What is liability?
The Liability is the amount of money you need in the Exchange in order to cover your lay bet. When you place your lay bet, the lay liability is immediately ‘locked away’ from your Exchange account.
If your lay bet loses, you’ll lose the liability on the Exchange and you’ll win it back at the bookmaker.
If your lay bet wins, the liability will be returned to your account and you’ll also win your lay stake amount (minus any commission).
Shared liability comes in to play when you have multiple lay bets on different selections in the same event on the same exchange website. Quite often it's impossible for all of these outcomes to occur and so the amount of liability is reduced. For example if a match being played is Arsenal v Chelsea and you have lay bets against Arsenal and also Chelsea, it's impossible for Arsenal and Chelsea both to win. As a result of this, your liability will be much lower than you may have initially thought. This can be especially helpful when placing multiple horse racing bets on the same race.
Note that this only applies to bets on the same market. A lay bet against Arsenal and a lay bet against Both Teams To Score will not share liability.
Example
Football Match Result
In this example we have placed three different lay bets.
Lay Bet 1 - £238.81 against PSG at odds of 3.35. The liability is £561.22.
Lay Bet 2 - £18.59 against Draw at odds of 3.55. The liability is £47.40.
Lay Bet 3 - £46.72 against Manchester United at odds of 2.48. The liability is £69.15.
You may be expecting these bets to mean your liability and therefore total balance needed in the exchange is £677.77 (£561.22 + £47.40 + £69.15). Due to shared liability you actually only have a maximum of £495.91 at risk in the exchange as you can see below:
If Manchester United win then you will be £188.25 in profit.
If it's a Draw you will be £238.13 in profit.
If PSG win then you will be £495.91 down.
This shows that your liability is in fact just £495.91. This is the maximum amount you can lose on the exchange side and the amount needed in your balance to cover the three lay bets.
This is all down to the fact that it's impossible for all three lay bets to lose (Manchester United win, Draw and PSG win can't all happen).
We can break down the numbers to see why you reach the profits/losses above.
If Manchester United win - You win the lay stake of £238.81 against PSG. You win the lay stake of £18.59 against Draw. You lose the liability of £69.15 for the Manchester United lay. £238.81 + £18.59 - £69.15 = £188.25
If it's a Draw - You win the lay stake of £238.81 against PSG. You win the lay stake of £46.72 against Manchester United. You lose the liability of £47.40 for the Draw lay. £238.81 + £46.72 - £47.40 = £238.13
If PSG win - You win the lay stake of £18.59 against Draw. You win the lay stake of £46.72 against Manchester United. You lose the liability of £561.22 for the PSG lay. £18.59 + £46.72 - £561.22 = -£495.91
If you are interested in finding out more about the math behind shared liability, please see the full training guide here: