An underlay is a price shorter than a selection's fair price: the bookmaker is paying less than the chance is worth, so the bet loses money on average even when it wins often. Measured as offered price / fair price - 1, an underlay comes out negative: the expected loss per $1 staked, if the fair price is right. Australian punters call it unders.
The fair price usually comes from the exchange near the jump, as betting exchanges in Australia explains, or from your own ratings. Telling an underlay from an overlay is the value side of betting strategy; in matched betting the word means a lay below the balanced stake.
An underlay in horse racing, worked
Example: Illustrative prices, not a real race. The exchange market makes Runner 2 a fair $3.00, about a 1 in 3 chance. A bookmaker offers $2.70.
underlay = 2.70 / 3.00 - 1 = -0.10, a 10% underlay
EV on a $20 bet = 20 x (2.70 / 3.00 - 1) = -$2.00 on average
The expected value calculator does this sum for your own prices.
Runner 2 still wins about one race in three, so backing it feels right, but over many such bets the winners hand back only 2.70 / 3.00 = 90 cents per dollar staked. In sport, Team A at $1.45 against a fair $1.55 (illustrative prices) is a 1.45 / 1.55 - 1 = -6.5% underlay.
Why underlays are common on popular runners
A price follows the money a bookmaker expects, and popularity brings money that has little to do with the chance of winning:
- Names draw money: a famous horse, stable, jockey or club.
- Tips and headlines point a crowd at the same few selections at once.
- A bookmaker expecting one-sided money has a reason to shorten the price before it arrives.
- On the tote, every extra dollar on a runner lowers its dividend, since winners share one pool after the operator's commission.
Popular is not the same as favourite. Across many races long shots tend to return less per dollar than favourites, the favourite-longshot bias, so a fashionable outsider can be a deeper underlay than the favourite.
The matched betting underlay
In matched betting, where a bookmaker bet is covered by an exchange lay, an underlay lays less than the balanced stake.
Example: Illustrative prices: a $30 qualifying bet at $3.40, laid at $3.45 at an illustrative 5% commission. The balanced lay is 30 x 3.40 / (3.45 - 0.05) = $30.00, which loses $1.50 whichever way the race goes.
Lay $22.00 instead and the liability falls to 22 x 2.45 = $53.90. If the bookmaker bet wins: 30 x 2.40 - 53.90 = +$18.10. If it loses: 22 x 0.95 - 30 = -$9.10. The back lay calculator works out any lay stake.
Risk: Betting involves risk. An underlay leaves part of the back bet unhedged and still needs the lay matched. Bookmaker terms bite too: many restrict or prohibit automated betting, third-party access and multiple accounts, and a bookmaker can limit your stakes, void bets or close the account, a risk that sits with you. See responsible gambling for limits and support.
Underlays and B337's screeners
B337's +EV screener lists bookmaker prices above the fair price across sports markets, ranked by edge, so a price short of fair never makes the list, and its fair price is an estimate. The screeners are included with Terminal Pro and Full Automation and sold on their own as the Screeners plan; on a free account they show the live counts, plus the +EV screener's best edge, with the rows locked.
Risk: Betting involves risk. A price above fair can still lose, and often does, and a price can move between the screen and your bet slip. See responsible gambling for limits and support. For free and confidential support call 1800 858 858 or visit gamblinghelponline.org.au.