Spread betting is a way of gambling where the closer a punter is to backing the precise result of a predicted event, the greater the amount of winnings. Conversely, the further away the punter is from getting the prediction right, the more they stand to lose.
Associated with spread betting is “points spread betting” which is popular in the US. This is basically a handicap system in order to balance the teams in a sporting contest. The less-fancied team is given a fictitious points “bonus”. Bookmakers pay out on the final score after this bonus has been accounted for. This version of spread betting was invented by the mathematician Charles K McNeil who became a Chicago bookmaker in the 1940s.
Which Betting Company Offers Spread Betting?
Spread betting is based upon city trading, in which you invest money in shares and either buy when the price is low, or sell when the price is high. Like city trading, you can make big profits, or suffer terrible losses.
Say you were offered a spread of 29-31 on the number of goals that would be scored in the Premiership on a certain weekend. You can either ‘buy’ at 31 or ‘sell’ at 29. If you buy you are betting that more than 31 goals will be scored. If you sell you are betting that less than 29 goals will be scored.
Say you buy and your stake is £2. You will receive £2 for each goal above 31 that is scored. So, if 34 goals are scored, you win (34-31) x 2 = £6. However, if only 24 goals are scored, you lose (31-24) x 2 = £14.
Most UK bookmakers, such as PaddyPower, now give options for points spread betting. For example, in the NBA the Miami Heat are given a -10 spread over the Orlando Magic. If you back Miami, they not only have to win, they have to win by ten points, as that is the spread. So if the final score is Heat 104-99 Magic, you still lose.
Is Spread Betting Right For Me?
Spread betting can be a great way of making a lot of money very quickly, but it is also a great way for the uninitiated to lose a lot of money very quickly. Before you even indulge in spread betting, you need to take a few things into consideration.
Firstly, only ever bet what you can afford to lose, and make sure you calculate the likelihood of a worse case scenario. If you buy at England scoring 265 in an innings in a game of cricket at £1 a run, and they are skittled out for 80, then you’ve lost £185! Bets where you have the potential to suffer sizeable losses should be avoided when you’re getting started with spread betting. Also only ever bet on events that you have a good amount of knowledge about.
If you are about to suffer a heavy loss, don’t just sit there in tears. You will be able to close your bet in order to cut your losses. In the above example, say England were 70-7, and the spread now offered by the bookmakers is 120-150. You close your bet by accepting the price to ‘sell’ of 120. This means you would lose (265-130) = £135, rather than £185. Of course, if England recover, you would still lose out, but not as much.
Spread betting is definitely not for the faint-hearted or for casual gamblers. You really need to be on the ball and armed with knowledge about what you are doing. You also need to follow the action carefully and take steps if things start to go off the boil. Spread betting can be fun and exciting, but only if you pay close attention, and do not take your wagering lightly.