Betting with Bookie is an ongoing educational series designed to demystify the betting experience. Each article will tackle sports betting terminology and concepts in a simple way, in an effort to make you a better bettor.
Placing any bet involves an amount of financial risk. When you use a betting exchange - backing and laying - risk shows itself in two places: when you place a back bet (Stake) and how much you stand to lose on a lay bet (Liability).
Stake
It doesn’t matter if you use a sportsbook or a betting exchange, the amount you place on a Back bet is your Stake. Terminology can vary - bet amount, wager, risk - but they all mean the same thing: The amount of money being staked on the Back bet.
On a sportsbook, you can only place Back bets. So every bet you place will have a Stake and that’s it. A 10 mBTC* bet on the Lakers is the same risk as a 10 mBTC bet on the Bulls (odds notwithstanding) - you will lose your Stake if your bet does not win. So, working out your risk when making a back bet is simple:
Most of you are probably very familiar with this idea of Stake. However, things get a little more interesting with a betting exchange. This is because a betting exchange lets users take the other side of a back bet - it lets you make a Lay bet. Let’s take a closer look.
Liability
When you place a Lay bet on a betting exchange, the risk you are taking is calculated slightly differently than for a Back bet. As we learned in Betting with Bookie: Back vs. Lay, the individual who lays a bet is responsible for paying out the winnings of the Back bet (if it does indeed win). For someone placing a lay bet, the amount you are risking is called Liability, and is calculated as:
Let’s say you lay the Lakers for 10 mBTC at 2.10 odds. Your liability is:
If the Lakers win, your Lay bet is a loser, so you pay the backer’s winnings of 11 mBTC. That was what you risked, and that is what you ended up losing.
If the Lakers lose, then your lay bet is a winner (yay!) and you keep the backer’s 10 mBTC stake (that’s the winnings on your lay bet, so to speak).
*All bets placed on Bookie will be in Bitcoin
*10 mBTC = 10 milli-Bitcoin (~$68 USD at the time of this writing)
Bookie is bringing provably fair sports betting to the world by building our betting exchange on the Peerplays blockchain.
Thanks for explain more about Bookie.
Glad you're enjoying the articles, @melea! Thanks for reading.
Questions:
#1 Is Bookie up and running, so anyone signing up can back/lay a bet if we head on over there?
#2 Can Steemians fund their Bookie accounts with Steem currency? (aka, does Bookie provide a Steem-to-bitcoin exchange?)
Reason we ask #2, is bc a lot of people here don't have a great means of getting bitcoins without paying fees which are so large, that Bookie might as well charge 25% vyg on bets.
Lastly, "back" and "lay" are easy concepts, what's hard is that Americans don't understand what they mean wrt to a given market. An american is familiar with "bid" and "ask", but back and lay are like renaming left and right. the main concept is that "bid" is oft confused with what someone can pay to own the stock, when instead it represents the best bid on the market currently. It's counter-intuitive, but "bid" actually means the price at which you can SELL, and "ask" actually means the price at which one can BUY. THAT is why people get confused.
With full knowledge of the concept you're describing, if we went to Bookie or BetFair and looked at masters odds for a golfer to win the whole thing, we'd still have to remind ourselves which one is the odds we're going to actually GET when buying a share in Jordan Spieth (the Lay) and which ones are the odds which are fantasy (the back).
So it's not just back and lay that're confusing Americans, it's also the reverse-intuitiveness of which one is the buy price and which one is the sell price.
Hi @harpooninvestor,
#1 - No, Bookie is not live yet. Bookie Public Beta will be launched and open to all in time for FIFA World Cup 2018 (which starts on June 14).
#2 - Bookie Public Beta will use 'play tokens'. All users of the public beta will be eligible for real Bitcoin prizes through a range of competitions and leaderboards based on their play token betting success.
At full launch (after the WC 2018), Bookie will be enabled for Bitcoin betting. There are plans to enable betting with other cryptocurrencies in the future, but nothing concrete for Steem currency. But the second half of 2018 will see firming up of plans in this area, so stay tuned.
We agree that there is a need for clear education around betting exchanges, tailored to the cultural expectations of the North merican sports bettor. Obviously, this series of articles is a move in that direction, but it takes time to change people's intuitive understanding of market terminology, as you say. Interestingly, there is no consensus on whether backing is buying or selling, even amongst betting exchange users, as per this thread:
http://www.geekstoy.com/forum/showthread.php?7323-What-is-BUY-amp-SELL-on-Betfair-Betdaq
We believe that the best way to educate new exchange users is to make the Bookie in-app betting experience as familiar as possible. We are developing a feature that will allow non-exchange users to compare exchange market displays to (the more familiar) sportsbook displays. Working at this more intuitive level, we hope to make moving from sportsbook to exchange a quick and simple transition.
Really appreciate your thoughtful comments on this issue - We hope it continues! And would definitely love to see you giving us feedback on the Bookie Public Beta.
A non-betting individual here. I am missing information here: In the above example, why would anyone want to place a Lay bet of 11 mBTC and only get back 10mBTC if it "goes their way"? I am assuming it has to do with odds, but how the above example shows. If you place the Lay and the Lakers win, you lose 11 mBTC, if the Lakers lose, you get only 10 mBTC? Please advise.
It says:
Idk, I'm confused too.
Hi @aphiso,
Yes, I think you got it! Liability is what you might lose when making a lay bet. If your lay bet wins, your profit is the backer's stake. No additional money changes hands. So, once you've won the lay bet your liability essentially becomes null, as you say.
"The odds were in favor of the backer so the larger profit goes to the lay?"
That's correct. If the odds had been 1.5, then the Backer's stake would have been 10 mBTC and the Layer's liability would have been 5 mBTC. In that case, the odds would be in favour of the layer, to use your expression.
Thank you for clearing that up. Appreciated!
No problem! Look forward to your thoughts on the next one (coming soon!).
Hi @bryner,
It does have to do with odds, yes. In this particular example you stand to lose 1 mBTC more than you stand to profit, depending on the result. However, as the odds shift so does potential profit/loss, for both the backer and layer. For example, odds of 2.00 is like flipping a coin: heads or tails. The odds are 50/50, and so each side stands to profit or lose the same amount. So, to answer your question of "why would anyone want to play a lay bet..." it's because they feel they are getting good odds about the bet.
In case you haven't seen it, one of our earlier articles covers this very topic: Back vs. Lay.