There is a plethora of information to be found online about Spread Betting. Enter the phrase in a search engine and you will be overwhelmed by the number of results and drowning in confusion when seeking an explanation as to what ‘Spread Betting’ actually is.
Wikipedia’s 3,000 word thesis on the subject requires a degree level education to fathom. Personally, whilst not in possession of any such qualifications, I did find it intriguing that Spread Betting was invented by an American.
Having spent a number of years in the ‘home of the free’ I still remain flabbergasted by the lack of understanding seasoned American gamblers have in regards to basic betting mathematics. Surely this, Spread Betting, should have been embraced by American’s such is their love of ‘line betting’ but it has simply proven to be too complex for them.
Similarly, away from financial traders, this genre as a sports betting medium, has never really taken off in the UK. There was a time when it was threatening to knock the doors down and both Ladbrokes and William Hill went into the field in a major way.
It may have simply been a lack of interest or, as it seemed at the time, the earth-shattering arrival of the Betfair Exchange, but whatever the reasoning both companies did a U-turn and quickly withdrew from the Spread Betting business.
Spread Betting remains however and, whilst it is primarily an instrument for the financial markets, sports is very much part of the menu on offer from some of the bigger firms such as Spreadex and Sporting Index.
So what is a spread bet?
Essentially ‘a spread’ is not a bet on the winner of an event but a bet on the general performance of a selection. The glory is, you can back your selection to perform both well (to ‘buy’) or badly by ‘selling’ them.
Always remember:
-
Sell means to oppose a selection or to back him/her to do badly.
-
Buy means to support a selection or to back him/her to do well.
Points Spread
There are two types of Spread Bet, the more traditional ‘Points Spread’ and ‘Indices’. You will find countless Points Spread markets on all sorts of outcomes of all kinds of sports but bet works the same in all instances.
The Spread Betting company devise their ‘spread’ on an outcome of an event and you, the punter can then decide to go higher (buy) or go lower (sell) on that quote.
In the instance of a cricket match ‘traders’ may have estimated Hampshire’s total run score will be 260 and therein they will offer a ‘spread’ of 255-265. You, as a punter, can ‘buy’ the points spread meaning you will win if there are more than 265 runs. Or you can ‘sell’ meaning you win if there are less than 255 runs.
The amount you will win depends on the actual number of runs. If the total Hampshire run score is ultimately 300 and you are a ‘buyer’ you will have won 35 times your unit stake (300-265 = 35).
Conversely if you sold at 255 your loss would be 45 times your unit stake (300-255 = 45).
Things really are that straightforward albeit some of the markets offered are far more complex. There are scores of them a cross-section of which are listed below:
Racecard Numbers:
A prediction on the total of the racecard numbers, of all the winners on a particular day’s horserace meeting. For example, a day with six race winners that have the following racecard numbers 10, 12, 3, 5, 22, 1. The aggregate result for this day would be 53.
Aggregate Starting Prices:
A prediction on the total starting prices of all horse racing winners on a particular day.
For example: A 5/1 winner is worth 5pts, a 10/1 winner is worth is 10pts, a 5/2 winner is worth 2.5 pts. So, if there are five even-money winners and a 5/1 winner during race meeting, the ‘make-up’ is 10.
Corner Kicks:
Quite simply the sum total of corner kicks in a football match.
Goal Minutes:
A prediction on the total number of goal scoring minutes by a nominated player, team or game. For example, in a ‘player goal minutes market’, if a nominated player scores in the 45th and 70th minutes, his player goal minutes result will be 115.
Total Games/Legs:
A prediction on the total number of games played in a Tennis match. Or total number of Legs played in a Darts match.
180’s Up:
The total number of 180’s in a designated Darts match
Barking Mad:
A prediction on the aggregate of the first and second placed trap numbers combined at a designated dog race meeting multiplied together. The minimum result per-race is 2 (trap 1 x trap 2), maximum result is 30 per race (trap 5 x trap 6).
As you can see there is no end to the number of markets which have been devised and all of these have a ‘spread’ which can be bought and sold.
The ‘spread’ is a spread firm’s profit margin, akin to an over-round in conventional betting, and the closer to the correct outcome their traders can be, in theory, it means the more profitable a market is for them. Indeed, if the result falls within the ‘spread’ all bets, buy and sell are losers.
Indices
Indices or an Index market works along similar lines albeit points are awarded to the placed contestants. For example in the Formula 1 World Championships, the ultimate winner will be ‘awarded’ 50 points, the runner-up 30 points, the third 20 points and fourth 10 points.
The scenario is the same for horseracing where the winner normally receives 50 points, runner-up 25 and third 10. In competitions, such as World Cup football, the winner will earn 100 points, runner-up 75, beaten semi-finalists 50, quarter-finalists 25 etc. Thereafter each driver/horse or team is given a spread with the favourite, naturally being the highest spread of all.
Here is a sample, taken from an eight-runner horse race at the time of writing, which compares a betting market to ‘spreads’:
Horse / Price / Spread
- Moohaned 11/4 / 18-21
- Fork First 100/30 / 10-13
- Jazri 5/1 / 12-15
- Lindsay’s Dream 6/1 / 11-14
- Stanblow 7/1 / 9-12
- Honey Badger 8/1 / 8-11
- Penny’s Boy 16/1 / 5-7
- Petshop Boy 33/1 / 3-5
A reminder the winning horse earns 50 points, runner-up 25 and third 10.
Immediately it is noteworthy that fixed odds do not directly convert into the ‘spread’. ‘Fork First’ a 100/30 shot is quoted at 10-13 whilst ‘Lindsay’s Dream’ a 6/1 shot is quoted almost as low.
This is one of the glories of Spread Betting as you are taking on the opinions of one company who have to factor in their liabilities. Conventional betting and especially exchange betting is the consensus of thousands of people in a marketplace environment.
Here is a hypothetical result of that race with the returns both buyers and sellers will receive:
1st Jazri Buyers win 35 x their stake (50-15). Sellers lose 38 times their stake (12-50)
2nd Stanblow Buyers win 13 x their stake (25-12). Sellers lose 16 times their stake (9-25)
3rd Moohaned Buyers lose 11 times their stake (21-10). Sellers win 8 times their stake (18-10)
4th Fork First Buyers lose 13 times their stake (0-13). Sellers win 10 times their stake (10-0)
5th Lindsey’s Dream Buyers lose 14 times their stake (0-14). Sellers win 11 times their stake (11-0)
6th Farmshop Boy Buyers lose 5 times their stake (0-5). Sellers win 3 times their stake (3-0)
7th Petshop Boy Buyers lose 7 times their stake (0-7). Sellers win 5 times their stake (5-0)
8th Honey Badger Buyers lose 11 times their stake (0-11). Sellers win 8 times their stake (8-0)
Spread Betting benefits include:
- Ability to trade pre-event and in-running.
- Ability to close down all or part of a ‘position’ at any time therein guaranteeing a profit or minimising a loss.
- Pit your wits against one company’s beliefs, their ‘spread’, as opposed to a consensus of many which is how traditional betting markets work.
- When compared to fixed-odds there is often value to be had as the spread firm has to move their lines to account for liabilities.
- Spread betting is a great medium to use when managing a portfolio. You can ‘sell’ a selection which you have previously backed and because it is currently trading at shorter prices, you can ensure a profit.
- Good liquidity: Unlike traditional bookmakers in more obscure field it is not difficult to place sizeable trades/bets.
- Ever thought a horse priced around 5/1 will run a big race? You may not expect it to overcome the short priced favourite but you think it is near certain to finish in the frame. In the industry it is called an “each-way bet to nothing”. It may be a bet to nothing (as you will get your stakes back if it does not win but is placed) however, via spread betting, a selection like this will be a money-maker.
- A fantastic medium for slow maturing markets such as the Premier League.
- Spread betting does offer an exciting betting experience.
Spread Betting pitfalls include:
- You, as a punter, will have to overcome what amounts to sizeable margins.
- Spread betting is volatile and you could face enormous losses – in the case of a cricket team collapsing for example or an odds-on favourite finishing unplaced.
- You will need a big bankroll. Betting just £10 a point and buying a highly quoted contestant in a horserace may require a balance of £400 as you could, conceivably, lose 40 points.
Our Spread Betting advice:
- Always keep a close eye on any event you have placed a spread bet and be prepared to act quickly.
- Never over-stretch yourself, always leave funds on deposit to allow you to trade other markets which are interwoven with the market you have played.
- Consider more people back (buy) than lay (sell), it means spreads are often artificially high. Therein never be afraid to go against the crowd and being a ‘seller’ – it is where the value is.
- Only play in markets where you have specialist knowledge. If you know about lesser-known markets you have a great chance of winning as it is a case of you versus a single company trader, a gunfight where it is your line against his.