Spread Betting Explained
Written by Wheretobet.com
Wed, 27 Jun 2007
Category sportsbook
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Spread betting, also known as "index betting", is a relatively newly conceived method of wagering on sports and other events. The concept is a simple and straightforward system which rewards correct selections based upon how correct they were and penalizes incorrect selections based upon how wrong they were. Although this may initially sound confusing it is best understood through the use of examples.
This case in point will be an American Football game between the Chargers and the Broncos where the index is set on the total number of points scored by both teams combined, in this case 46-49. What this means is that the index maker believes that between 46 and 49 total points will be scored in the game. In order to wager the bettor needs to decide if he want to take a position below 46 or above 49, This means that if the better believes there will be more than 49 he can "buy" at that number and will win based on how many points above the number the total ends at. On the other hand, if the total falls below 49 he will lose according to how many points under the number lands. The same holds true for gamblers who predict a low scoring game and "sell" at 46. These players will also be rewarded or penalized based upon how good their scoring prediction is.
The amount won or lost on any spread bet is based upon the stake the bettor makes when he takes his position. If a person "buys" over 49 at $10 he will be paid $10 for every point over 49 in the game. Conversely, if the total falls below 49 the bettor will have to pay $10 for every point below 49. The same holds true for "sellers" who take the low side except that they are paid for every point below 46 and lose for every point above the number.
Here is an example of a $10 stake on the over to help clear things up.
· Index - Total Points in Game Chargers/Broncos 46-49.
· Wager - Buying at 49 (prediction of over 49) for $10
· Final game result - 42 points (7 less than the predicted "over" number).
· Bettor's Gain/loss - Bettor loses $70 (7 * $10 = $70).
On the other hand, a bettor who "sold" $10 at 46 would be a $40 winner because the total was 4 less than the predicted "under" number and 4 * $10 = $40.
It is important to note that wins and losses are highly variable in spread betting and careful money management is necessary in order to prevent huge, potentially devastating losses. Some shops will offer stop-loss situations where a pre-set loss limit is put into place but that is not always the case and due to the nature of sports where "anything can, and will, happen" it is very important to only wager what one can afford to lose, even in the worst case scenario.