Racing is Excellent
Why racing offers some of the best matched betting opportunities
Theory
How we make a profit from racing
Our Not-So-Secret Weapon
High frequency racing profit with Stallion
Using Stallion
How to use Stallion to find profitable racing bets
Customization
Customizing Stallion to suit your betting preferences
To Lay or Not to Lay
Full Lay, Underlay vs No Lay
Gotchas
Common pitfalls and considerations when betting on racing
Full Lay, Underlay vs No Lay
In the theory lesson, we discussed the concept of laying horses to reduce variance while pointing out that doing so also reduces expected value (EV).
In this lesson, we'll go through the different lay strategies available in Stallion and how to decide which is best for you.
Before we start: while you're new to matched betting, we strongly recommend to fully lay all racing bets.
Most people will never stop laying their bets. You shouldn't feel like it's something you have to "graduate" from.
We lay bets to reduce variance. By laying the runner we're backing, we're significantly reducing the downside risk of losing our stake if the runner doesn't win, while still retaining a large portion of the upside if it does.
Consider the following example:
Horse wins: You win $200 return. +$200.
Horse places: You lose $50 stake, get paid a $50 bonus bet, retain $40. -$10.
Horse loses: You lose $50 stake. -$50.
Everytime our horse doesn't win, we're losing money.
Now, let's look at the same bet, but with a full lay at the exchange:
Horse wins: You win $150 profit from the back bet, lose $154.59 on the lay bet (liability). Net result: -$4.59.
Horse places: You lose $50 stake on the back bet, get paid a $50 bonus bet, retain $40, win $45.41 from the lay bet. Net result: +$35.41.
Horse loses: You lose $50 stake on the back bet, win $46.31 from the lay bet. Net result: -$3.69.
With the lay in place, our worst case scenario is losing $4.59 instead of $50, while our best case scenario is still a healthy profit of $35.41.
Assume you go through 10 bets without a single winner. With no lay in place, you'd be down $500. With the lay in place, you'd be down just $45.90.
The impact this has on the long term expected value depends on how you time your bets.
Ideally, you should be laying at odds that are as close as possible to the odds you're backing at the bookmaker.
The closer the lay odds are to the back odds, the less EV is lost by laying.
However, in order to get lay odds that are close to the back odds, you often need to wait until minutes before the jump, especially on less popular meetings or race days.
In addition to the spread between back and lay odds, the commission charged by the exchange also reduces EV.
Not laying bets has the benefit of maximising expected value (EV). By not laying, you retain the full EV of your back bet.
As we mentioned above, to get decent lay odds you often need to wait until minutes before the jump. This can be inconvenient if you're trying to place a large number of bets in a short amount of time. It can also be inconvinient if you have other things to do on race day. No laying means you can place your bets as soon as you find them, without having to wait around for better lay odds.
Human error is also a factor to consider. By requiring a lay bet to be placed, we're introducing another step in the process where mistakes can be made (i.e. laying too much, laying the wrong horse etc.). Not laying removes this risk entirely.
So far we've discussed absolutes: either fully laying or not laying at all. However, there's a middle ground that can be very effective: underlaying. Once you've gotten comfortable with the full lay strategy, we actually recommend moving to an underlay approach.
The premise is simple: instead of fully laying the horse, you only lay a portion of the stake. This way, you still reduce variance, but you also retain more EV compared to a full lay. A good range is 10-25% underlay. Let's consider the impact on the same example above, but with a 15% underlay:
Horse wins: You win $150 profit from the back bet, lose $131.39 on the lay bet (liability). Net result: +$18.61.
Horse places: You lose $50 stake on the back bet, get paid a $50 bonus bet, retain $40, win $35.06 from the lay bet. Net result: +$25.06.
Horse loses: You lose $50 stake on the back bet, win $35.06 from the lay bet. Net result: -$14.94.
With the underlay in place, instead of losing $4.59 on a win, you're now making $18.61. On a place, you're making $25.06 instead of $35.41, and on a loss, you're down $14.94 instead of $3.69.
With underlaying, you're back to making money when the runner wins, while still significantly reducing downside risk compared to no lay at all. You also retain more EV compared to a full lay. The downside is of course that the amount you lose on a losing bet is higher than with a full lay, but it's still much lower than not laying at all.
No laying is only an appropriate strategy for people who are very comfortable with losing large amounts of money in a very short amount of time.
If's possible to go through long losing streaks that don't end before the bookmaker you're using limits or bans your account. Of course, there's no shortage of bookmakers to open new accounts with, but it's still a hassle and can slow down your matched betting significantly.
It's also worth considering the impact on your mental state. Losing large amounts of money can be very stressful, and this stress can lead to mistakes being made when placing bets.
Many people who have been matched betting for a long time still prefer to lay at least a portion of their bets to reduce variance and avoid the stress that comes with large swings in their bankroll.