Understanding Lays

[ADDA]

Hi all

I know this may be a very basic question, but I am having trouble understanding something, so please can someone help.

The betfair helpsite says the following:
"In the example, you’ve chosen to lay the USA at the current odds of 2.52. Note that on the left hand side, your potential loss (liability) is shown as £15.20 but on the right the figure is £25.20. This is because your counterparty's stake is included in the Payout figure, as each Betfair user must ‘pay’ for their bet first with the money held aside from their account until the market and each bet is settled."

Can someone please explain this to me. My understanding is the following:
* You lay £10 at 2.52 odds
If the horse wins, you pay an additional £5.20 (bringing your total loss to £15.20)
If the horse loses, you get back £20, which means you have made a £10 profit.

Is my understanding correct?
Can someone please explain to me why this example is £25.20 in it and where this fits in?

Thanks very much

[milfor]

You lay £10 at 2.52. This means you play bookie and someone else backs
£10 at 2.52. This means he gives you (the bookie) £10. But if the horse wins
you have to give him 10*2.52=25.20 back. In this case your loss is:
25.20-10=15.20

[alrodopial]

An example:

When you lay at lets say odds 13.0 (decimal odds) in fact you are backing at odds of 1.083.Think of it as a back bet and you will understand it better.How do I find the 1.083 (so small odds!) ?
The formula is:
BackOdds = LayOdds/(LayOdds-1)
so BackOdds = 13 / (13-1) = 13/12 = 1.083

The larger the lay odds , the smaller the equivalent back odds.

The big difference is this:
When you lay and place a stake of 10$ this is not your liability (the amount you are risking to lose) (it is your liability if you are backing but now you are laying) but this time it is the amount you want to gain(profit).
So you are backing at odds of 1.083 and want to gain 10$, how much are you are risking?
Liability * (BackOdds-1) = Profit , so
Liability = Profit / (BackOdds-1) = 10/(1.083-1) = 10/0.083 = 120$

You are risking 120$ to win 10$ .

Hope it clears things a little.

[osknows]

It is a weird one to get your head around when you're first starting especially if your used to fractional odds. Betfair uses decimal odds so the stake is included in the price (eg 9/1 = 10.0, 9/4 = 3.25)

I always think of it on Betfair as 2 people trading. Imagine I am the backer and I back at decimal odds of 10.0 (or 9/1)

If I put £10 on a table if the bet wins I expect £90 back in winnings plus my initial stake of £10. If the bet loses I lose £10

You as the layer come along and see odds of 10.0 (9/1) which means in order for you to win 'my' staked £10 you must put up a liability of £90 (i.e my potential winnings). If the bet wins you lose your liability and ay the backer £90, if it loses you get my stake of £10

On betfair this is multiplies up by many thousands of people being matched to different backer and layers at different prices.

[London_Calling]

In the beginning, I found it easier if I visualised myself as the person behind the counter in the bookies.