Spread Betting Explained
By easyodds
Last updated: 10:11 Friday, April 4, 2008
SPREAD BETTING EXPLAINED
What is spread betting?
Spread betting is a form of betting where your winnings and losses are calculated depending on how right or wrong your bet is. The more right you are, the more you win. The more wrong you are, the more you lose.
Can you explain what you mean?
Let’s take an example. Say you want to have a bet in the Premier League points market. Every team in the top division has a spread – which is basically a prediction of the number of points they will get in a season. Manchester United’s spread would be something like 90.5-92.5, Arsenal’s around 88.5-90.5, Chelsea’s 86.5-88.5, and so on, all the way down to Derby’s spread, which would be something like 28.5-30.5.
So what happens next?
You have to decide if you want to ‘buy’ or ‘sell’. Buying means going higher than the top figure in the spread – which means you predict the team in question will get more points than the spread suggests. For example, buying Manchester United’s spread would mean predicting they would get more than 92.5pts. Selling means you think the team in question will get fewer points than the lower figure of the spread predicted.
So I’m using my own judgement to decide what will happen?
Exactly. If you think Manchester United will get 100pts in the season, you would buy their spread. If you think Chelsea will end up with only 80pts, you would sell their spread. Remember – you buy at the higher figure, sell at the lower figure.
What about my stake?
That’s the next thing to do –pick your stake. So let’s say you buy Manchester United’s spread and decide upon a £5 stake. For every point you are right or wrong, you win or lose £5. You’ve bought at 92.5. If Manchester United end up with 100pts, then you will win your stake multiplied by 7.5 – because 7.5 is the difference between the price you bought at and United’s eventual points tally. £5 x 7.5 = £37.50. Congratulations, you’re a winner! However, if United end up with 85pts, then you would lose your stake multiplied by 7.5 – because 7.5 is the difference between the price you bought at and their eventual points tally. £5 x 7.5 = -£37.50.
OK… so the more right or wrong I am, the more I win or lose.
Spot on. So it’s important to think about best- and worst-case scenarios before you place your bet so you can roughly estimate the maximum if you will win or lose. This is where spread betting differs greatly from fixed-odds betting. The moment you place a fixed-odds bet you know exactly how much you’ll win or lose. If you put £10 on a horse to win a race at 5/1, you’ll either win £50 plus your stake back or lose £10. But when you place a spread bet you have no idea how much you’ll win or lose until the event is over.
What sort of markets are available?
You can bet on all major sports, such as football, racing, tennis, golf, cricket, American football and snooker. There are short-term markets – for example, in football you can bet on the number of goals in a game – as well as long-term markets, such as the Premier League points example above. So you’ll find pretty much as many options as you would with the fixed-odds markets.
Anything else I need to know?
Always be aware whether your market will have small or big outcomes before deciding on your stake. If you’re betting on the number of goals in a Premier League match, the spread is likely to be around 2.4-2.7. There are unlikely to be more than seven or eight goals in the game, so the number of points you will win or lose will be relatively small. As a contrast, if you’re betting on the total number of team runs in a cricket Test match, big figures will be involved. The spread may be around 250-270 but the team may be bowled out for 80 or amass 500 runs. The potential upside or downside should dictate the size of your stake so think it through carefully.
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