Taking the Gamble out of Gambling
3. The percentage taken by the betting exchange is ONLY taken from
winnings; you pay nothing on top of your losses.
4. The percentage taken is also calculated on the net profit from the one
market. (I.E. If you Dutch bet 2 or more horses in the one race, you only
pay a commission on the net profit. Dollars won – total dollars out).
Laying – Profiting by Picking Losers
Another aspect of betting exchanges that is appealing and also very powerful if you
understand how it works is laying. Laying is essentially when you play the role of the
bookmaker, meaning that you are betting that a particular horse or team will loose. Now I
know what you’re thinking, “wow how easy can that be I can pick losers easy”? If you’re
thinking like that at this point hold on there a minute. The intention of this book is to
change your thinking from a gambler’s mentality to an investor’s mentality and in
regards to laying there are some important points to consider before deciding if you can
make a profit (“investor’s mentality”) from any strategy. Firstly, recall our scenario at the
bar where you bet your friend 2/1 on the football game? Basically this is what you are
doing when you lay on a betting exchange, so while in some instances your chances of
winning may be higher, your risk is also higher.
If the betting exchange details for a particular horse or team show that someone wants to
bet $100 on a horse at a price of 5.50 and you match that bet (i.e. you lay $100 at the 5.50
price). If that horse wins and you loose the bet, you have to pay out $450. Here’s how it
works. In your bet with your friend at 2/1 where he won and you paid him $20, he risked
$10 to win $20. When he won the bet he essentially got his $10 back plus $20 from you.
So the price on the bet was really 3.0.
With our betting exchange example the price is 5.50 and when you loose, the other
person takes back his bet and you have to pay the remainder. So your risk with any lay is
(Odds-1) X Bet, which in our case is 5.50-1 (4.50) X $100 = $450. For this reason it is
foolish and a pure gamble to randomly lay on long priced horses, as although they don’t
win very often, there are times when they do. Also the probability of any one horse
winning is generally reflected in its price, so unless you have some solid data that proves
a certain strategy is profitable then you are back to the gambler’s mentality. Can you
imagine the feeling of dread if you placed a $100 lay on a horse at a price of 51.0 that
flashed home to win? You may have been real happy with yourself that you’d grabbed
say ten of these 51.0 outsiders for the lay to have a bank of $1000 (less commissions) but
you’ve just blown that plus an extra $4000 out of your own pocket in one mighty swoop
using your “Gambler’s” mentality.
I hope at this point I have stressed to you the importance of changing your thinking to
that of an investor as opposed to a gambler. Just ask yourself this question, would you
rather pick winners or make profits? How many winners you pick doesn’t always mean
you are successful or profitable as I’ve shown throughout this book, particularly in our