There are three types of betting companies in the UK sport betting industry: fixed odds bookmakers, betting exchanges and spread betting firms such as IG Spread Betting. A small number of operators dominate spread betting. Trading on the London Stock Exchange was the spread betting model. The basic principle was betting high or low on the price of currencies or commodities and this has been adapted for sport. Hence, bettors bet on an outcome being above or below the spread. For example, for the price of a currency read the number of goals in a football match. Here is a list of our best betting sites followed by a spread betting guide:
What is spread betting?
When you place a bet with a regular bookmaker, it either wins or loses. The stake and the odds determine the return. Betting exchanges provide the platform for peer-to-peer betting which brings together individuals betting on something to happen and others betting on the same thing not to happen. However, spread betting is not about a winning or losing outcome but a return based the stake and the spread. Bettors consider whether the outcome of a sporting event will be above or below the spread. So, the transaction is akin to buying or selling a commodity.
The spread is a range of outcomes of an element of a sporting event. One of the most popular spread betting UK markets is the number of goals in a football match. A typical spread quote would be 2.2-2.4. So, the bet options are the number of goals being less than 2.2 or more than 2.4. The sport margin or middle, which in this case is 0.2 goals, applies so that the selling price is lower than the buying price. The financial result for the bettor depends on how lower or higher the final outcome in comparison to the spread. One of the market leaders in the UK is IG Spread Betting.
T&Cs: New UK members only | Min. bet.: £20 at odds of 2.0+ | Free bet wagering: 1x at odds of 1.80+ | Max. bonus: £10 | Valid: 14 days | Full T&Cs apply | 18+ | BeGambleAware.org
How does spread betting work?
Spread betting market makers try to create a market for two sides of a binary bet to attract business on both outcomes. The purpose of spread betting is to equalise the chances of both teams or players in a match when there is a big favourite and underdog. So, it takes betting on the match beyond the team or player to win which favours the favourite. In a very uneven contest, there will be very few bets on the outsider.
The spread is a handicap in favour of the underdog. The bet is now “will the favourite win by more than the quote?”, known as covering the spread. Bookmakers can adjust the spread in line with the weight of money on each side of the bet. The spread bookmaker charges a commission so if there is an even spread of bets the bookmaker is unconcerned with the result of the match. Therefore, profits are derived from the commission and not the difference in stakes and payout.
Compliers create the spread so that in theory there are roughly an equal number of bets on the favourite as on the underdog. The probability by implication is 50% for both outcomes. Therefore, the payout is marginally less than the notional payout of half of the total stakes. Spreads will often favour one side but only slightly. Consequently, the bookmaker changes the spread to manage the risk and not be too heavily dependent on one outcome in order to make a profit.
New UK members only | Min. dep.: £10 | Wagering: 1x first free bet | Odds: Evens (2.0) or bigger | Max. bonus: £20 | Valid: 7 days | Full T&Cs apply | 18+ | BeGambleAware.org
How spread betting works
The best way to illustrate how spread betting works is through a worked example. Please find below a spread betting calculation that shows the fundamental way in which spread betting bets are settled. The worked example is on the number of goals in a football match and the spread is 2.2-2.4. Sports spread betting bettors can sell (go low) at 2.2 or buy (go high) at 2.4. Hence the number of goals can be below 2.2 or above 2.4. The middle is 0.2. Here is the range of four potential scenarios:
Spread betting calculation
There are 2 possible bets:
Bet: £100 Buy at 2.4
Number of goals: 2
Calculation: 2.4 – 2 = 0.4 x £100 = LOSS of £40.
Number of goals: 4
Calculation: 4 – 2.4 = 1.6 x £100 = WIN of £160.
Bet: £100 Sell at 2.2
Number of goals: 2
Calculation: 2.2 – 2 = 0.2 x £100 = WIN of £20.
Number of goals: 4
Calculation: 4 – 2.2 = 1.8 x £100 = LOSS of £180.
Please note that in both bets the LOSS is £20 more than the WIN which equates to the 0.2 middle multiplied by the £100 stake.
T&Cs: New UK members only | Min. dep.: £10 | Min. bet: £20 acca of 3+ | Min. odds: 1/2 | Wagering: 1x | Max. bonus: £20 | Valid: 7 days | Full T&Cs apply | 18+ | BeGambleAware.org
Licence, Regulations and Currency
The Gambling Commission regulates conventional bookmakers and betting exchanges in the UK. The Commission sets and monitors the regulations and can issue fines or even revoke a licence. However, Financial Conduct Authority regulates spread betting in the UK. This body maintains the integrity of firms offering financial services in the UK. Spread betting is regulated by this body because of the element of risk associated with this activity. Its predecessor was the Financial Services Authority, which was the first organisation to regulate sports spread betting in the UK.
Spread sport betting has been a growth market in the UK since the 1980’s and there are now about one million account holders with spread betting companies. A recent trend is bitcoin spread betting. Hence, bettors use the cryptocurrency to deposit funds in a spread betting account. A bitcoin is a unit of computer data that has a value. It is safe and secure and transactions are anonymous because no central bank is involved. It is traded on a peer-to-peer network and the nature of the currency makes it suited to the funding of spread betting accounts.
Sports spread betting
Sport lends itself to spread betting because of the various scoring systems. Hence, every sport has a numerical expression of the progress of play. Despite some exceptions, the vast majority of sports have a scoring system based on goals, points or games. Hence, it is easy to create spread betting markets for sports that have a spread of scores. So, bettors can buy or sell and the result and bet settlement is clear and unambiguous. The most popular betting sports with UK bookmakers are football, horse racing and tennis. So, here is a sample of the most bet on markets for these three sports and several other sports.
The most popular football spread betting markets are as follows:
- Match goals
- Half goals
- Match supremacy
- Yellow cards
- Red cards
The most popular horse racing spread betting markets are as follows:
- Winning favourites
- Total distances
- Jockey/trainer winners
The most popular tennis racing spread betting markets are as follows:
- Match supremacy
- Breaks of serve
- Supremacy for rugby union, rugby league, cricket and snooker.
- Points for rugby union and rugby league.
- Runs for cricket.
- Frames for snooker.
Spread betting tips
Spread betting UK can be volatile and the potential losses can be substantial. Therefore, operators like IG Spread Betting require you to fund an account to cover the maximum liability from a spread bet. One popular sports spread betting market is on the number of runs in a Test match in cricket. A typical spread is 1200-1250 runs. Both sides have two innings and the range of possible runs in each innings is about 100 to 500. That means there could be from 400 to 2000 runs in a Test match. If you sell or buy at £1 a run the potential liability could be £850 (1250 – 400) or £800 (1200 – 400). However, stop losses control liabilities and here is some information as part of spread betting tips.
Spread betting stop losses
A stop loss is a spread betting trade when the price (such as the number of goals in a football match or number of runs in a cricket match) reaches a specified level. The stop loss is applied automatically which means the bettor does not have to constantly monitor a market and place a manual bet when the stop loss has been reached. Stop losses can be buys at the low level and sells at the high level. So, the maximum liability from a losing spread bet can be limited by a stop loss.
Also, you should bear in mind that gambling problems are more likely to be associated with spread sport betting than fixed odds and exchange betting. Clearly the potential to lose money quickly and the volatility of markets makes spread betting potentially more addictive and damaging. Therefore, spread companies promote responsible gambling but it is imperative that you monitor your bank and liabilities. So, stop losses are important elements of spread betting and you should apply them with some thought. However, you must adopt a disciplined approach to spread betting UK and keep in control.