For those who were asking on the other thread...

Spread betting evolved out of the Stock Exchange and is principally the same as buying and selling shares. Whereas with fixed odds betting you're either right or wrong, with spread betting,the more right you are the more you win and the more wrong you are...etc.
Take Premiership points as an example. At the beginning of the season,any given betting company - say Hills - would decide how many points they thought each team in the Prem would get. Let's say in Newcastle's case they thought we'd get 57. You could then bet on whether you think Newcastle would get more or less than 57 points. But the kicker is that Hills give themselves a margin of error, let's say a point either way, which means they actually offer a 'spread' of 56-58 points. So you can either 'buy at 58', meaning you think we'll get more than 58 points, or 'sell at 56', meaning you think we'll get less than 56. You can see how this is just like share dealing, in which there's a difference in the prices at which you can buy and sell a given share. Currency exchange is the same. It's in that little margin that the company makes it's money.In the Newcastle example, if we finished with 56, 57 or 58 points, only the bookie wins. I suppose it's like a horse race where you're not allowed to bet on the favourite.

So how do the bets work? Well, when you buy or sell, you pick a unit stake. In the Newcastle example, you might sell at £10 a point. This means for every point below 56 that Newcastle get, you win £10. Equally, if you're wrong and Newcastle do really well, then for every point above 56 (not 58, note) they get, you lose £10. You can see now why betting companies want your bank details before they open spread accounts. Because losses/gains are theoretically unlimited (ok, in the football eg you could lose up to £560 - if Newcastle get 0 points all season! - or win £580 if they win every game) the bookies deduct your total theoretical loss from you bank account when you place the bet and pay back whetever you haven't lost (!) at the end.

-- Anonymous, May 07, 2001

Answers

If that makes sense and you're still awake, I'll continue... (That £ is quite annoying, isn't it?)

-- Anonymous, May 07, 2001

Oh.It's stopped doing the funny thing with the £-sign now. Was that just me?

-- Anonymous, May 07, 2001

Your comment about betting on a horse race without being allowed on the favourite could be slightly better.

In fixed odds events, which is what we all know about, the bookies work in a profit from the start as well. If you asked Ladbrokes to give you odds on a coin turning up heads or tales they'd give you 5/6 (or 6 to 5 on) on each of the outcomes. Say you have £10 on each toss, and you always pick heads. After 100 tosses they have taken in 100 lots of £10 from you, or £1000. Assuming a 50-50 split they would have to pay out 50 lots of 5/6 of £10, or 50*5*10/6 = £416.66. They'd also give you your 50 winning £10 bets back. So £916.66 back to you. Bookies make 1000-916 = £83.34 profit, or 8.3%.

If this was in a bookies in the UK you'd also pay an amount of tax which would reduce your winnings.

In the spread betting the difference between the 56 and the 58 is the spread firms fixed profit. If you win your winnings are not taxed though.

If you asked a spreasd firm to give you prices on the 100 tosses of a coin they would say they expect 49-51 Heads. This means if half the people go low and half the people go high then they MUST make a profit 2.

-- Anonymous, May 07, 2001

The point about not betting on the favourite is valid in that with fixed odds betting you can make a profit as a punter even if you agree with the bookie (ie by betting on the fav). In spread betting, you're effectively being asked 'in which way do you think we've got it wrong?' by the bookie - if you agree with their spread, there's no point in betting.

-- Anonymous, May 07, 2001

Whilst we are on the subject of trying to fleece the bookies! Saw a lad I know down at the Liverpool game. He put a £10 accumalator on at the beginning of the season. Leagues to be won by Manure, Fulham, Millwall and Brighton. He was sweating on the Millwall result to make his bet complete and they duly obliged by winning 5-0. He's on his way to the bookies tomorrow morning to pick up a cool £9,500.

-- Anonymous, May 07, 2001

Cheers Dan....I think :)) only saying I think cos I'm tempted to look into this more and it could get expensive :)))

-- Anonymous, May 08, 2001

I had Man U, Blackburn, Millwall, Rangers and Livingston which has won me £500, Rangers would have been 5 times as much, Blackburn 20 times, the pair of them too much to worry about.

-- Anonymous, May 08, 2001

How much did you put on that bet macbeth? I presume ManU, Millwall and Livingstone gave you the results. What were the odds?

-- Anonymous, May 08, 2001

Man U were 4/5, Millwall 13/2 and Livingston 3/1

Blackburn were 100/30 and Rangers 4/5

The banker was Livingston, finished just out of it last year to Falkirk who didn't get promoted cos their ground wasn't good enough, Livingston then bought all of Falkirk's best players.

-- Anonymous, May 08, 2001

Where can I bet on Strawberry Jam finishing above Lemon Curd?

Is that "Spread Betting"?

-- Anonymous, May 08, 2001