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With Internet betting, the possibility of fixed-odds arbitrage actions against bookmakers and exchanges has expanded significantly. Such exchanges in particular act like a stock exchange allowing the odds to be set in the course of trading between individual bettors which usually leads to quoted odds that are relatively close to the "true odds."

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With fixed-odds betting it is customary to know the odds at the time of the placement of the bet, although this also includes bets where the price is determined only when the race starts. It is ideal for the bookmakers to price up a book such that the net outcome will always be in his favour, i.e. the sum of the probabilities quoted for all possible outcomes will be in excess of 100%. The excess over 100% represents profit to the bookmaker in the event of a balanced book.

In the usual case of an imbalanced book, the bookmaker may have to pay out more winnings than what is staked, or he may earn more than mathematically expected. An imbalanced book may arise since there is no way for a bookmaker either to know the true probabilities for the outcome of competitions left to human effort or to predict the bets that will be attracted from others by fixed odds compiled on the basis of his own personal view and knowledge.

In making a bet where your expected value is positive, you are said to be getting "the best of it". For example, if you were to bet £1 at 10 to 1 odds on the outcome of a coin flip, you would be getting "the best of it" and you should always make the bet. However if someone offered you odds of 10 to 1 that a card chosen at random from a regular 52 card deck would be the ace of spades, then you would be getting "the worst of it" because the chance is only 1 in 52 that the ace will be chosen. It is mathematically disadvantageous to make a bet where you are getting "the worst of it."

When making a bet where you must put more at stake than you stand to win, you are laying the odds or laying the bet. So, for example, if you bet £1000 that it will rain tomorrow, and if you win you will only win £200 but if you lose you will lose your entire £1000, then you are laying a bet. It is possible that you could be getting "the best of it" or "the worst of it" when you lay a bet; the fact that you are laying a bet does not necessarily mean you are getting "the worst of it". A lay bet is a bet that something won't happen, so if you lay £50 on a horse then you are betting the horse won't win.

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February 1, 2015
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