Matched Betting Guide – Part 2 – Master the Fundamentals

Welcome to part 2 the OzProfit 3-Part Matched Betting Guide! You’re already 30% of the way to earning over $1,500 in less than 30 days.

If you’ve landed on this page directly, then I highly recommend reading Part 1 – Meet the Concepts first.

Part 1 – Meet the Concepts
Part 2 – Master the Fundamentals
Part 3 – Make the Money

During Part 2 – Master the Fundamentals, you’re going to learn:

  • How Betting Exchanges have revolutionised the betting industry.
  • A mental model for thinking about Lay Betting, making matched betting simple.
  • How to Back & Lay the same event to guarantee the same outcome.
  • The way we use Free Bets to guarantee ourselves a healthy profit.
  • Making matched betting zero effort by using amazing calculators.
  • How to build up your confidence so you can start earning financial freedom.

I honestly believe that this page alone is going to change your life like it did with mine.

Remember my story from part 1? It took me years to learn this information that you’re going to learn in 20 minutes.

What’s a Betting Exchange? Betfair Explained

We learnt in Part 1 – Meet the Concepts that a Betting Exchange is when individual people bet against each other, without a traditional bookmaker getting involved.

That means you can listen to one of your mates spout off about how is team are a ‘sure thing’ then go and bet directly against his team winning. With a traditional bookie, you’d need to bet on the other team winning. With a betting exchange, you can bet on his team not winning.

Honestly – understand this concept and you’re 95% of the way there… the rest is easy!

This is an example to help you see the difference, using the Aussie Soccer A-League. We’re in a scenario where we’re betting on Sydney FC

Backing vs Laying - Soccer

See that difference between the Bookie and the Exchange? We’re able to cover the Draw / Lose outcomes in a single bet. A Lay Bet. Our bet wins as long as Sydney FC don’t win.

To help make the difference even more stark, here’s an example from Horse Racing where we have 6 runners in a race. I’m interested in betting on Meadowvalley Lover because I quite like the name.

Back vs Lay Racing

That means that we can bet on all the other runners at equivalent odds of $1.5 if we actually didn’t like the chances of Meadowvalley Lover. We’re effectively betting directly against people who have backed that horse to win.

The only Betting Exchange available in Australia is Betfair. They are the largest and most trusted exchange in the world with millions of dollars bet on their website each year. If you’re not signed up with Betfair, you simply can’t do matched betting.

I recommend that now is a good time to go ahead and sign up so you can get a feel for the interface and betting markets.

I’ve also written a really in-depth Betfair guide, perfect for quickly learning how to use Betfair.

vAction: Create a Betfair Account

No need to deposit any cash right now, create yourself a free account so you can follow along with the rest of this guide.

Laying a bet made simple

Now you have mastered the concept of a Lay Bet and you have yourself a Betfair Account, it’s time to really understand how a Lay Bet works. They’re actually incredibly simple.

Let’s use our example of the 6 Horse Race, where I’ve blocked out the numbers we don’t care about right now.

Betfair Interface for Lay Bets

We have our 6 runners on the left hand side alongside their jockey, draw number and silks (colours). Practically, we don’t need to know any of that extra information.

Remember, we aren’t ‘hoping’ for any single outcome to happen.

You can see the Back Bet odds for Meadowvalley Lover are $2.9 and the Lay Bet odds are $3. The numbers underneath the odds are how much money you can bet at those odds. Remember, you’re betting against other people so there’s only a finite amount of money available. Let’s focus in on our horse.

Back Odds vs Lay Odds

Woah, HOLD ON.

Previously, I said the Lay odds for Meadowvalley Lover were $1.5 and now it’s $3. What happened?

Simply, Lay Bets work a little differently to normal bets. You actually bet how much money you want to win if the event doesn’t happen (the payout). You then have a liability, the amount you need to pay out if the event does actually happen.

Stay with me, let’s see how that works in action.

Lay Odds Explained

In order to win $20 (payout), I’m willing to risk $40 (liability).

There are two possible outcomes:

  1. Meadowvalley Lover wins – I lose $40
  2. Any other horse wins – I win $20

For the observant amongst you, you would have noticed that Back Betting $40 at odds of $1.5 would return a $20 profit. It’s the same thing!

If you want to play around with the numbers, I recommend using Betfair’s Lay Bet Calculator and putting in some different odds / stake combinations.

Handy Guide to Lay Betting Terminology

Lay Bet – Betting on something not to happen.

Lay Odds – Also seen as ‘Backer Odds’ on Betfair, these define how unlikely something is to happen. The higher the lay odds, the less likely an event will happen.

Payout – Also know as Lay Stake or ‘Backers Stake’ on Betfair, this is how much you will win should the event not happen.

Liability – This is exactly how much you need to pay out if the event does happen. Just like paying your mate when he calls a coin flip correctly.

How to ‘Match’ a bet – Backing & Laying

Since we now know we can bet on both side of an event happening, it make sense to see what happens when we do exactly that. It’s the core principle of matched betting.

Prepare yourself though, I’m about to make us lose money. Stay with me for a few minutes and I’ll turn that right around.

I’m going to bet on the German Soccer League for this example. Why? Because I want to prove that knowing the teams/sport are completely irrelevant. My knowledge of German football is nonexistent.

Let’s see the odds at a bookmaker:

Bookmaker Odds - German Soccer

Now let’s see the odds at Betfair:

Exchange Odds - German Soccer

It’s clear that Dortmund are the clear favourites in this match, the odds suggest they have a roughly 60% chance of winning the match.

Again, I want to show that what you’re betting on doesn’t matter. So, I’m going to Back and Lay The Draw.

At a Bookmaker, I can get odds of $4.2 to Back the draw.

At the Exchange, I can get odds of $4.4 to Lay the draw.

If I bet $10 on The Draw at our Bookmaker, I want to try and match that by winning $10 at the Exchange if any other event happens. We need one additional concept first though.

Betfair charge a commission on any winnings you make through their Exchange. This is how their business model works and is something we need to include in our calculations. The commission only applies to your winnings.

Commission varies by sport and by region, often influenced by local gambling laws. It varies between 2% – 10%.

Let’s see how that matched bet has worked out, where we bet on every possible outcome. On our soccer match, Betfair charges a 5% commission on any winnings.

Matched Betting Example

There’s quite a lot going on there! Really, it’s quite simple though and boils down to these very simple principles:

  • Backing and Laying the same event normally means a small loss of money due to:
    • The difference in odds ($4.2 vs $4.4).
    • The commission paid to Betfair.
  • When ‘matching’ a bet, you bet on every possible outcome to guarantee what your profit/loss will be.
  • We can place lots of bets for a relatively small loss of money.

Whilst it’s not critical to your understanding, I also want to share what happens if we ‘balance’ things out a little by adjusting our Stake at the Betfair Exchange.

Balanced Matched Bet

By reducing our Lay Stake on Betfair to $9.66, we can guarantee ourselves a loss of just $0.83 (+/- 1 cent thanks to rounding). In this example, we’re losing around 8% of our original stake but we’re about to earn that back, and more!

Using Free Bets to Guarantee Profit

Bookies offer ‘Free Bets’ to entice people to bet with them instead of with other bookmakers.

Over in the UK, they’re free to advertise these offers publicly. However, we do things slightly differently here in Australia. Australian law states that bookmakers aren’t allowed to advertise their special offers unless you’re an active customer.

Fortunately, this hasn’t stopped most bookies from continuing to offer fantastic free bet opportunities. Here’s a prime example:

Example Free Bet Offer

In this example, we deposit $260 and receive an additional $260 in free bets.

Think of Free Bets as fake money. It can only be used for betting, so they have no cash value until they’re placed on a betting market. A little bit like a coupon for a free McFlurry at McDonalds.

This leads us to a key lesson that you’ll need to keep in mind.

When betting with a free bet, you don’t receive your free bet value back as cash money.

Let’s have a look at that in action:

See how the stake is $50 in both scenarios, but the free bet returns us $350 whilst the cash bet returns us $350 plus our stake back to make it $400. Importantly, the profit is the same in both scenarios.

Now we need to combine the two concepts – free bets and matched bets. This is the magic to guaranteeing profit.

I’m going to show you the result using our previous football example where we can Back the draw at $4.2 and Lay the draw at $4.4. This time, our $10 is a free bet at the bookmaker.

Matched Bet Free Bet Example

This is a moment to get excited. We’re going to win $6.99 whatever happens.

Let’s have a look at the things that have changed compared to our original matched bet.

  1. With our bet at the bookmaker, we lose nothing if that bet loses. Remember it’s ‘token’ money not real money.
  2. We’ve adjusted our stake at the Betfair exchange to balance the fact we don’t receive our stake back with the free bet.
  3. Both the outcomes balance out perfectly. It doesn’t matter what happens in the game itself.
    • In fact, you’ve probably forgotten what teams we’re betting on. You don’t need to know!

We just won $6.99 with a free bet value of $10 in this example. I would generally aim for around $8 profit out of every $10 in free bets, which we can do by using higher odds and/or closer back and lay odds.

That means, if we get a $260 free bet, I would expect to make roughly $205 profit.

The income adds up very quickly when you can make over $200 from just one single offer.

Now you understand the fundamentals of matched betting, I’m about to make things 10x simpler for you.

Matched Betting Calculators Explained

I’m willing to bet that most readers didn’t 100% understand the maths of how we decided the bet amount. Why? Because it took me years to fully understand what was going on… and I like maths!

Fortunately, you don’t need to know the maths. I’ve already taught you all the concepts you need to know.

What you need is a Matched Betting Calculator.

They do all the work for you. All you need to do is input the odds, your stake at the bookie and the Betfair commission. The calculator does all the hard work for you.

My favourite calculator is from BonusBank because it’s so simple. Here’s my calculation from the $10 free bet I worked on earlier.

There’s one concept you need to know and that is Calculator Mode. Here, you have 3 options:

  1. Qualifier – This is for any matched bet where you are betting with your own real money. You’ll use this when ‘qualifying’ for a free bet offer by a bookmaker. It’s designed to reduce the amount you lose on these matched bets.
  2. Bonus Bet (SNR) – Our standard free bet calculation. SNR stands for Stake Not Returned which applies to an overwhelming majority of free bets. Make sure you’re on the SNR mode for any free bets you’re matching.
  3. Bonus Bet (SR) – It’s been around 5 years since I had a free bet that also returned the free bet value as cash. They are incredibly rare, it’s a safe assumption that all free bets you earn in normal circumstances are SNR. SR stands for Stake Returned.

Test out the BonusBank matched betting calculator

Experiment with the Qualifier and Bonus Bet settings, put in different odds / stakes and see what happens. The more you experiment, the better these concepts will stick in your head and the more confident you will get at matched betting.

The final part of mastering the fundamentals of matched betting is to start practising the skills you’ve learnt over the last 20 minutes.

Take Action – Start Paper Trading

Before you go ahead and make any bets, I highly recommend following this top tip.

Play out different scenarios to see where the money goes.

By understanding what happens with each bet you place, you reduce the chance of making an error to virtually nothing. Remember, matched betting is risk free as long as there is no human error! So, we should do everything possible to not make a mistake.

Build your confidence by doing something called paper trading.

I’m going to give you a framework for doing this and show you a clear example of how I paper trade.

You’re going to fill in the following template with all the required information. Print this image, draw it out on paper or create it in excel. It’s a lifesaver!

Paper Trading Framework

To help, I’ll walk you through exactly how to fill in each field.

Sporting Event: The event, including date & time, that you wish to bet on.

Betting On: The outcome that you wish to bet on, usually in the format ‘<team/player> to <win/draw/lose>

Bet Type: Circle which bet you’re making. A qualifier is when you use your own money at the bookie in order to earn a free bet. Use Free Bet (SNR) whenever you are using a bonus bet at the bookie.

Bookmaker Odds: The quoted odds of the outcome at your bookie for the event you’re ‘Betting On’.

Bookmaker Stake: You set this amount based on either the size of your free bet, or the amount you need to bet to earn a free bet.

Exchange Odds: The Lay odds at the Exchange (the odds in pink) for the event you’re ‘Betting On’.

Exchange Commission: The percentage commission charged by Betfair on that market. Most sports are 5% with higher commissions for racing. AFL is only 2.5% commission!

Exchange Stake: Get this value from the BonusBank Matched Betting Calculator. Enter your Bookmaker Odds, Bookmaker Stake and Commission and voila!

Event Happens (Bookie): Your bet wins at the Bookmaker, record your Profit. That is, your total returns minus your original stake because that was already your money. For the mathematically inclined, you can use a simple formula: Stake x (Odds – 1).

Event Happens (Exchange): This is your Liability at the Betfair exchange. I like to go on to Betfair, enter my Exchange Stake and take the value directly from their interface. For those of you who like to work it out, use: Stake x (Odds – 1).

Event Doesn’t Happen (Bookie): If your bet is a qualifier, lose your Bookmaker Stake. If your bet is a Free Bet (SNR), you lose $0.

Event Doesn’t Happen (Exchange): You win your Exchange Stake, minus the small commission stake. Simple formula: Stake * (1 – Commission %).

Totals: Add up your profit/loss across each horizontal line at the Bookmaker and Exchange.

Paper Trade Example - Qualifier
This is a reasonable loss on a qualifying bet, though it could be smaller (tip: lower odds).
Paper Trading Example - Free Bet
This is a good profit on a free bet but we could do better!. (Tip: higher odds)

I highly recommend you load up a bookie website and the Betfair exchange, so you can test out these fundamentals with real, live numbers.

When in any doubt, go back to basics and write down exactly what will happen in each scenario!

Key Takeaways – Master the Fundamentals


If you want to start pulling in a profit from matched betting, you’ve learnt all the basic concepts you need to know. From this single web page, you’ve:

  • Understood how a Betting Exchange works
  • Mastered the concept of a Back & Lay bets and how they balance each other out.
  • Worked out how to take advantage of bookmaker offers for guaranteed profit.
  • Signed up to the worlds most trusted Betting Exchange, Betfair.
  • Given a trial run of a matched betting calculator that makes life super simple.
  • Paper traded your first matched bets.

I’d say that’s pretty incredible. You’re well on your way to bringing in a fantastic additional income stream.

Part 3 of the OzProfit Matched Betting Guide is titled ‘Make the Income’ where I present (in detail) the actions you’ll need to take to earn a profit from matched betting. You could get away without reading it. However, I guarantee it will make you double the profit in half the time.

Well worth investing another 20 minutes, don’t you think?

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