Why laying a selection is often a better choice than backing it (Scott Ferguson, June 2004)

Ever looked at a bookmaker and thought that looked like an easy way to riches? Well, it's not quite that easy, but it certainly does have its advantages.

A licensed bookie has to offer a price on every betting option - every horse in a race, every player in a tournament and nearly every match on the football/tennis schedule. They can't hide the selection they like, or the match they don't want to get involved in.

As a layer on an exchange, you have the choice to bet when and where you want to. You can lay one horse in a race or all of them. You can lay to lose £5 or £5000. You can price all 64 matches in the opening round of a Grand Slam or just the one you like the most - it's your decision.

Bookmakers can suffer if they try to spread themselves too thin – i.e. by offering too many matches or events and not being able to do proper research so they are highly confident of their prices.

When bookies do get it right though, the punter by placing a bet offers the bookie a great price on the alternative option. Let's use the example of the men's match, Karol Kucera v James Blake, in the 2004 Hopman Cup final. Using a sample of 12 betting firms listed on TipEx, the top price available on Kucera to win at 3.46. The Betfair price never even got above 3.10. However Blake traded as low as 1.31 up to a high of 1.41, closing at 1.40. By laying Blake early at 1.33 (1/3), the price you are effectively backing Kucera at is 4.0 (3/1). Even if you were slow off the mark, you could have laid 1.36 (4/11) or even 1.40 (2/5), and still returned a better price than any bookmaker on the sample (before taking commission into account).

As mentioned below, you could even improve your price by laying short then backing at a higher price.

The beauty of laying favourites comes down to the lower level of risk involved. Favourites are traditionally backed strongly - hence the name. Any time there are reasons why the favourite is a risk - poor form, coming into an event fresh from a break, injury concerns etc - then it may be worth opposing them. Laying a 1.20 shot for £100 has a big upside (£100) and a relatively small downside (£20). Only one in six selections at that price has to get beaten for you to break even. Any more than that, and you are in profit.

Often there are factors which force the price of the favourite down to well below its true price. Media attention and popularity are the main ones here. Some players or teams are good enough to win anyway despite the weight of attention - eg Manchester United, the most popular football team in the world, are always shorter than they should be. Others, on occasion, struggle under the weight of the support like Tim Henman. In England, Henman comes up shorter than he deserves for every match of every tournament. In futures betting, his price is never anywhere near the all-up match-by-match price of his path required for victory.

Lleyton Hewitt in 2003 was an interesting player to price up. It was clear by June that something was wrong with him - two changes in coach within six months, the lawsuit with the ATP, and poor form. Bookmakers and punters were divided as to whether his 2003 season would see a return to his best or slide further into a slump.

Using Centrebet prices for every ATP match Hewitt played in the four months between Hamburg and the US Open, laying 'Rusty' for a stake (not risk) of £100 at the final price in every match (23 in total), you would have recorded a profit of £318. In only three matches was his price any higher than 1.35 - low risk, high reward. Betfair prices recorded on odds comparison sites for these matches are affected by live trading on several of these matches, and thus cannot be used. It can be safely assumed that the prices traded on the favourite spanned both sides of the bookmaker price and closed slightly higher on nearly all occasions.

If you look at the trading history of a market on an exchange, particularly one with a clear favourite, you will always find that the 'jolly' accounts for the vast majority of the bets matched. So if you are keen to cheer on the outsider, try the laying the favourite instead for better value.