Laying horses for profit

We all like a bet, but with betting exchanges we now also have the option of laying horses to lose. Here we examine the differences between betting and laying.

What does laying horses mean?

Laying horses means you pick a horse or horses that you believe to have a much lesser chance of winning than the odds imply. In effect you decide that a profit can’t be made from backing this horse at these odds and so you instead lay it to lose.

This is the exact opposite to backing horses in that you back a horse because you think it has a much bigger chance of winning than the odds imply.

Backing and laying horses are thus opposite sides of the same coin. Or are they?

The answer to this question is yes and no, as both backing and laying have similarities and differences that need to be understood.

The dynamics of laying horses

The first thing you need to understand about laying horses is that if you lay one horse in a ten runner race, not only are you laying that one horse to lose, but you are also backing the rest of the field to win.

Laying a horse at 5/1 is the exact same thing as backing the rest of the field at 1/5.

Many people fail to really grasp this and the mathematics and psychology behind it. Often people just see it in an impulsive and non scientific manner. They decide that a horse can’t win or is a weak favourite and needs to be taken on. Because of this they enter the transaction in the same mind frame as when having a bet. They are out to show that their opinion is correct and they will risk money on it to back it up.

The problem with all of this is that when the inevitable happens and something they lay wins, people react negatively and cease to think in a logical manner. Similarly to when they back a short priced loser, they take their opinion being wrong as a personal affront and decide that laying is not for them.

They are too emotionally (and often financially) invested in this one transaction and are not thinking in terms of the infinite sequence.

Don’t ever forget the following:

No one bet or no one lay defines you or your potential to show a profit. You have to think in terms of the infinite sequence. The question you need to ask yourself when laying horses is: can this lay show a profit over time? If the answer is yes then it was a good lay even if it wins. 

The difficulty with the change in mindset between backing and laying horses

It would be unfair, however, to just say that anyone who can’t lay is too emotionally invested as described above.

Though every lay is essentially a bet on the rest of the field, the differences in psychology between betting and laying are no easy task to merge into one profitable betting and laying operation.

In my article Actual value versus perceived value. Value and the infinite sequence, I explain that even though value can be found across the entire spectrum of odds, that many people will still be more comfortable within a specific price range. Let’s say that when betting that your  particular selection process points you towards an average price of 5/1, but when laying your approach typically means that you lay at around 10/1 i.e. you are backing the field at 1/10.

There is a massive difference in the psychology of these two transaction types. Backing at 5/1 and backing at 1/10 are Worlds apart. In the first instance you will have a lot more losers than winners and every win is very significant. In the second instance you will win more often but every loss has much more significance.

If you and your methods have difficulty in adjusting psychologically and/or logically from betting to laying, then maybe laying is not for you.

Bankroll advice for laying horses

Managing your bankroll requires a different approach when laying horses than to when backing horses.

Often people will have a twenty or fifty point betting bank for backing horses. This is reasonable and allows both financial and psychological cushion for the inevitable losing runs. The problem with laying is that because we will win more often than lose, it is easier for the ego to inflate and thus we run the risk of overexposing ourselves.

I therefore recommend laying to lose a certain amount rather than laying to win a certain amount.

Let’s say your bankroll is two thousand. I would recommend laying to lose no more than one hundred per transaction. This means that when you lay a winner it is not a massive blow and you live to fight another day.

If you instead lay to win one hundred every time, then a few winners can easily wipe out your bankroll. You don’t want this to happen.

The thing to be aware of is not to become too complacent and lay too often just because you only lose one hundred when wrong. It is important to maintain selectivity in laying just as in backing. This is the one massive advantage we have as individuals over the bookmaking firms. They have to lay multiple horses in every race, but we can pick and chose. Don’t ever give up this advantage of selectivity by laying too much. Stay calm and stay tough. Only lay when things are strongly in your favour.

Is laying horses profitable?

All of the above are relevant factors when laying horses, but is it worth the effort and can a profit be made?

A quick look at the stats for pretty much any trainer will tell you that they all show a level stakes loss in any given year to industry SP’s. This holds true for even the top trainers with high winning strike rates. This means that if you lay all their horses blind you will show a level stakes profit to industry prices.

Why not just lay on mass then? Easy game, right?

Well, no. Nothing is that simple. For starters, betting exchange SP’s and industry SP’s are two different things with Betfair SP’s typically up to 20% higher than those offered by the high street firms. Also, laying on mass like that involves the need for a very large bankroll and will result in massive swings.

It is for sure a positive for anyone interested in laying horses that pretty much all trainers show a level stakes loss pretty much every year. However, laying all their horses is too big and risky a proposition for any one individual and a more selective approach can give more guaranteed profits in a less stressful way.

Summary

Every lay you have is a bet except typically at drastically shorter odds than you are used to. We thus need to make big psychological and financial adjustments to our game plan while laying. If we feel uncomfortable with the need for these adjustments, then we should refrain from laying until we have learned to merge the psychology of betting and laying into one profitable game plan.