Note: The goal of this article is to give you the basic idea and an overview of spread betting. It is not meant to be a comprehensive and detailed explanation of the betting product.

Spread betting, otherwise referred as Index betting is a bet type, where the result depends on how right or wrong you were on a particular market. The amount you stand to either win or lose is not fixed, and therefore, you won't know your net result until after the event is over, or until you have 'closed out' your bet.

As a result of the liability not being set as in a standard fixed odds wager, a spread bet can be volatile. If the game or match doesn't go as planned, you can be exposed to sizable losses (in relation to the stake per position). Anyone, who has traded options on the share market, should grasp this concept without too much trouble.

The concept is similar to that of the stock market, where if you like a team/player you 'buy' (generally speaking but it does depend on the market), but if you think that the team/player will perform below market (or the bookmakers') expectations, you would 'sell'.

Spread companies generally offer a number of markets on the one game/match; in some cases such as for golf majors, there can be a plethora. The more common markets are the total point markets (betting the total scores), match margin or supremacy market (predicting the winning margin) and the performance indices (examples would be betting the finishing position of a player in a golf tournament, or the finishing position of a driver in a Formula One race).

Best Explained With an Example.

A Rugby Union match between Australia and England.
The total points market is 44 - 47. This means that if you fancy that the game will be a high scoring game with the result likely to fall above 47 points therefore you BUY for $10 a position. If the total for the game were 57 points, then you would be correct winning ten times your stake. In this example your stake is $10 per point, and $10 x 10 equals a profit of $100.

However, if the game total were only 37 points, you would be wrong to the tune of ten points, thus losing $100 (the difference between the buy price at 47 and the actual score).

The difference between the BUY and SELL prices is essentially the house edge/vig.

Let's look at a cricket game between Australia and England.
Australia is batting first; the total runs quote for Australia quote is 220 - 230. If you believe that Australia will make more than 230 runs, you buy. If you believe that Australia will make less than 220 runs, you sell.

Australia goes on to make 290 runs after a brilliant knock by Matthew Hayden. If you had bought Australian runs, you would be correct by 60 runs (290 - 230). You would collect 60 times your stake.

However, if Australia finds it difficult to score runs, and makes just 170, you will be wrong by 60 runs (230 - 170), thus losing 60 times your stake or $600 if you are betting per unit.

As a very general and fairly crude rule, bookmakers bias the spread quote in favour of the buy price. That is to say, there is an inherent disadvantage betting the buy price. He attempts to make the buy price less appealing due to the disproportional number of punters who prefer to BUY. There is generally more demand for the BUY price than for the SELL. Punters prefer to support a team or player to do well as opposed to opposing teams/players.

Sports Acumen offers by far the greatest number of spread markets in Australia.

This article has been just a very short overview of spread betting. If you are interested in the concept, and would like further information, Sports Acumen has an excellent booklet on spread betting.

Spread betting is certainly not for everyone, and if you are not 100% confident in understanding the spread betting market, I would seriously suggest that you stay out of it until you gain more knowledge. You certainly can make a lot of money from successful spread betting, but the opposite is also true, you can lose a lot of money if it all goes pear shape.

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This article is protected by international Copyright © Elk Publications Pty Ltd February 2005 Please contact if you wish to reproduce this article elsewhere.