At regular bookmakers, players bet against the house.
At Betfair, players bet against each other, every bet placed requires two players betting on opposite outcomes. Therefore, every placed bet will have a loser player and a winner player. The loser's stake, pays up the winners profit, and Betfair receives a small commission from every winning bet. For new players, the commission is 5.00%, decreasing with betting activity.
Hence, there are 2 types of bets at Betfair, back bets and lay bets.
A back bet, is for when you are in favor of an outcome. You choose the outcome you want to back.
A lay bet, is for when you want to bet against an outcome. For instance, in a football match, if you place a lay bet on the draw, you will win the bet, if any of the teams wins the match. It's the outcome you have selected that can't happen (the draw), or you'll lose the bet.
In lay betting, you always insert on the bet slip the amount you want to win. Instead of inserting the amount you want to risk, like in a back bet. Therefore, when you place a lay bet, the amount you insert on the bet slip, is different than the amount you risk. The risked amount is automatically calculated according to the odd and amount you want to win. The risked amount is the amount of money you will lose if you lose the bet, and it is represented as the liability on the Betfair betslip.
-The Back Bets are the blue zone. The Lay Bets are the red.