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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, such as fixed-odds or money-line betting or parimutuel betting. 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 general purpose of spread betting is to create an active market for both sides of a binary wager , even if the outcome of an event may appear prima facie to be biased towards one side or the other.
In a sporting event a strong team may be matched up against a historically weaker team; almost every game has a favorite and an underdog. If the wager is simply "Will the favorite win?
The point spread is essentially a handicap towards the underdog. The wager becomes "Will the favorite win by more than the point spread? This allows a bookmaker to act as a market maker by accepting wagers on both sides of the spread. The bookmaker charges a commission , or vigorish , and acts as the counterparty for each participant. 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.
To profit, the bookmaker must pay one side or both sides less than this notional amount. In practice, spreads may be perceived as slightly favoring one side, and bookmakers often revise their odds to manage their event risk. One important assumption is that to be credited with a win, either team only needs to win by the minimum of the rules of the game, without regard to the margin of victory.
This implies that teams in a winning position will not necessarily try to extend their margin—and more importantly, each team is only playing to win rather than to beat the point spread. This assumption does not necessarily hold in all situations.
For example, at the end of a season, the total points scored by a team can affect future events such as playoff seeding and positioning for the amateur draft, and teams may "run up" the score in such situations.
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 , and the penalty is typically a lifetime banishment from the sport, such is the lack of tolerance for gambling in sport. Spread betting was invented by Charles K. McNeil , a mathematics teacher from Connecticut who became a bookmaker in Chicago in the s.
Spreads are frequently, though not always, specified in half-point fractions to eliminate the possibility of a tie, known as a push.
In the event of a push, the game is considered no action , and no money is won or lost. However, this is not a desirable outcome for the sports book, as they are forced to refund every bet, and although both the book and its bettors will be even, if the cost of overhead is taken into account, the book has actually lost money by taking bets on the event.
Sports books are generally permitted to state "ties win" or "ties lose" to avoid the necessity of refunding every bet. Betting on sporting events has long been the most popular form of spread betting. Whilst most bets the casino offers to players have a built in house edge, betting on the spread offers an opportunity for the astute gambler.
When a casino accepts a spread bet, it gives the player the odds of 10 to 11, or That means that for every 11 dollars the player wagers, the player will win 10, slightly lower than an even money bet. If team A is playing team B, the casino is not concerned with who wins the game; they are only concerned with taking an equal amount of money of both sides. This is the house edge. The goal of the casino is to set a line that encourages an equal amount of action on both sides, thereby guaranteeing a profit.
This also explains how money can be made by the astute gambler. If casinos set lines to encourage an equal amount of money on both sides, it sets them based on the public perception of the team, not necessarily the real strength of the teams. Many things can affect public perception, which moves the line away from what the real line should be. This gap between the Vegas line, the real line, and differences between other sports books betting lines and spreads is where value can be found.
A teaser is a bet that alters the spread in the gambler's favor by a predetermined margin — in American football the teaser margin is often six points. For example, if the line is 3. In return for the additional points, the payout if the gambler wins is less than even money , or the gambler must wager on more than one event and both events must win. In this way it is very similar to a parlay. 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.
Sports spread betting began in the United Kingdom in the late s to offer an alternative form of sports wagering to traditional fixed odds , or fixed-risk, betting. The more right the gambler is then the more they will win, but the more wrong they are then the more they can lose. 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.
If the gambler elects to buy at and the team scores runs in total, the gambler will have won 50 unit points multiplied by their initial stake. But if the team only scores runs then the gambler will have lost 50 unit points multiplied by their initial stake.
It is important to note the difference between spreads in sports wagering in the U. In the UK betting above or below the spread does not have a known final profits or loss, with these figures determined by the number of unit points the level of the final outcome ends up being either above or below the spread, multiplied by the stake chosen by the gambler.
For UK spread betting firms, any final outcome that finishes in the middle of the spread will result in profits from both sides of the book as both buyers and sellers will have ended up making unit point losses. So in the example above, if the cricket team ended up scoring runs both buyers at and sellers at would have ended up with losses of five unit points multiplied by their stake.
This is a bet on the total number of points scored by both teams.