Spread Betting is a different form of betting, in that when you spread bet, you are betting on the severity of an outcome above or below the given spread, rather than the normal method of betting which is simply win or lose.
The simplest way to explain this would be to use a football match.
Usually you would bet on a team to win or lose. With Spread Betting, you can bet on how much they win or lose by – eg – if the spread for a match was for Man Utd to win by 1 goal, you could bet £10 per point on that spread.
If they won by 2 goals, you would win £20. If they won by 10 goals, you would make £100 – so the upside can be great in proportion to normal odds betting.
However, there is a downside – in this example, if Man Utd lost by 2 goals, you would lose £20. If they got destroyed by 10 goals, then you’ve lost £100. So the level of risk is greater.
Largely due to its availability on the internet, spread betting has become a major force in the UK betting scene, with well in excess of 1,000,000 people now partaking in spread betting in the UK alone.
In the UK, spread betting is regulated by the Financial Services Authority rather than the Gambling Commission.
Why Spread Betting?
Spread Betting basically creates an equal market place no matter what the sport or the given talent of the opposing sides.
Again, using football as an example – Barcelona are fictisiously playing Accrington and Stanley. In this example, Barcelona would be clear favourites to win, and a majority, if not all, of the bets would be to back Barcelona to win.
With Spread Betting, Accrington and Stanley are in effect given a handicap as the spread may be that Barcelona will win by 3 goals. So to back Barcelona, they must score at least 3 goals before you start to win money.
For every goal over 3 goals, you get another point – when you place your spread bet, you bet an amount per point, so the more points you get, the more you win.
If you didn’t think Barcelona would score 3 goals, you bet under the spread – for every goal less than 3 they score, you class that as a point as well.
Spread Betting in Sports Betting
Spread Betting’s origin is traced back to the USA in Chicago in the 1940′s. it’s founder unsurprisingly was a talented maths teacher, Charles K Mcneil.
The concept of Spread Betting soon became popular across the whole of the USA, although never really took off in the United Kingdom until the 1980′s – since then, it has soared in the number of participants here.
Typically, American spread bettors will bet on the points difference in a game between 2 teams – this is set against the points difference starting point stipulated by the bookmaker – for an example :
• The bookmaker advertises a spread of 4 points in a certain game;
• If the gambler bets on the “underdog”, he is said to take the points and will win if the underdog’s score plus the spread is greater than the favorite’s score.
• The eventual score is Underdog 8, Favorite 10: 8 + 4 > 10, so the gambler wins;
• The eventual score is Underdog 8, Favorite 13: 8 + 4 < 13, so the gambler loses.
• If the gambler bets on the “favorite”, he gives the points and will win if the favorite’s score minus the spread is greater than the underdog’s score:
• The eventual score is Underdog 5, Favorite 10: 10 – 4 > 5, so the gambler wins
• The eventual score is Underdog 8, Favorite 10: 10 – 4 < 8, so the gambler loses.
In the UK, these bets are sometimes called spread bets, but rather than a simple win/loss, the bet pays more or less depending on how far from the spread the final result is.
Example: In a football match the bookmaker believes that 12 or 13 corners will occur, thus the spread will be set at 12-13.
• A gambler believes that there will be more than 13 corners, and “buys” at £25 a point at 13.
• If the number of corners is 16, the gambler wins (16 – 13) = 3 x £25.
• If the number of corners is 10, the gambler loses (13 – 10) = 3 x £25.
• A “sell” transaction is similar except that it is made against the bottom value of the spread.
• Often “live pricing” will change the spread during the course of an event, allowing a profit to be increased or a loss minimized.
In North American sports betting many of these wagers would be classified as over-under (or, more commonly today, total) bets rather than spread bets. However, these are for one side or another of a total only, and do not increase the amount won or lost as the actual moves away from the bookmaker’s prediction. Instead, over-under or total bets are handled much like point-spread bets on a team, with the usual 10/11 (4.55%) commission applied. Many Nevada sports books will allow these bets to be used in parlays, just like team point spread bets, making it possible to bet, for instance, “the Packers and the over”, and be paid if both the Packers “cover” the point spread and the total score is higher than the book’s prediction. (Such parlays usually pay off at odds of 13:5 with no “vig”, just as a standard two-team parlay would.)
Risks of Spread Betting
Whilst spread betting is a great form of betting and gambling, it has to be pointed out that there are inherent dangers with it.
A recent study has shown that over time, 1 in 5 people will make a profit out of spread betting which is no different to normal gambling.
The fact that there is no stop limit on wins or losses with spread betting also means that a punters exposure can be far greater. A lot of new spread bettors can get in over the head without realising it. we would always recommend that you paper trade while you practise spread betting before risking your own money – and always only gamble what you can afford to lose.