Spread Betting in the UK

Spread betting is a form of betting which rewards or punishes the individual according to how right or wrong they are about their predictions. This makes it possible for the bettor to win big, but also to lose big. Whereas the potential profit and loss of a bet is known at the outset when betting with a sportsbook, it is much more fluid when spread betting.

Spread betting firms evaluate an event and secure an opinion as their own. This is known as the “spread”. They then invite bettors to bet against them in one of two directions – by buying or selling the spread for a certain unit of money.

For example, if a firm thinks that the Pakistan cricket team will make 305 runs, they might quote 300-310. If you think that Pakistan will make less than 300 runs, you would sell the spread. If you think that they will score more than 310 runs, you would buy the spread.

If you sold the spread for £10 a point, and Pakistan made 290 runs, you would win the difference between the result at the lower spread figure, multiplied by your stake: 300 - 290=10 x £10 = £100. However, if Pakistan made 320 runs, you would lose the difference multiplied by your stake: 320 - 300 = 20 x £10 = £200. And of course, the same principle applies (using the higher spread figure as a reference point) if you had bought the spread.

An interesting aspect of spread betting is that, in many cases, the spread changes as the sporting event unfolds. This allows a bettor to close his position and take a profit or loss even before the event itself has ended.

Spread betting firms make their profits from the spread itself, and most often hedge themselves so that they don't have to worry too much about individual winners or losers. This means that they generally don't ban winners as quickly as sportsbook makers do, but it's still a possibility in extreme cases.

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