The formula looks like this: stake x decimal odds – stake = liability. Say you lay a bet at odds of 6,00 with a €10 stake, then your liability would be 10 x 6 – 10 = €50. You will note that the liability when laying a bet can be substantially higher than the back liability.
It is important to be careful and check your bet before clicking on the submit button, as it can be very costly to lay at different, much higher odds by mistake. There is a huge difference in laying at odds of 4,10 or odds of 41 if your lay bet loses. As shown from the screenshots below, with a stake of €10, your liability will be €31 at odds of 4,10 and a massive €400 if you accidentally lay a different market at odds of 41.
The betting exchanges will not let you place a bet if you do not have enough money in your account to cover the liability. Hence, you can never lose more than the money you have in your betting exchange account. However, it is still unfortunate to lose a bet if you did not intend to place it.
If you do make a mistake, you can always back the same bet so that they offset each other. You may have a small loss in the end but that is better than losing a large amount of money.
High odds will win occasionally
There is no such thing as a safe bet. If you choose to lay bets at high odds, you will win the majority of your bets. However, occasionally high odds come, which potentially could wipe out all the profit you have made.
Liabilities offset each other
Lastly, if you lay more than one selection in the same game, the liabilities do not accumulate. If you for example lay Germany to win and also lay Germany to draw, then your bets will partially offset each other and reduce your overall liability. If you back and lay over 2,5 goals, your bets could, depending on the odds, potentially completely offset each other and the outcome of your bets be €0, regardless of how many goals were scored in the game. That is because you will have bet on both under 2,5 goals and over 2,5 goals.
