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Spread betting explained – How does spread betting work

sportsbetting tradingThe sports betting market was heavily influenced by its financial counterpart from its very beginning. The complete betting terminology, including most slang phrases, is directly derived from stockbrokers. Even the basic algorithm philosophy, that helps bookmakers adjust their odds, is based on the long-term research of stock market shares.

Spread betting is a different type of wagering compared to fixed odds betting or Asian Handicaps and bears a higher resemblance to the various financial markets. This betting method requires the bettor to think and act exactly like if he was in a stock exchange. His daily routine includes trading goals, cards and corner kicks as if they were shares, foreign currency or any kind of goods, where prices have continuous ups and downs.

How Spread Betting differs from Fixed Odds & Asian Handicaps

When you think of a stock exchange, you create the mental image of the hustle-and-bustle of stockbrokers with their constant orders about “sell” or “buy”, where a lot of money is at stake. That's pretty much the case with sports spread betting. Placing spread bets means that you expect to gain profit, however, not with the classic “win” or “lose” scenario. It's far more complex than that. Your profit is influenced from the initial spread line and the final score of the match. The higher the winning difference, the more money you will make. Unfortunately, the opposite scenario also applies: The bigger the losing difference, the more money you will lose.

Just like in stock markets, this bet type requires two different lines, a “buy” one and a “sell” one. The “buy” line is always bigger than the “sell” line and the difference between them is the “spread”, as described in financial language. In betting terminology, the “spread” is actually the vig, the money any online bookmaker is guaranteed to earn, similarly to fixed odds betting.

You don’t have to deal with odds or Asian Handicap lines that require time consuming evaluations,. It might look like AH betting, as you choose between two spread betting lines, but when you “buy” or “sell” a specific line you take the risk of a huge win or a huge loss. You don’t know exactly how much you’ll win before the start of an event, while you also cannot predict your losses in any way.

How does spread betting work?

Compared to bargaining with shares, currencies or oil prices in financial markets, in sports betting you deal with various outcomes in sports. From goals, corner kicks or yellow cards in football betting, to points and rebounds in basketball (e.g. NBA betting lines) and games or sets in tennis. Spread betting is constantly gaining more attention among bettors and is offered on many different sports by an ever increasing number of online bookmakers.

As mentioned above, the bookie always offers two lines in spread betting. For an exact number of goals in a typical football match the basic lines usually are 2,5 (sell price) and 2,7 (buy line). For a typical basketball match the exact points spread lines should be 160 (sell) and 163 (buy).

The first decision you have to make is to place a bet either on the “sell” or “buy” price. If we use the previous examples, it’s like an over/under decision, where you place a bet on under 2,5 goals/160 points or over 2,7 goals/163 points. Placing an under bet seems identical to backing a share price to drop, or an over bet for a price to rise respectively.

Profit/loss calculations

The profit or loss of your bet is decided by two main variables: The amount you’ve placed on your bet and the difference between the spread and the final score.

Let’s take a look at the examples mentioned above.

Suppose you’d like to place a 10€ bet on one of the many spread betting companies on a low goals scenario. This means, you'll back the “sell” price of 2,50.

If the match ends a goalless draw, you win:

10€ X(2,50-0)= 25€

If the match ends with one total goal (1-0 or 0-1), you win:

10€X (2,50-1)=15€

In case of a two goal result (1-1, 0-2 or 2-0), you win:

10€Χ(2,5-2)=5€

If the match ends with 3 or more total goals,you lose, however, for every added goal you lose more money.

10€X(2,50-3)= -5€

In case of a six goals match, you lose:

10€Χ (2,5-6)=-35€

The same applies on the opposite scenario. In this case you bet on the “buy” spread line and calculate your profit or loss with this line (2,70). If the final score is over 2,70 goals you win, if not, you lose.

In case of a six goals match, you win:

10€Χ (6-2,7)=33€

In basketball you are able to bet on spread lines regarding basketball points. This is far riskier than football as the total points are far harder to predict.

For example, if you place a 10€ bet on “sell” (under 160 points) and the match ends at 140 points, you win:

10€Χ (160-140)=200€

Or, if the match ends at 175 points, you lose:

10€Χ (160-175)=-150€

Similarities to foreign exchange & stock exchange markets

Spread BetsSpread betting might be considered a bet type, however, is technically more of a spread trading procedure. Bettors are exposed in a stock exchange-like philosophy, making it easier for them to transfer their interest from goals and points to shares and forex, where the risk is even higher.

Choosing spread betting as your main betting type is generally acknowledged as a risky decision. In fixed odds betting you can better control your bankroll, as you know exactly how much money you might possibly lose. Your initial bet might be lower compared to fixed odds or Asian handicap betting, however, you could win or lose big.

Larger amounts - Higher risk

It’s obvious you must have a large bankroll in order to place spread bets, as you never know how much you might actually lose. This means that it's possible you will have to deposit more than you thought. In case you are a high roller or a VIP-labelled bettor, an online bookmaker could offer some credit, however, that is an extremely rare occasion. This type of bet is rather tempting to players who gamble a lot, as technically there is no win limit.

It's also a matter of psychology. How many times have you easily won a bet and thought you could have chosen a “harder” betting line, that would have given you better odds? For example, when you place an over 2,5 bet at 1,90 odds, you know that in case of a five goals match you could have won an over 4,5 bet at 5,00 odds. Spread betting lets you do exactly that, at the price of a far higher risk.

It’s not betting exchange

Many apprentice bettors confuse spread betting with exchange betting. There are some common points, as the “buy” and “sell” lines in every set of odds, but a betting exchange is a wholly different type of market. In a betting exchange it’s the odds change during every minute in live betting, but at spread betting the spread lines always remain the same. The main difference, is once again the amount of expected profit and loss. As soon as a bet is “matched” in exchange betting, both sides know exactly how much they’ll win or lose, regardless of the final score or point spread.

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