Betting Sports Spread
Betting Sports Spread
Spread betting is any of various types of wagering on the outcome of an event, where the pay-off is based on the accuracy of the wager, rather than a simple "win or lose" outcome, such as fixed-odds (or money-line) betting or parimutuel betting. A spread is a range of outcomes, and the bet is whether the outcome will be above or below the spread. Spread betting has been a major growth market in the UK in recent years, with the number of gamblers heading towards one million. Spread betting carries a high level of risk, with potential losses or gains far in excess of the original money wagered. In the UK, spread betting is regulated by the Financial Services Authority rather than the Gambling Commission.
Purpose
The general purpose of spread betting is to create an active market for both sides of a binary wager, even if the outcome of an event may appear a priori to be biased towards one side or the other. In a sporting event (e.g. a basketball game) a strong team may be matched up against a historically weaker team; almost every game will have a favorite and an underdog . If the wager is simply "Will the favorite win?", more bets are likely to be made for the favorite, possibly to such an extent that there would be very few bettors willing to take the underdog.
The point spread is essentially a handicap towards the underdog. The wager becomes "Will the favorite win by more than the point spread?" The point spread can be moved to any level to create an equal number of participants on each side of the wager. This allows a bookmaker to make a market by accepting wagers on both sides of the spread. The bookmaker charges a commission, or vigorish , and acts as the counterparty for each participant. As long as the total amount wagered on each side is roughly equal, the bookmaker is unconcerned with the actual outcome; profits instead come from the commissions.
Because the spread is intended to create an equal number of wagers on either side, the implied probability is 50% for both sides of the wager. In order to profit, the bookmaker must pay one side (or both sides) less than this notional amount. In practice, spreads may be perceived as slightly favoring one side, and bookmakers will often revise their odds in order to manage their event risk.
Spreads in sports wagering
Spread betting was invented by Charles K. McNeil, a mathematics teacher from Connecticut who became a bookmaker in Chicago in the 1940s. The idea became popular in the United Kingdom in the 1980s. In North America, the gambler usually wagers that the difference between the scores of two teams will be less than or greater than the value specified by the bookmaker. An example:
- The bookmaker advertises a spread of 4 points in a certain game;
- 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:
Spreads are frequently, though not always, specified in half-point fractions to eliminate the possibility of a tie, known as a push . In the event of a push, the game is considered no action , and no money is won or lost. However, this is not a desirable outcome for the sports book, as they are forced to refund every bet, and although both the book and its bettors will be even, if the cost of overhead is taken into account, the book has actually lost money by taking bets on the event. Sports books are generally permitted to state "ties win" or "ties lose" to avoid the necessity of refunding every bet.
A teaser is a bet that alters the spread in the gambler's favor by a predetermined margin – in American football the teaser margin is often six points. For example, if the line is 3.5 points and the bettor wants to place a teaser bet on the underdog, he takes 9.5 points instead; a teaser bet on the favorite would mean that the gambler takes 2.5 points instead of having to give the 3.5. In return for the additional points, the payout if the gambler wins is less than even money. At some establishments, the "reverse teaser" also exists, which alters the spread against the gambler, who gets paid at more than evens if the bet wins.
Bets on the total (over/under)
In addition to the spread bet, a very common "side bet" on an event will be the total (commonly called the over/under or O/U ) bet. This is a bet on the total number of points scored by both teams. Suppose the Cowboys are playing the Giants and the total is set at 44.5 points. If the final score is Cowboys 24, Giants 17, the total is 41 and bettors who took the under will win. If the final score is Cowboys 31, Giants 24, the total is 55 and bettors who took the over will win. The total is popular because it allows gamblers to bet on their overall perception of the game (e.g., a high-scoring offensive show or a defensive battle) without needing to pick the actual winner.
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.
- 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.)
Prominent sports spread betting bookmakers and exchanges
In 2004 Cantor Fitzgerald launched the spread betting exchange Cantor Spreadfair, which matches up spread bettors opposing views and allows them to bet with each other. This removal of the faceless bookmaker allows clients to bet at the spread size and momentary level that they request, and in turn this creates a tighter spread margin, which in turn allows users to lose less and win more than with the non-exchange spread-betting firms. In December 2008, Cantor closed Spreadfair and would focus only on Financial spread betting and CFD business.
Mathematics of spread betting
The mathematical analysis of spreads and spread betting is a large and growing subject. For example, sports that have simple 1-point scoring systems ( e.g., baseball, hockey, and soccer) may be analysed using Poisson and Skellam statistics.
Financial spread betting
By far the largest part of the official market in the UK concerns financial instruments; the leading spread-betting companies make most of their revenues from financial markets, their sports operations much less significant. Financial spread betting in the United Kingdom closely resembles the futures and options markets, the major differences being
- the "charge" occurs through a wider bid-offer spread;
- spread betting has a different tax regime compared with securities and futures exchanges (see below);
- spread betting is more flexible since it is not limited to exchange hours or definitions, can create new instruments relatively easily (e.g. individual stock futures), and may have guaranteed stop losses (see below); and
- the trading is off-exchange, with the contract existing directly between the market-making company and the client, rather than exchange-cleared, and is thus subject to a lower level of regulation although the spread betting companies themselves are some of the most regulated entities in the City of London.
Unlike fixed-odds betting, the amount won or lost can be unlimited as there is no single stake to limit any loss. However, it is usually possible to negotiate limits with the bookmaker:
- A "stop loss" or "stop" will automatically close the bet if the spread moves against the gambler by a specified amount.
- A "stop win", "limit" or "take profit" will close the bet when the spread moves in a gambler's favor by a specified amount.
Spread betting has moved outside the ambit of sport and financial markets (that is, those dealing solely with share, bonds and derivatives), to cover a wide range of markets, such as house prices.
In a falling stockmarket, financial spread betting can also be used by investors as a means of hedging against predicted losses in a portfolio of shares.
Tax treatment
Profits from financial spread betting are currently free from Capital Gains Tax whatever the trader’s personal circumstances, and also Income Tax for those who c
Sports Spread Betting | Online Sports Betting ...
Extrabet.com Sports spread betting, sports and financial fixed-odds and binaries, plus a casino, all on one platform. We value your bet in-running, so you can close out whenever ...
Spreadex - the Spread Betting Experts since 1999
Leading UK financial and sports spread betting provider, established in 1999. Experienced, friendly dealers, wide range of markets and great offers. The name to trust in spread ...
Sports Spread Betting Online | Sporting Index
Online sports spread betting UK with spread betting company Sporting Index. Experience the ultimate online sports spread betting thrill and spread bet on Football, Horse Racing ...
Spread Betting Guide | Spread Betting | Sports Spread ...
Find Out how to be successful at spread betting, with the spread betting guide. the spread betting guide covers financial and sports betting
Sports Spread Betting Online | £100 Free Cash to ...
Online sports spread betting UK with spread betting company Sporting Index. Experience the ultimate online sports spread betting thrill and spread bet on Football, Horse Racing ...
Sports betting - Wikipedia, the free encyclopedia
However, there are professional sports bettors that make a good income betting sports, many ... The bettor can adjust the point spreads for the two games, but realizes a lower return ...
Spreadex - the Sports Spread Betting Experts since 1999
Leading UK financial and sports spread betting provider, established in 1999. Experienced, friendly dealers, huge range of sports markets and great offers.
Sports Spread – Ireland’s Sports Spread Betting ...
SportsSpread.com. Sports Spread is a spread betting company based in Ireland offering spread betting opportunities on a range of sporting events.
Sports Spread Betting Guide
Sports Spread Betting Guide: The essential Sports Spread betting website with reviews of all spread betting firms, tips, tutorials, hints, strategies and forthcoming spread betting ...
Sports Spread – Ireland’s Sports Spread Betting Specialists
SportsSpread.com. Sports Spread is a spread betting company based in Ireland offering spread betting opportunities on a range of sporting events.
