It is a term used in gambling.
If a bookmaker accepts a large bet, let's say on a horse, he may want to cover himself against the possibility of paying out a large sum.
So he 'lays it off' with another bookmaker, by placing an amount on the same horse. So if the horse wins he collects money as well as pays out.
This is known as bet-covering.
The same principle applies in the field of insurance. An insurer who stands to lose heavily in the event of a risk materialising, covers himself by taking a policy with a re-insurer.
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