Exposure betting is a very important factor in betting exchanges, especially where lay bets can have higher liabilities than the stake. Exposure is found in both regular sportsbooks and betting exchanges. Sportsbooks manage it differently than betting exchanges. Understanding how the exposure element works in betting exchanges and how to use it can help bettors understand better their betting environment and control better the risk in their bets.
What is Exposure Betting?
Exposure betting is betting with the maximum amount of money a bettor can lose on a bet. When bettors place a back or lay bet in a betting exchange, the exchange holds money from their account to cover their possible loss. If the bet wins, the bettors get paid. If the bet loses, the exchange takes the money from their account. This is called exposure and it is a very important term in exchange betting.
Example of Back Bet Exposure Betting
A back bet is when a bettor bets on something they believe will happen.
In a football game between Team A and Team B, a bettor bets 10€ on Team A to win at odds of 3.0 and commission fee of 5%.
If Team A does win, the bettor will get 30€ from the winning bet. The exchange will keep 0.5€ and the bettor will receive in total 29.5€ from the winning bet.
If Team A loses or the match ends in a draw, the bet loses and the bettor loses their 10€ stake.
The exposure in this back bet is 10€. For the bettor in this bet this is the most they can lose.
Example of Lay Bet Exposure Betting
A lay bet is when a bettor bets on something they believe will not happen.
In a football game between Team A and Team B, a bettor bets 10€ on Team A to NOT win at odds of 3.0 and commission fee of 5%.
If Team A does loses or the match ends in a draw, the lay bet wins and the bettor will get their 10€ from the winning bet. The exchange will keep 0.5€ and the bettor will receive in total 9.5€ from the winning bet.
If Team A wins, however, the lay bet loses and the bettor must pay the winnings of the bettor who placed the back bet. They must pay [stake x (odds – 1)]. They must pay 20€
The exposure in this lay bet is 20€. For the bettor in this bet this is the most they can lose.
In lay exposure betting, the exposure is always bigger than the stake.
Exposure and Liability in Betting Exchanges
The terms exposure and liability are often misinterpreted by betting exchange bettors. Exposure and liability are similar but not exactly the same in a betting exchange. Exposure is the total amount of money a bettor can lose on all their bets combined. It is very important to know in order to manage the overall risk taken.
Liability, on the other hand, is only the amount of money a bettor risks losing on one individual lay bet. It is always higher than the amount of the stake because bettors must pay the back bettor if they lose. To understand the difference better, if a bettor places many lay bets, their total exposure is the sum of all their liabilities.
Betting exchanges track this to ensure bettors do not risk more money than they have in their account. They calculate and display both exposure and liability in order to help players understand fully their risks and manage them better.
In Short
Exposure betting in betting exchanges shows the most money a bettor can lose on a bet. In lay betting the exposure element is always bigger than the stake. Betting exchanges set exposure limits on every bettor to protect them, the matching bets operation and the fair play. Understanding exposure helps bettors know better how exchange betting works and bet safely.