Cash Out v Laying on an Exchange, Which Offers Better Value?

Man with large stack of cash

More and more betting sites now offer the chance to cash out your bet, with just about every decent bookie boasting this facility. Choice in life can be both a blessing and a curse and whilst having extra flexibility with your bets is certainly a good thing, deciding when to cash out a bet and when to let it ride can sometimes add an extra layer of stress to your punting. Is it just us, or does every bet you cash out win, whilst every bet you let ride somehow comes a cropper?!

Unfortunately, when it comes to cashing out, your options don’t start and end at the site where you placed your bet. More experienced punters will be well aware of betting exchanges such as Betfair (others exist but Betfair are essentially the Google of exchanges). Exchanges give you an alternative to cashing out as they allow you to lay bets (that is, to basically act as the bookie) as well as back them (like a normal punter).

Just when you thought you already had too many decisions to make, now you have another. But is it better to use cash out or an exchange? What are the pros and cons of each option? And what are you things you need to know when considering either?

What Is an Exchange?

GBP being handed over

Before we look more closely at how cash out stacks up against using an exchange, let’s first look at what an exchange is. If you already know, just skip this section; but for those that aren’t familiar with Betfair, Betdaq, Smarkets and others, we’ll quickly get you up to speed.

An exchange acts as a broker between two people wanting to bet on opposite outcomes. Exchanges act as a third party who holds money and facilitates “punter to punter” betting, in the same way that sites such as Zopa enable peer to peer lending. Betfair and other exchanges take a small commission but because this is much lower than the profit margin a bookie takes, they claim to offer much higher odds.

Exchanges allow normal punters to act as the bookmaker and lay bets. Assuming you don’t think an even money favourite in a horse race will win, you can lay that horse. If you decide you want to bet £100, the exchange will take money from your account to cover your liabilities. As this horse is priced at odds of evens, that will be £100. If the favourite doesn’t deliver the goods, you will win £100, less the exchange’s commission (typically 5%), whereas if it does win your £100 will be used to pay the winnings of anyone who backed it up to that value.

Because exchanges are almost entirely automated they are brilliant for in-play betting. There is often no need for staff to regulate or control the odds as these are set by the market, by punters, so exchanges usually have a wide variety of live betting options. These are perfect to use as an alternative to cash out, whilst exchanges can also be used in the same way in outright markets, on long term bets and before a game or event has started.

Should I Cash Out or Lay at an Exchange?

Young man thinking

There are always going to be a number of variables when it comes this situation and so there isn’t necessarily a simple answer. We can’t just say, cash out is better or conversely that laying at an exchange is better.

However, let’s look at some of the key points of comparison from a user perspective and explain how the exchange and cash out might vary and which, in general and/or in specific circumstances, might be better.

Which Returns More Money?

Essentially, when you cash out you are simply placing another bet that is the precise reverse of your initial wager. So, if your initial bet was, say, on Liverpool to win the Premier League title, at odds of 3/1, by cashing out you are making a bet on them not to win the title. You can also look at it as backing every other club to win the league but either way, the end result should be that whoever does go on to glory, you win (or lose depending on which way the odds have moved), the same amount of money.

Example

When you lay the bet you are doing the same thing described in the first method above, simply betting on the Reds not winning the title by taking other people’s bets that they do. An example will show how this works if you opt for the option of laying at the exchange and we’ll use decimal odds to make it easier to understand.

Sticking with the example given, let us say you bet £10 on Liverpool at odds of 3/1 (4.0 in decimal odds) with a standard fixed odds bookmaker. Let us then assume that the Jurgen Klopp’s men start the season well are after 25 games they are top of the table. The odds have moved from 4.0 to 2.0 (which is even money) and perhaps you are a Liverpool fan who decides that now is the time to take your profit. After all, if your team finally end their long, long title drought, you’ll be more than happy, whilst if they don’t, at least you won’t have lost any money – in fact you’ll have made some. But how much?

Well, based on the numbers above and assuming a 5% commission at the betting exchange, you would lay Liverpool for £20.51. That essentially means that you are taking £20.51 worth of bets on Liverpool winning the title at odds of 2.0, meaning that you will make a profit of £9.49 if they do win and £9.48 if they don’t (it isn’t always possible to lay to guarantee an exactly even amount either way).

Original Bet Lay at Exchange
Stake – £10 Stake – £20.51
Odds – 4.0 Odds – 2.0
Potential Profit – £30 Potential Profit After Commission – £19.48
Potential Loss – £10 Potential Loss – £20.51

The table above shows what bets and exchange lay you would make. The table below demonstrates how no matter what fate has in store for the Reds, you make a profit.

Original Bet Outcome Win Lose
Bet Profit/Loss £30 -£10
Lay Profit/Loss -£20.51 £19.48
Overall Outcome £9.49 £9.48

The key point to note is that whether you lay, as per the example above, or use a betting site’s cash out facility, you are essentially making a secondary bet. The reason that this is important is that just as with the first bet, the bookie will take their cut, factoring in a profit margin for them on the cash out value they offer.

Put another way, the cash out price will be lower than the true value of the bet based on the perceived probability of the outcome. Just as, in theory at least, the betting exchange would have offered a higher price for the initial bet, so too will they offer better odds, in the form of the lay, for the “cash out”.

Much as bookmakers like to paint cash out as a great service they offer to customers, the truth of the matter is that it is a highly profitable tool for them to effectively double their profits on a bet. They make money on the initial wager and then do so again on the secondary part of the bet.

Coming to what really matters, ultimately this means that more often than not your most profitable cause of action will be to lay the bet rather than cash it out. This isn’t always the case because the lay price may be out of line, you may find the odd great cash out offer at a bookie or low liquidity at the exchange may mean it isn’t even possible to cash out. But in general, if your only concern is the bottom line, you will usually be better off laying the bet at an exchange, especially if you are betting on bigger markets with good liquidity.

Ease of Use

One area where we can give a simple answer concerns ease of use and this is an undisputed win for cash out. To lay the bet at an exchange you will need to use some form of laying calculator (or great mental arithmetic and/or trial and error) to work out the precise value of your lay stake. If you are betting in-play, you will need to be quick too, as the lay price may be changing constantly. You may even find that you go to lay your selection and the odds move dramatically, leaving you with another, far more complex calculation to make.

On the other hand, cash out requires you clicking your mouse. Maybe clicking it twice. Maybe even clicking it thrice, depending on the site in question. All the best online betting sites have now developed highly intuitive cash out tools and even for a partial cash out, all you really have to do is decide whether or not you want to accept the available offer. If the odds move during you attempting to do so you will simply get a message stating as such with a new value.

It really couldn’t be easier, so this is a clear win for cash out and for betting newbies this may be the decisive factor. Cash out is quick and easy and if you don’t understand exchanges, don’t have an account with one, aren’t great with maths and don’t mind losing a few quid here and there, this is definitely the option for you.

Offers & Promotions

Another area where we can give a categorical answer is offers and promotions. This is a little more complex than you may think but due to the many great promos the best bookies offer, if you opt to lay your bet, rather than cash it out, you may just find yourself a whole lot richer.

If you decide to cash out a bet, that bet is effectively closed and the bookmaker you made the initial bet with has effectively “bought” it back from you. Once you accept the cash out, the bet is no more. In contrast, when you lay the bet at an alternative site, an exchange, your bookmaker bet remains open.

This means that if the bookie has a promotion on the game or market in question, you could still benefit from that. Let us look at a couple of examples that may make things clearer and we’ll start with our wager on Liverpool.

If you accept a cash out on the Reds, the bet ends and you have made a profit. But let us suppose you lay Klopp’s boys instead and thus your initial bet at the bookmaker remains active. They continue to thrive and with, say, 10 games of the season left, your bookmaker decides, as has happened many times in the past, that they will pay out on the “to win the title” market.

If Liverpool go on to deliver the goods your hedging plan works as normal and you losses at the exchange detract somewhat from early payout at the bookie. You have still made a profit though, so that’s all good. Or is it?

Well, in that instance it is but what about if the bookie pays out early and then Liverpool fall apart? What if, and of course this is just an example that could never happen in real life, a midfield club legend slips over in a pivotal game leading to a goal against his side that results in a defeat that ultimately costs Liverpool the title?

Well, in that scenario, you would win at the bookmaker because they had already paid out. But you would also win at the exchange, because Liverpool didn’t win and your lay of them was a winner. Rather than just winning around £10, you would actually win a much more impressive £49.48! That’s a big difference and when bigger stakes and/or longer odds are involved the sums can be much larger.

Now, you may think such an example is a freak example that is highly unlikely to happen but as well as paying out early, there are lots and lots of other promotions bookies run that can lead to the same double payout.

Some of the great betting sites we feature have promotions that have free bet insurance in certain circumstances, whilst others pay out early if a team scores first and others if a side goes two goals up. There are further offers that grant a free bet in the event of you landing a winner over certain odds, others that double or even treble the odds if a player scores two or three goals (or sometimes tries in rugby and touchdowns in American football) and various similar offers that potentially give you extra value at the bookmaker.

With all of these offers, if you cash your bet out you will lose the possibility of taking advantage, whereas if you let the bet stand but lay or hedge the wager with an exchange, you will still have the opportunity to benefit from the promotion. With some, this may mean you get paid as a winner at the exchange and the bookmaker, as outlined above, with deals that pay out on whichever side scores first or teams that go two up falling into this category.

With other types of promo, for example winners on free bets, or free bets if your horse, golfer or other selection finishes second for example, you won’t necessarily win on both sides of the bet. However, you will, in the case of the former, get your normal winnings at the bookmaker and a free bet from them, or in the latter win at the exchange but also get a free bet from the bookie.

When it comes to offers, therefore, we have to mark this as a clear “win” for the exchange. If you cash a bet out, your interest ends, whereas if you lay at an exchange, you may still hit a tidy bonus win in addition to your guaranteed return.

Flexibility

Increasingly the best online bookies have sophisticated cash out tools that facilitate partial cash out. This means you can take some profit, or minimise some loss, but still let some of the bet ride, meaning you still have an interest, both financially and emotionally, in the game or event.

However, even the very best tools out there do not match the total flexibility that laying at an exchange can sometimes offer. With an exchange, subject to liquidity, you can lay as much or as little of your stake as you want and can keep altering your position at any point before or during the game, match, race or tournament.

Another clear win for the exchange? Well, maybe not, as you might have noticed that in the paragraph above we said “sometimes offer” and “subject to liquidity”. Everything at an exchange is always subject to liquidity in the market – someone being willing to accept the other side to the wager (back or lay) you wish to make. We touched on this when discussing which method of taking cash returns the biggest profit but it is particularly relevant in certain circumstances.

When it comes to laying in-play, liquidity is often markedly limited away from the biggest markets. So if your bet is on who will win a game of football or a tennis match, for example, you should be fine to lay it off, or part of it, in-play, with sufficient liquidity in the market to mean the odds are good.

On the other hand, if your bet was on the correct score in football, or perhaps total games in tennis (to use just two examples), you may find things much harder. It may not be possible to lay your bet at all or, where it is, you may find a lack of liquidity means that the odds are very poor.

All in all, therefore, if you like laying your bets during the action and tend to have punts on lesser markets (and by this we don’t mean obscure ones, just ones beyond the most popular three or four), you may find cash out if the better pick. On the other hand, if you do mainly stick to the major markets, the greater flexibility of the exchange could be a plus.

Cash Out or Lay: The Winner is… Lay at the Exchange

Overall, you will probably have to assess each situation on its merit but we feel on balance the exchange, when liquidity allows, is the better option. Assuming there is lots of money in the market you will generally get a bigger return and you will also have total control over your bet.

Whilst betting newbies will find cash out the easier facility to use, the fact that Betfair and other betting exchanges have literally millions of customers is indicative of the fact that you don’t need to be a genius to use it. Once you get your head around the concept, laying a bet at the exchange is easy enough and there are lots of free online tools that will help you calculate exactly what stake you should use.

Last of all, perhaps the biggest advantage of laying with an exchange is that it leaves the bet open, meaning you are still in a position to benefit from any promotions that might be available at the bookie with whom you placed the original bet. Regular punters placing multiple bets every weekend may get lucky several times a year and the additional profit could really add up, so all in all, where possible, it is the exchange for us.