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What is Spread Betting?

Spread Betting is a form of speculative trading where bettors stake on whether a product or certain valued item will go up or down without actually buying or selling the product. The best way to have spread betting explained is to examine the terms individually.

spread betting explained

Betting is basically gambling on the outcome of an event or a change in the value of an item over time. Also, in this context, ‘Spread’ refers to the difference between two given values. In spread betting, you place a wager on whether a value or prediction will go up or down. Your profit or loss from this type of wager is determined by the difference between the outcome of the bet and the point where you placed your stake. Spread betting is becoming more popular among English bettors because there is no spread betting tax in the UK.

There are different forms of spread betting available for UK bettors right now. In this article, we are interested in sports spread betting. Keep reading to find out all the fundamental basics of sports spread betting and the differences between this kind of betting and other available options.

Sports Spread Betting Explained

At sports spread betting sites, you are placing bets for or against a specific prediction by the bookie in a sports event. For instance, if the bookmarker places the spread for the goals to be scored in a Premier League game at 2.5 – 3.0. 

Gamblers who predict that there would be fewer goals will bet short or sell at 2.5, and those who predict it would be higher would bet long or buy at 3.0. The amount every player wins or loses depends on the difference between the initial bet point and the result of the game.

Sports spread betting is not limited to football; it is available in almost all professional sporting events. Bettors can place bets on specific bets like the number on the shirt of the player who scores. 

Bets can also be placed on long-term events like the number of points a team would have at the end of the season. Some betting sites allow gamblers to build their own bets according to their preferences with a Bet Builder feature.

Sporting Index spread betting

Sports Spread Betting v Financial Spread Betting

These two forms of betting still follow the fundamental idea of spread betting. You are placing a bet on whether a prediction will go up (Long or Buy) or down (Short or Sell). However, they are also very different in terms of what is being bet on.

Financial Spread betting involves traders placing bets on whether the value of an asset will go up or down. The assets here could be shares, commodities, stocks or any other valued financial item. On the other hand, sports betting involves gambling on the difference between a prediction by the bookie and the eventual outcome of a professional sporting event. 

Sports Spread Betting v Fixed Odds Betting

Sports Spread betting and Fixed Odds betting are similar because they both involve placing wagers on sports events, but that’s where their similarities end. When gambling with fixed odds, your bet is either won or lost at a point in the game, and your profit or loss cannot be more than a certain amount. Rather, in sports spread betting, your bet continues even after a certain milestone is hit. 

For instance, a bet for one basketball team to score over 70 points in a game. In a fixed odds wager, once the team scores one more than 70 points, the punter wins and the bet exits. However, in a sports spread bet, the punter’s win percentage keeps getting higher as the team scores more points.   

Benefits of Spread Betting

  1. Bettors can win more – as the margin for a correct prediction widens, the punter’s win keeps increasing. Also, gamblers get to use leverage to place their bets. This means that with a small deposit, a gambler can get very big rewards if the bet swings in their favour. Unfortunately, it also means multiplied losses if the bet goes the other way.
  2. Tax-Free – presently, there is no spread betting tax in the UK. By law, it is classified as gambling, unlike other investment methods that require users to pay stamp-duty charges or profit tax. 
  3. Negative Bets – this form of betting gives gamblers an opportunity to bet on an item performing negatively. This option is not available in some other trading methods. Here, bettors can bet on a player not performing up to a certain point, and they get rewarded for how bad the player performs. The same applies when betting on financial predictions.

Risks involved in Spread betting

Spread Betting gives gamblers a lot of control over the amount of risk and reward they are exposed to. Here are some risks bettors would face while targeting higher rewards.

  1. Multiplied Losses – when gamblers place bets here, their losses can continue to accrue as the results get worse. Just as profit can be multiplied, losses can also be multiplied depending on the outcome. If players don’t cut their losses in time, they could lose more than their deposit. Whereas a gambler who places a fixed odds wager would lose only his deposit immediately after the bet fails. 
  2. Volatility – some betting options are more volatile than others. In sports spread betting, the more volatile options are more rewarding because of the high risk attached. Volatility here means the outcome could suddenly change by large amounts. Bettors who don’t have the capital to withstand a sudden shift would immediately lose their deposit and whatever capital they had placed as support.

Final Thoughts on Spread Betting

Spread Betting is an exciting way to place bets. For punters interested in financial stakes, the tax-free feature is a huge advantage of spread gambling. On the sports side, this type of betting gives a more accurate reward for your predictions. However, just as it can be highly rewarding, it can also be risky for players.

We have answered the question on ‘what is spread betting.’ Our advice for anyone interested in getting involved is to calculate and prepare for possible losses while calculating potential gains before playing.

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