I'm not into Betfair yet, (still looking at it), but if you lay a horse for say $10, and it loses, the people who back it have to give you the $10. Hence you make a $10 profit. Of course if that horse wins then you have to pay them the price, eg. you lay it at $4, you have to pay them $30. (you lose $30).

Then of course should you win, Betfair take I think around 5% commission.

Paul