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, which is known as money-line betting. Outcome-based education (OBE is a recurring Education reform model Fixed-odds betting is a form of Wagering against Odds offered by a 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. The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom, the UK or Britain,is a Sovereign state located ^[1] As with all gambling, however, spread betting carries a high level of risk. ^[2] In the UK, spread betting is regulated by the Financial Services Authority rather than the Gambling Commission. The Financial Services Authority ( "FSA") is an independent non-governmental body Quasi-judicial body and a company limited by guarantee that regulates ^[3]

Contents 1 Purpose 2 Spreads in sports wagering 3 Greatest spread reversals 4 Financial spread betting 5 Financial spread bet example 6 See also 7 Notes 8 References 9 Further reading

Purpose

The general purpose of spread betting is to create an active market for both sides of a wager, even if the outcome of an event may appear a priori to be biased towards one side or the other. Sao Paulo Stock Exchangejpg|thumb| Virtual market arena where buyer and seller are not present and trade via intemediates and electronical information Bias is a term used to describe a Tendency or Preference towards a particular perspective, Ideology or result especially when the tendency interferes In a sporting event, for example, a strong team may be pitted against a historically weaker team. Persons betting on the event normally would be likely to favor the better team, to such an extent that there would be very few, if any, betting on the team perceived to be worse. In Psychology and the Cognitive sciences perception is the process of attaining awareness or understanding of sensory Information.

The use of a "point spread" evens out the market towards 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. A bookmaker, bookie or turf accountant, is an organization or a person that takes bets and pays winnings depending upon results and depending on the nature The bookmaker charges a commission and acts as the counterparty for each participant. A counterparty (sometimes contraparty) is a legal and financial term As long as the number of participants on each side is roughly equal, the bookmaker is unconcerned with the actual outcome; profits instead come from the commissions.

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. Charles K McNeil (died 1981 is credited with inventing the point spread in sports gambling Connecticut ( is a state located in the New England region of the northeastern United States of America. Chicago (ʃɪˈkɑːgoʊ is the largest City by population in the state of Illinois and the American Midwest of the United States. The 1940s decade ran from 1940 to 1949 Events and trends The 1940s was a period between the radical 1930s and the conservative 1950s which also leads the period to be ^[4] The idea became popular in the United Kingdom in the 1980s. The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom, the UK or Britain,is a Sovereign state located 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. A bookmaker, bookie or turf accountant, is an organization or a person that takes bets and pays winnings depending upon results and depending on the nature An example:

• The bookmaker advertises a spread of 4 points in a certain game;

• If the gambler bets on the "underdog", he is said to take the points and will win if the underdog's score plus the spread is greater than the favourite's score. In historical writings when used in reference to a person favourite ( British English and the English of Commonwealth Countries or favorite ( American

• The eventual score is Underdog 8, Favourite 10: 8 + 4 > 10, so the gambler wins;
• The eventual score is Underdog 8, Favourite 13: 8 + 4 < 13, so the gambler loses.

• If the gambler bets on the "favourite", he gives the points and will win if the favourite's score minus the spread is greater than the underdog's score:

• The eventual score is Underdog 4, Favourite 10: 10 - 4 > 4, so the gambler wins;
• The eventual score is Underdog 8, Favourite 10: 10 - 4 < 8, so the gambler loses.

Spreads may be specified in half-point fractions to avoid ties, or pushes. TiE (formerly The Indus Entrepreneurs) is a global nonprofit dedicated to fostering entrepreneurship In the event of a tie after factoring in the point spread, the game is considered no action, and no money is won or lost. ^[5]

• The winner of a North American spread bet wins his stake, while a losing gambler loses the stake plus the bookmaker's commission (commonly known as the vigorish or vig, usually 10% of the stake); a push is treated as if no bet had been made. Vigorish, or simply the vig, also known as juice or the take, is the amount charged by a Bookmaker, or
• In the United Kingdom both sides play at odds of 9/10 and "dead heat" rules apply, resulting in a net loss of £5 on a £100 wager, due to the 9/10 odds of the proposition. The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom, the UK or Britain,is a Sovereign state located

If a key player on a side is injured and may not play, the bookmaker may refuse to accept bets by not quoting a spread on the event, or may "circle" the game; in this case, lower maximum amounts for each bet are enforced (typically $5,000 instead of the $25,000 limit observed at most Las Vegas sports books) and certain specialty wagers, such as "teasers", are prohibited. Las Vegas ( Spanish: "The Meadows" is the most populous City in the state of Nevada, the seat of Clark County, and an internationally

• A teaser is a bet that alters the spread in the gambler's favor by a predetermined margin, 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. Even money describes a wagering Proposition with even Odds - if the bettor loses a Bet, he or she stands to lose the same amount of money that the winner 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.

Example: In a soccer match the bookmaker believes that 12 or 13 corners will occur, thus the spread will be set at 12-13. Association football, more commonly known as football or soccer, is a Team sport played between two teams of eleven players and is widely considered A corner kick is a method of restarting play in a game of Association football.

• A gambler believes that there will be more than 13 corners, and 'buys' at £25 a point at 13.

• If the number of corners is 16, the gambler wins (16 - 13) = 3 x £25.
• If the number of corners is 10, the gambler loses (13 - 10) = 3 x £25.

• 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. An over-under or over/under bet is a wager in which a Sportsbook will predict a number for a statistic in a given game (usually the combined score of the two teams 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. A parlay or accumulator is a single bet that links together two or more individual Wagers and is dependent on all of those wagers winning together The Green Bay Packers are a professional American football team based in Green Bay Wisconsin. (Such parlays usually pay off at odds of 13:5 with no "vig," just as a standard two-team parlay would. )

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. "MMIV" redirects here For the Modest Mouse album see " Baron von Bullshit Rides Again " Cantor Fitzgerald LP is a global Financial services firm specializing in bond trading, as well as Investment banking, Asset management This removal of the faceless bookmaker allows clients to bet at the spread size and monetary 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.

The mathematical analysis of spreads and spread betting is a large and growing subject. Analysis (from Greek ἀνάλυσις, "a breaking up" is the process of breaking a complex topic or substance into smaller parts to gain a For example, sports that have simple 1-point scoring systems (e. g. , baseball, hockey, and soccer) may be analysed using Poisson and Skellam statistics. Baseball is a Bat-and-ball Sport played between two teams of nine players each Ice hockey, often referred to simply as hockey, is a team Sport played on Ice. Association football, more commonly known as football or soccer, is a Team sport played between two teams of eleven players and is widely considered In Probability theory and Statistics, the Poisson distribution is a Discrete probability distribution that expresses the probability of a number of events The Skellam distribution is the discrete Probability distribution of the difference K_1-K_2 of two correlated or uncorrelated Random

Greatest spread reversals

• 1985 - College Football - Oregon State beats Washington, 21-20. Year 1985 ( MCMLXXXV) was a Common year starting on Tuesday (link displays 1985 Gregorian calendar) College football is American football played by teams of student athletes fielded by American universities, Colleges and military academies The Oregon State Beavers football team represents Oregon State University (based in Corvallis Oregon) in NCAA Division I-A College football College football has a long and storied history at the University of Washington. The Huskies were 37-point favorites.

• 1998 - College Football - Temple, a 35. Year 1998 ( MCMXCVIII) was a Common year starting on Thursday (link will display full 1998 Gregorian calendar) College football is American football played by teams of student athletes fielded by American universities, Colleges and military academies The Temple Owls football team participates in the NCAA 's Division I Football Bowl Subdivision as a member of the Mid-American Conference 5 point underdog, beats #14 ranked Virginia Tech 28-24 on the road. The Virginia Tech Hokies football team is a College football program that competes in NCAA Division I-FBS, specifically in the Coastal At the time, the Hokies were 5-0 while the Owls were 0-6.

• 2007 - College Football - The Syracuse Orange, 36. Year 2007 ( MMVII) was a Common year starting on Monday of the Gregorian calendar in the 21st century. College football is American football played by teams of student athletes fielded by American universities, Colleges and military academies 5 point underdogs, beat #18 ranked Louisville 38-35 at Louisville.

• 2007 - College Football - The Stanford Cardinal, 41 point underdogs, beat the #2 ranked USC Trojans 24-23 at LA Coliseum. Year 2007 ( MMVII) was a Common year starting on Monday of the Gregorian calendar in the 21st century. College football is American football played by teams of student athletes fielded by American universities, Colleges and military academies The Stanford Cardinal is the nickname of the athletic teams at Stanford University. The phrase "USC Trojans" also refers to the University of Southern California student body in general The Los Angeles Memorial Coliseum is a large outdoor sports Stadium in the University Park neighborhood of Los Angeles California at Exposition

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. The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom, the UK or Britain,is a Sovereign state located The field of finance refers to the concepts of Time, Money and Risk and how they are interrelated For example, in the figures for the second half of 2006, the income derived from financial spread betting at IG Group, was £29. Year 2006 ( MMVI) was a Common year starting on Sunday of the Gregorian calendar. 3m, compared to £3. 8m in sports. . Other Major companies in the sector are CMC Markets, City Index and MF Global Spreads. 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
• spread betting is more flexible since it is not limited to exchange hours or definitions, can create new instruments relatively easily (e. The bid/offer spread (also known as bid/ask spread) for assets (such as Stock, Futures contracts options, or Currency pairs is The word regime (occasionally spelled " régime " particularly in older texts refers to a set of conditions most often of a Political nature 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. This article is for the legal term For regulation of genes see Regulation of gene expression. 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" will automatically close the bet if the spread moves against the gambler by a specified amount. A bookmaker, bookie or turf accountant, is an organization or a person that takes bets and pays winnings depending upon results and depending on the nature
• A "stop win" will close the bet when the spread moves in a gambler's favour by a specified amount.

Spread betting has moved outside the ambit of sport and financial markets (that is, those dealing solely with shares and futures), to cover a wide range of markets, such as house prices. ^[6]

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. ^[7]

Financial spread bet example

Suppose Lloyds TSB is trading on the market at 410p bid, and 411p offer. Lloyds TSB Group plc () is a leading British Financial institution with its Group Head office in London and its registered office A spread-betting company is also offering 410-411p. We use cash bets with no definite expiry. Shelf life is that length of time that Food, drink Medicine and other perishable items are given before they are considered unsuitable for sale or

For example, if I think the share price is going to go up, I might bet £10 a point (i. e. , £10 per penny the shares moves) at 411p. We use the offer price since I am "buying" the share (betting on its increase). Note that my total loss (if LloydsTSB went to 0p) could be up to £4110, so this is as risky as buying 1000 of the shares normally.

If a bet goes overnight, the bettor is charged a financing cost (or receives it, if the bettor is shorting the stock). This might be set at LIBOR + a certain percentage, usually around 2/3%. The London Interbank Offered Rate (or LIBOR, ˈlaɪbɔr is a daily Reference rate based on the Interest rates at which Banks offer to lend In Mathematics, a percentage is a way of expressing a number as a Fraction of 100 ( per cent meaning "per hundred"

Thus, in the example, if Lloyds TSB are trading at 411p, then for every day I keep the bet open I am charged [taking finance cost to be 7%] ((411p x 10) * 7% / 365 ) = £0. 78821 (or 78. 8p)

On top of this, the bettor needs an amount (AKA margin) in the spread-betting account to cover the bet. In Accountancy, an account is a label used for recording and reporting a Quantity of almost anything Usually this is either 5 or 10% of the total exposure you are taking on but can go up to 100% on illiquid stocks. In this case £4150 * 0. 1 or 0. 05 = £411. 00 or £ 205. 50

If at the end of the bet Lloyds TSB traded at 400-401p, I need to cover that £4110 - £400*10 (£4000) = £110 difference by putting extra deposit (or margin) into the account.

The bettor will usually receive all dividends and other corporate adjustments in the financing charge each night. Dividends are payments made by a Corporation to its Shareholder members A corporation is a separate legal entity usually used to conduct business For example, suppose Lloyds TSB goes ex-dividend with dividend of 23. 5p. The bettor will receive that amount.

See also

• Asian handicap
• Bet exchange
• Bookmaker
• Contract for difference
• FootyTAB
• Parimutuel betting
• Point shaving
• Sports betting
• Spread trade

Notes

1. ^ The Sunday Times: World Cup to kick off boom in spread betting
2. ^ The Times: The perils of spread-betting
3. ^ Gambling Commission
4. ^ Gambling Times: What are the Odds?
5. ^ Sports Bet Types http://www.sportsbookpatrol.com/sportsbook-school-101/sports-bet-types.php
6. ^ The Sunday Times: Spread betting
7. ^ MoneyWeek: How to profit from market turmoil

References

• Incademy
• Spread Betting Knowledge
• Investopedia
• What is spread betting? (financial)

Further reading

• Malcolm Pryor (2007). An Asian Handicap (named so simply because of its Eastern origins is a Gambling term used to describe Spread betting in Soccer that has gained popularity The term betting exchange is used to describe a form of bookmaking in which the operator offsets its risk perfectly through technology such that the effect to the customer is that customers A bookmaker, bookie or turf accountant, is an organization or a person that takes bets and pays winnings depending upon results and depending on the nature A contract for difference (or CFD) is a contract between two parties typically described as "buyer" and "seller" stipulating that the seller will pay to In Australian Rugby league, FootyTAB is the name of the legal Betting agency operating in both the NRL and the Brisbane Rugby League Parimutuel betting (from the French language: pari mutuel, mutual betting is a betting system in which all bets of a particular type are placed together in a pool Point shaving, in organized Sports is a type of Match fixing where the perpetrators try to prevent a team from covering a published point spread. Sports betting is the general activity of predicting Sports results by making a wager on the outcome of a sporting event In finance a spread trade refers to the act of buying one security or Futures contract and selling another related one in an attempt to profit from the change in MoneyWeek is an investment Magazine (weekly and website It covers financial and economic news and provides commentary and analysis across UK and global markets The Financial Spread Betting Handbook. Harriman House. ISBN 189-7597-93-2.  

• John Piper (2007). Binary Betting. Harriman House. ISBN 190-5641-23-0.  

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