Back to lay betting, known as arbitrage betting, is a popular and common form of sports gambling.
‘Arbitrage’ is the word used to describe the buying and selling of currencies, securities or commodities in different markets in order to take advantage of differing prices for the same asset. This has been embraced by professional sports betting punters over the years.
A back to lay strategy is the most popular form of sporting arbitrage, consisting of backing horses with bookmakers and laying the same horses with betting exchanges to guarantee a profit.
Arbitrage betting is essentially the act of placing bets on all possible outcomes of a race at varying odds that guarantee profit regardless of who wins the race.
While a bookmaker’s market will always go above 100%, giving them an edge, arbitrage betting puts those odds back in the backer’s favour by ensuring they cover all possible outcomes across bookies and exchanges, adding the market up to less than 100%.
Bookmakers are wise to the practice and have been know to limit punters and even close accounts with no notice, potentially ruining the process for them.
Arbitrage in the Betting Exchange Era
Back in the day, arb betting was done between two, three or more bookmakers. Since exchanges such as Betfair and Matchbook came onto the scene however, more possibilities have opened up for wily punters.
Exchanges offer the customer the chance to bet against a horse winning, known as ‘laying’, meaning they can now potentially cover all possible outcomes with just two bets – one ‘back’ and one ‘lay’ bet.
As we mentioned above, traditional fixed odds bookmakers look down upon arb bettors. Let’s face it; they hate to lose! Betting exchanges however welcome arbitrage backers which means accounts are not restricted or closed. They don’t care who wins, as long as they take a commission.
Back to Lay Betting Strategies
Back to lay betting strategies are now very much commonplace. They consist of two bets concerning a bookmaker and a betting exchange, such as Betfair.
Essentially, backers are able to bet on a horse to win with a bookmaker and then lay the same horse on a betting exchange, guaranteeing profit.
Arb opportunities come up whenever the lay price on an exchange is shorter than the win odds with a bookmaker, or the back odds on another exchanges. If the technique is used correctly, these two bets will cover all potential outcomes in the race, thus locking in a profit no matter what happens.
Calculating a Back to Lay Bet
So, if a back to lay bet is now something you may be interested in exploring, you’ll need to know how to calculate one.
Horse racing markets on betting exchanges are well known to be very volatile the closer they are to the race start time. The odds on some horses shorten drastically in the moments before a race.
This information even feeds into the fixed odds market when it becomes known, a good example being 2021 Derby winner Adayar. He was virtually unchanged at around 40/1 and 50/1 in the days leading up to the Derby, but was shortened drastically to 16/1 in the half-hour or so before the off without any major four and five-figure bets being reported by bookmakers.
Such examples are known as ‘steamers’ and they are the ones that create an opportunity for back to lay bettors, mostly because in normal circumstances bookmakers are slow to react to the movement of the odds.
For example, a horse may have shortened greatly on Betfair around 5-10 minutes before post time, but bookies have not yet reacted. The horse may be available at 9.0 (8/1) to back and at 8.0 to lay.
This represents an opportunity as the lay odds are shorter on the exchange than the win price with the bookie. Say you wanted to put £500 on said horse to win, how much do you need to stake with the exchange to make a profit?
To get to the lay stake needed on the exchanges, simply use this calculation:
- Back odds x back stake / lay odds – exchange commission.
- Example – 9.00 x £500 / 8.00 – 0.02 = £563.91
You would in this case make a £563.91 ‘lay’ bet on the horse at odds of 8.00 on the exchanges.
Naturally a lot of stake money is needed if you want to make this strategy pay which is why, despite the guaranteed profit, many still have not found their way into back to lay arbitrage betting just yet.
If your horse wins, you will be collecting from the bookmaker but will lose your lay bet money. It breaks down like this:
- Profit = win odds -1 (stake) x back stake – (lay odds -1) * lay stake
- Example – profit = (9.0 -1) x £500 – (8.0 -1) x £563.91 = £52.63
If the horse loses, you’ll be collecting from the betting exchange using this calculation:
- Profit = (lay bet stake x (1 – commission)) – bookmaker’s win bet stake
- Example – Profit = (£563.91 x (1 – 0.02)) – £500 = £52.63
So, using these numbers your profit is locked in at £52.63 no matter which horse wins the race. While the profit is guaranteed, in this case your return on investment is just 4.9% so be prepared for slow accumulation.
This also doesn’t take into account any mistakes or mistiming of the situation which can lead to losses. Be sure you know exactly what you are doing before attempting a back to lay bet.