As of 2006[update], spread betting was a major growth market in the UK, with the number of gamblers heading towards one million.
The point spread can be moved to any level to create an equal number of participants on each side of the wager.
As long as the total amount wagered on each side is roughly equal, the bookmaker is unconcerned with the actual outcome; profits instead come from the commissions.
In practice, spreads may be perceived as slightly favoring one side, and bookmakers often revise their odds to manage their event risk.
In virtually all sports, players and other on-field contributors are forbidden from being involved in sports betting and thus have no incentive to consider the point spread during play; any attempt to manipulate the outcome of a game for gambling purposes would be considered match fixing.
The lack of tolerance for athletes and coaching staff engaging in this practice is so serious that the penalty is typically a lifetime banishment from the sport.
[4] Spread betting was invented by Charles K. McNeil, a mathematics teacher from Connecticut who became a bookmaker in Chicago in the 1940s.
[5] 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, with even money for either option.
The goal of the casino is to set a line that encourages an equal amount of action on both sides, thereby guaranteeing a profit.
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.
This reflects the fundamental difference between sports spread betting and fixed odds sports betting in that both the level of winnings and level of losses are not fixed and can end up being many multiples of the original stake size selected.
But if the team only scores 300 runs then the gambler will have lost 50 unit points multiplied by their initial stake.
The total is popular because it allows gamblers to bet on their overall perception of the game (e.g., a high-scoring offensive show or a defensive battle) without needing to pick the actual winner.
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.
For example, sports that have simple 1-point scoring systems (e.g., baseball, hockey, and soccer) may be analysed using Poisson and Skellam statistics.
In particular, the financial derivative contract for difference (CFD) mirrors the spread bet in many ways.
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: Spread betting has moved outside the ambit of sport and financial markets (that is, those dealing solely with share, bonds and derivatives), to cover a wide range of markets, such as house prices.
Most traders are also not liable for income tax unless they rely solely on their profits from financial spread betting to support themselves.
Thus, in the example, if Lloyds Bank 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 as collateral in the spread-betting account to cover potential losses.
In this case £4110 * 0.1 or 0.05 = £411.00 or £205.50 If at the end of the bet Lloyds Bank traded at 400-401p, I need to cover that £4110 – £400*10 (£4000) = £110 difference by putting extra deposit (or collateral) into the account.
The punter usually receives all dividends and other corporate adjustments in the financing charge each night.
[11] Evidence from spread betting firms through an analysis of their risk warnings in October 2024 actually put this closer to being 2 in 10 traders as being profitable.