Spread Betting: What It Is and How It Works. Spread Betting Explained

Aizat Chew
June 7, 2024
72 Views
Spread betting

Spread betting is one of the most curious and exciting betting types, as it implies a payoff based on whether or not the market or the game flow corresponds to your selected scenario. Therefore, the range of outcomes is significantly broader than a simple triumph or failure.

I’ll guide you through the basics of what Spread Betting is, how to make a bet, and what opportunities you can obtain with this wagering type.

What is spread betting?

In a gambling world, spread betting (or Point spread) is a kind of wagering where the return depends on the precision of the stake rather than a simple win or loss result, such as fixed-odds betting or parimutuel betting. In a nutshell, you’ll earn or lose based on whether or not the market follows your chosen direction.

Spread Betting is commonly used in sports, financial markets, and other sectors such as political events, entertainment, media, and more.

There is an article on parlay betting in my blog. You can check it to broaden your knowledge about the gaming environment.

Spread betting in sports

In sports, spread betting implies a wagering form where the bookmaker establishes a spread, also known as a line, representing the envisaged difference in points or goals between two teams. The concept of spreads entails applying artificial handicaps (i.e., Asian handicap) to even out a matchup between opponents. In fact, spreads are oddsmakers estimating the margin of victory or defeat in a game.

Gamblers make their stakes on whether the actual outcome will be above or below the established line.

The types of spread bets on sports events include the following:

  • Point Spread: The type of spread bet where you should predict whether a team will win or lose by a particular margin.
  • Total Points: You stake on whether the total number of points obtained in a game will be higher or lower than an established figure.
  • Futures Bet. This bet enables you to stake on future events, i.e. which team will triumph at the championship.

You can apply spreads in various kinds of sports betting, including soccer, basketball, tennis, baseball, golf, and Betting on horse racing.

Financial spread betting

In financial markets, traders speculate on the movements of the financial asset prices without owning or taking a position in the underlying asset. Instead, they place a bet based on whether they expect the price to go up or down.

In stock market trading, the two types of prices are involved:

  • Bid price: a price at which you can buy a share or commodity;
  • Ask price: a price at which you can sell a share or commodity.

The difference between these two prices is regarded as the spread.

If you believe the value of an asset will increase, you will buy this asset (open a long position). Otherwise, if you expect the value to fall, you would sell the asset (a short position). Essential elements of financial spread betting include the use of leverage, the ability to earn on both rising and falling markets by going long and short, the vast diversity of markets, and tax benefits.

How does spread betting work?

Spread betting works by having bookmakers equalize the chances of teams or players in a match. Bookmakers predict how much of a points advantage a team will win, and set this as the line. You can bet on the team that you think will cross that line. Don’t get it? Read on, then I’ll give an example.

What makes spread betting so alluring is the opportunity to multiply your stake if your choices are correct. However, with faulty selections, you will lose the multiples of your stake.

Unlike even money bets where the payout is one-to-one, in spread betting, your potential gains or losses are not fixed and depend on the accuracy of your forecasts. Therefore, while even money bets offer straightforward returns, spread betting provides variable results, which can potentially increase both your profits and losses. With point spreads, your actual returns depend on how much the real result deviates from the spread.

The wager you are making is the amount you bet per point movement. Thus, a $10 bet on Total Goals could win or lose $10 per goal. Therefore, you should carefully consider different spread betting markets before making a stake.

I’ll go through the fundamental elements of the point spread betting process and how they work.

  • The Spread. The spread is intended to even out the competition between two teams/players with varying skill levels. For example, if Team A is considered favorite against Team B, a bookmaker might settle the following spreads:

Team A (-3) and Team B (+7).

  • Betting on the favorite: If you bet on the favorite (Team A in this case), they must win by more points than the spread for you to win the bet. What does a minus 3 spread mean? Team A needs to win by at least 4 points to cover the spread and drive your bet to triumph.
  • Betting on the underdog: If you wager on the underdog (Team B), they need to either win the game outright or lose by fewer points than the spread. What does a +7 spread mean? If Team B fails by less than 7 points, a bet on them would be successful.
  • A push in spread betting: If the spread is a whole number and the favorite wins by exactly that amount, the bet is a “push,” and all stakes are refunded. For instance, if the spread is -3 and the favorite wins by 3 points, neither side wins or loses.
  • Odds and payouts: As a rule, both sides of a spread bet have similar odds, often around -110. Therefore, you would need to wager $110 to win $100.
  • Point spread betting: the vigorish. The vigorish in sports betting is a percentage of what a bookmaker receives as part of the stakes. In other words, it’s a sportsbook’s commission. This is exactly why you need to bet $110 to win $100, as those $10 go to the sportsbook.

How to read point spreads

Reading point spreads in sports betting implies understanding how bookmakers arrange a line to equalize a betting field between two teams of different strengths. I will demonstrate below a step-by-step example of how to read and interpret point spreads.

Let’s assume we have two competing teams: Team A (-7.5) and Team B (+7.5).

Key components include:

1.    Favorite and underdog:

The favorite is the player (team) that is likely to win the game. Team A is the favorite, indicated by the negative sign (-).

The underdog is the team expected to lose the game. Team B is the underdog, indicated by the positive sign (+).

2.    The spread:

The number next to each team (7.5 in this case) represents the point spread. This is the bookmaker’s estimate of the margin of victory.

What does a Negative Spread mean?

We took as an example a spread of (-7.5). This means the favorite (Team A) must win by more than this number of points (8 points or more) for a bet on them to triumph.

What does a Positive Spread mean?

In our example, a positive spread equals (+7.5). This means the underdog (Team B) can either win the game outright or lose by less than this number of points (7 points or fewer) to drive a bet on them to success.

How to bet on the spread?

To give you an idea of how to bet on the spread, I’ll continue the example illustrated above. Let’s assume that you are planning to make a $10 wager and are choosing between Team A (-7.5) and Team B (+7.5).

1.    A $10 bet on Team A (-7.5)

  • Winning the bet:

Team A must win the game by 8 points or more for your bet to triumph.

For example, if Team A wins with a score of 30-20, they have covered the spread by a 10-point win.

  • Payout:

With standard odds of -110, you would win approximately $9.09 in profit (since $10 / 1.10 ≈ $9.09) plus your original $10 stake, for a total payout of $19.09.

  •  Losing the bet:

If Team A wins by 7 points or fewer, or if they lose the game, you lose your $10 bet.

2.    A $10 bet on Team B (+7.5):

  • Winning the bet:

Team B must either win the game outright or lose by 7 points or less for your stake to succeed.

For example, if Team B loses with a score of 28-21, they have covered the spread by losing by only 7 points.

  • Payout:

With standard odds of -110, you would win approximately $9.09 in profit (since $10 / 1.10 ≈ $9.09) plus your original $10 stake, for a total payout of $19.09.

  • Losing the bet:

If Team B loses by 8 points or more, you lose your $10 bet.

Risks and benefits of spread betting

Exploring the core benefits and risks of spread betting will help you determine if this wagering style suits your strategy and risk tolerance. In the table below I have summarized the risks and benefits of spread betting.

RisksBenefits
High potential losses
Losses can exceed the initial stake if the outcome moves significantly against your prediction.
Higher potential returns
Spread betting can deliver higher returns than traditional fixed-odds betting or parimutuel betting, especially if your predictions are accurate and the result significantly exceeds the spread.
Market volatility
Sports outcomes can be unpredictable and volatile since changes occur dynamically throughout an event. This can adversely affect your bets.
Flexibility
Spread betting allows you to wager on a range of outcomes, diversifying the opportunities to make profits from your insights.
Complexity
Misunderstanding of the sport and the mechanics of spread betting can lead to poor betting decisions and greater losses.
Engagement
The dynamic nature of spread betting increases the thrill of a game, as every point or goal can affect the result of your stake.
Increased risk
Spread betting often involves leverage, meaning you can wager with more money than you have in your account. Like parlay or due column betting, this can equally amplify gains and losses, potentially elevating financial risk.
Diversification
With spread betting, you can diversify your betting strategy by wagering on various aspects of a game, including points scored, player performance, and more.

Final thoughts on the spread betting

In the modern gambling environment, spread betting stands out as an enticing opportunity to multiply your profit. However, before you start trying your luck with this wagering method, you should meticulously explore its intricacies, risks and benefits, and opportunities in different kinds of sports.

If you learn how to approach spread betting strategically, you’ll become empowered to apply advantage gambling, stay away from match fixing, and maintain a decent profit level.

Author Aizat Chew

My name is Aizat Chew. I specialize in sports betting and frequently share insights on my website regarding gambling companies, wagering strategies, and online casinos. I have prepared a guide to the world of gambling. Thanks to my enthusiasm and expertise, I strive to offer readers up-to-date details and top-notch recommendations.