When look at the market you can either back, accept a certain reward for putting your money in the market, or lay, offer a reward to the market in return for the backers stake. When you are backing you are risking 100% of your stake in return for a chance of getting your stake back plus a return on it. When you lay you are doing the opposite. You are looking to win a stake from a backer in return for offering a potential return to that backer.
Placing a 'back' order on the exhange
In this example we are looking at the Nunthorpe stakes at York on 18th August. We can back or lay any of the runners in the race. To do this all we need to do is point our mouse at the screen and click on either the back or lay price in the middle on the screen on the selection we want to bet on and enter the amount we want to bet.
If we clicked on 3.80 we would be backing Chineur. We would do this because we are expecting it to win. If we click on the pink 3.85 in the lay column, we would be laying Chineur; we are saying that Chineur will not win. When you are backing or laying an event you are effectively making a value judgement. You would only back something if you think that it is going to win but you know that nothing, especially in sports, is certain. Therefore when you back and lay on an exchange you are not just saying I am backing something because it will win, you are saying I am backing this because I think it will win and the price is acceptable. Backing indiscriminately is certain the road to the poor house, so if you only back and lay you need to make judgement on whether the price represents value, we will cover what value is and how to calculate it in the next section. When you back something with digital odds you are saying “I bet £X that this event will happen. In return I want to receive back 3.80 times my stake. If you backed Chineur at 3.80 with £100, your total return would be £380. The 3.80 represents (1+2.80) “1” being your stake of £100 and 2.80 being the £280 pound profit that you demand in return for taking this bet.
You can also ask for better odds, or more money than currently available. In this example, there is only £2 available to back Chineur at 2.80 so our £10 stake will make the £2 disappear and the remaining part of the order would appear onto the other side of the book as a lay order waiting to ‘fill’ at the price we asked.
Despite the fact we backed Chineur our order has appeared on the lay side of the book. This is because we have taken all the money available on the Back side and forced the price off the back side of the book. This bet will sit there on the exchange waiting for someone to take it from you. Until such time as it is taken you can leave it in the market or cancel the order which will remove it from the market. In all occasions if there is not enough money for you to back or lay at the unmatched portion of your bet will remain in the market until such time as it is taken by somebody else or removed from the market.
When you lay a bet you are effectively doing the opposite of a back, when you lay you are offering up risk capital to the market. If the horse loses and the lay wins, you will get to keep the backers stake. In this illustration you can see we have laid Chineur with £100 and stand to lose £280 if it wins and gain £100 if it loses. In this case Chineur lost to La Cucaracha and the lay bet would have won.
