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 ( i.e., 1 point), without regard to the margin of victory.

In practice, spreads may be perceived as slightly favoring one side, and bookmakers often revise their odds to manage their event risk. To profit, the bookmaker must pay one side (or both sides) less than this notional amount. 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.īecause the spread is intended to create an equal number of wagers on either side, the implied probability is 50% for both sides of the wager. The bookmaker charges a commission, or vigorish, and acts as the counterparty for each participant. This allows a bookmaker to act as a market maker by accepting wagers on both sides of the spread. The wager becomes 'Will the favorite win by more than the point spread?' The point spread can be moved to any level to create an equal number of participants on each side of the wager. The point spread is essentially a handicap towards the underdog. If the wager is simply 'Will the favorite win?', more bets are likely to be made for the favorite, possibly to such an extent that there would be very few betters willing to take the underdog. In sports, almost every contest has a favorite and an underdog, most obviously when a historically strong team is playing a weaker team. 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 the UK, financial spread betting is regulated by the Financial Conduct Authority rather than the Gambling Commission who regulate spread betting on sports. Financial spread betting (see below) can carry a high level of risk if there is no 'stop'. Spread betting has been a major growth market in the UK in recent years, with the number of gamblers heading towards one million. 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.Ī point spread is a range of outcomes and the bet is whether the outcome will be above or below the spread.

Type of wagering where the pay-off is based on the accuracy of the wager

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