What is liability in Matched Betting?
24 Jun 2020
Updated: 9 May 2023
Matched Betting Liability - An Overview
Liability in Matched Betting is the amount of money you need in your betting exchange in order to cover your lay bet.
If your lay stake is £5 with a liability of £30, you will need £30 or more in your betting exchange account if you want to be able to place your lay bet successfully.
When you place your lay bet at the exchange, your account balance will go down by the amount your liability was. This liability will then be 'locked away' from you until the bet settles (which is when the game or horse race ends).
If you had £50 in your betting exchange account and placed your £5 lay bet with liability of £30, your betting exchange account balance would drop by £30 to be £20. The betting exchange has not taken this £30 from you but just 'locked it away' from you. You will be able to see the amount 'locked away' from you in your account balance section under the term 'exposure'.
When using Matched Betting properly, when the game or race ends and your bets settle:
If your lay bet loses, you’ll lose your liability in the exchange, but win it back at the bookmaker (as your 'winnings').
If your lay bet wins, your liability will be returned to your account plus you’ll also win your lay stake amount (minus any commission charged by the exchange).
Matched Betting Liability - A Full Guide
For those interested in fully understanding exactly what liability is in Matched Betting, you first need to understand what liability is in normal betting (or punting) and how to calculate it, and then what liability is in lay betting at a betting exchange.
What is liability in betting?
A bookmaker are offering odds of 2.0 (1/1) on Arsenal to win.
If you decided to place a £10 bet on Arsenal to win, then you know you are making the following agreement with bookie:
If Arsenal win, the bookie will return your £10 stake plus £10 in winnings (so £20 in total). You will be £10 up and the bookie will be £10 down.
If Arsenal don’t win, the bookie will keep your £10 stake. You will be down £10 and the bookie will be up £10.
Based on 'the terms' of this agreement, when you come to place your bet, the bookmaker will be liable for paying you £10 in winnings if your bet wins.
Liability in (normal) betting therefore refers to the amount of winnings a bookmaker has to pay out to a punter if their bet wins.
If the bookie were offering odds of 3.0 (2/1) on Bournemouth to win and you placed a £10 bet on Bournemouth, what would the bookie's liability (or your potential winnings) be for this bet?
Their liability would be £20.
If the bookie were offering odds of 5.0 (4/1) on the horse Redrum to win and you placed a £20 bet on Redrum, what would the bookie's liability (or your potential winnings) be for this bet?
Their liability would be £80.
Not sure how we’re working out the bookie's liability?
Not to worry, as liability in betting is fortunately quite simple to calculate.
How is liability calculated in betting?
All you have to do to calculate a bookmaker's liability (or your winnings) is take your bet stake amount and multiply it by the odds, then take off your original bet stake amount.
With the Arsenal example, you would do £10 x 2.0 which is £20. Then take off £10 to end up with £10 in liability for the bookie (or £10 in potential winnings for you).
With the Bournemouth example, you would do £10 x 3.0 which is £30. Then take off £10 to end up with £20 in liability for the bookie (or £20 in potential winnings for you).
With the Redrum example, you would do £20 x 5.0 which is £100. Then take off £20 to end up with £80 in liability for the bookie (or £80 in potential winnings for you).
Now you know what liability is in betting and how to calculate it, we can now start to consider what liability is in Matched Betting. First though we need to look at what liability is in lay betting at a betting exchange.
What is liability in lay betting?
When you place a lay bet at a betting exchange – what you are actually doing is acting like a bookmaker does, or, to put it other words, copying exactly what a bookmaker does when they take a bet from a normal bettor. Basically you are behaving exactly how our bookmaker did in the examples we gave above.
As you are acting like a bookmaker at the exchange, you will therefore have liability, or winnings to pay out, to a bettor at the exchange if your lay bet loses.
Your lay bet stake actually represents the stake amount you are agreeing to take on from a bettor who is doing a normal bet (or a back bet) at the exchange. When you agree to take this amount, which is done through placing your lay bet, you are also automatically agree to pay out winnings to this bettor if their bet wins and your lay bet loses.
These winnings that you may need to pay out to the bettor at the exchange are called the liability of your lay bet.
The betting exchange takes your lay bet’s liability from your balance as soon as you place your lay bet. This is why your balance at the exchange goes down when you place a lay bet and why the betting exchange won’t allow you to place a lay bet unless you have enough balance in your exchange to cover the lay bet’s full liability.
It’s worth noting that the betting exchange only takes the liability amount of your lay bet from your balance and not the lay stake amount as well. You will only need to pay out winnings to the bettor, not their stake plus winnings.
Once your lay bet is placed the betting exchange safely holds, or locks away, your liability until the game or race comes to an end and your bet settles. When your liability is locked-away like this it is referred to as 'exposure' by the betting exchange.
If the bettor wins their bet and you lose your lay bet, the exchange then gives your liability to the bettor as their winnings.
If the bettor loses their bet and you win your lay bet, the exchange returns your liability to you, and gives you the bettors stake amount (which was the lay stake you wrote for your lay bet) as your winnings (minus the exchange’s commission).
As we are Matched Betting, whether our lay bet wins or loses at the exchange actually doesn’t matter to us though as we know the exact opposite outcome is occurring at the bookmaker where we've done our back bet.
If we lose our lay bet at the exchange, we win our back bet at the bookmaker. If we win our lay bet at the exchange we lose our back bet at the bookmaker. Either way we are covered.
In our final section, what is liability in Matched Betting, we take a look at this in more detail using a Qualifying Bet and a Free Bet example when Matched Betting the Coral signup offer.
You can see a full walk-through of this process on our free trial.
(For those interested to know how lay bet liability is calculated at the betting exchange it is in exactly the same way we calculate normal liability. All you do is multiply your lay stake amount by your lay odds, then take off your lay stake amount).
What is liability in Matched Betting
Now you know all about how liability works, especially at the betting exchange, it now becomes much easier to understand liability in Matched Betting.
The best way of getting to grips with liability in Matched Betting is by looking at the outcome of your bets in the Matched Betting calculators that pop up on our Oddsmatching Tool.
Here’s an example of a Qualifying Bet on a Premier League game using a 2% commission at Smarkets Betting Exchange:
In the Results section of the calculator you can clearly see what will happen based on the outcome of the game.
If Man Utd win, our bet at Coral, the bookmaker will win. At Coral we will get our £5 stake back PLUS £2.50 in winnings. We will be up by £2.50 at Coral.
At the same time our lay bet at Smarkets, the exchange will lose. Smarkets will give our £2.69 liability that they were holding to a bettor at the exchange. At Smarkets we will be down by £2.69.
Overall if Man Utd win then we will be down a small qualifying loss of just 19p.
If Man Utd do not win our bet at Coral will lose, and we will be down there by our back bet stake amount of £5. At the same time our lay bet at Smarkets, the exchange will win. Smarkets will return our £2.69 in liability to us then also give us £4.80 in winnings (which is equivalent to our original lay stake amount minus Smarkets' 2% commission). At Smarkets we will be up by £4.80
Overall if Man Utd do not win then we will also be down a small qualifying loss of just 20p too.
(If we were using 0% commission at Smarkets, which is only available to Outplayed Platinum and Diamond members, we would have had a Qualifying Loss of 16p instead. Although only a saving of 3p, over 100s and 1000s of Matched Bets this soon adds up. For anyone Matched Betting 0% commission is very worth using at all times when it’s available).
After placing our Qualifying Bet, we then get a £20 Free Bet at Coral. We use this on a football game in a popular European League.
In the Results section of the calculator you can clearly see what will happen based on the outcome of the game.
If Newcastle win, our free bet at Coral, the bookmaker will win. At Coral we will not get our free £20 stake, only our £90 in winnings. We will be up £90 at Coral.
At the same time our lay bet at Smarkets, the exchange will lose. Smarkets will give our £74.49 liability that they were holding to a bettor at the exchange. At Smarkets we will be down by £74.49.
Overall if Newcastle win then we will be up by £15.51 in profit (£90 - £74.49).
If Newcastle do not win our free bet at Coral will lose. As it was free money we won’t lose anything at Coral. At the same time our lay bet at Smarkets, the exchange will win. Smarkets will return our £74.49 in liability to us then also give us £15.53 in winnings (which is equivalent to our original lay stake amount minus Smarkets' 2% commission). At Smarkets we will be up by £15.53
Overall if Newcastle win then we will be up by £15.53 in profit (£0 + £15.53).
Now you’ve seen how liability in Matched Betting works with both Qualifying and Free Bets, we also have a few useful takeaway tips about liability in Matched Betting for you.
Also Read: What is Matched Betting Exactly?
Takeaway tips on liability in Matched Betting
- To successfully place a lay bet at any betting exchange your balance at the betting exchange must be the same or larger than the liability of your lay bet.
- The higher the odds you use in Matched Betting the higher the liability of your lay bet will be and the more balance you will need available in the betting exchange. Those starting with smaller Matched Betting bankrolls are therefore advised to use lower odds for completing their free bets initially.
- The larger the lay stake at the betting exchange is that you need to use the more liability you will need at the betting exchange. Basically a £30 lay stake requires larger liability than a £5 lay stake does on the same lay odds.
- As soon as you place a lay bet, the betting exchange will take the lay bet’s liability from your balance and hold it until the end of the game/race. If your lay bet wins they will return your liability to you plus your winnings. If your lay bet loses they will give your liability to another bettor on the exchange (you will win this back at the bookmaker though if you've done Matched Betting - click here).
- Once you become confident with Matched Betting and are sure that you understand liability and what happens when your lay bet wins or loses at the exchange, it is very worthwhile learning about shared liability – especially if you want to be able to complete multiple Matched Betting offers at one time.
Need a helping hand with Matched Betting?
Our Facebook Group, which has over 45,000 members, is a great place to ask for help and ask questions, especially if you are new to Matched Betting. Our community forum is also a great place to ask for help and advice.
Alternatively you can also contact us directly for support too.
Interested in Getting Started Matched Betting?
Alternatively, upgrade to our Platinum Membership here. It is possible to make the cost of a Platinum membership back within an hour or so once you get the hang of things. Talk about value for money!