Liability can be confusing to start with, yet it is an important part of matched betting that is crucial to take note of. Understanding liability is key to managing your risk and maximizing your potential returns in matched betting. Here at OddsMonkey, we will have a look at what liability actually is, how it links to the matched betting strategy, and why it is important to understand in order to get the most out of your matched betting journey!
What is Liability?
In the simplest of terms, liability is the amount of money that you could lose from a bet you have made. For example, placing a £10 bet with a bookmaker means that the liability for that bet is £10, as that is the most money that you could potentially lose.
So far, liability is pretty simple. However, this becomes a bit different when it comes to a lay bet at a betting exchange. It’s not just about the risk, but also about the control it gives you over each bet you place. Understanding this aspect can empower you in your betting decisions. When placing a lay bet, the person who has placed it essentially becomes the bookmaker as they are betting on something not to happen. Therefore, the liability would be the amount that you would pay out; this amount will always be shown on the bet slip.
How To Work Out Liability
Liability does have a formula that can be used to calculate what the exact liability is, even though the liability is usually shown on betting exchanges:
Liability = (Decimal Odds – 1) x Stake
An example of placing a back bet and how liability works would be placing £10 with odds at 4.0. The player placing the back bet would have a liability as the player cannot lose any more than £10. For the bookmaker, however, their liability is £30, as if the player wins the back bet, they will have to give back the £10 and the £30 to make it £40 altogether. If it was the other way around, and the player placed a lay bet at a betting exchange, the player is essentially becoming the bookmaker, as mentioned before. Therefore, we are accepting money in the form of a back bet for something not to happen and, in turn, agreeing to pay them if their back bet wins. To find out the exact outcomes of certain back and lay bets, make sure to use our matched betting calculator.
As a real example, if someone has bet on Arsenal to win at the odds of 1.78 with £38.46, if you placed a lay bet, then your liability would be £30 as the person with the back bet would be receiving £30 on top of their stake coming to a total of £68.46. This means the lay bet can potentially win £38.46 with the liability being £30. If this side of sports betting is one you perhaps utilise, you can find out more by using our football betting guide.
The bonus to taking part in these lay bets is the fact that no stake is made in the first place, meaning any return is just profit. However, the liability is usually a lot higher than the money there is to be made. It is also important to note that if the lay bet wins, the betting exchange you are using takes a commission, meaning some of your profit could be taken.
How Does Liability Link To Matched Betting?
Liability is an essential part of matched betting, and when using matched betting effectively, it is a huge feature when placing a lay bet due to this being half of an actually matched bet. Liability becomes one of the main parts of the lay bet because lay bets usually do not have large returns, with the liability being quite high for most lay bets.
For more tips on matched betting, you could check out our matched betting guides to get the best value for any free bets or sportsbook promotions you may have at your disposal, using advice from our specialists as well as some dedicated tools such as the range of calculators and informational videos we have on site!
