Spread betting is in the investment industry the use of speculation to win or lose. This is usually quantified in monetary terms. The pay off is determined by the accuracy of the wager and not on the simple basis of losing or winning. Spread betting involves high risk followed by equally high profits for accurate speculation. The amount initially bet on could be far in excess of the original amount placed. In the UK spread, betting is not regarded as a form of gambling and thus it is regulated by the financial services authority. Simply, in the UK, this is a legitimate business activity.
The idea of spread betting was initially invented by Charles K. McNeil, who was a mathematics teacher. McNeil later became a bookmaker in Chicago at around the 1940’s.In the United Kingdom the idea became popular at around 1980’s. Despite being around for quite sometime, it has only grown rapidly from the year 2000.
In sports where two teams are competing, there is always a favorite team and the weaker team, thus most bets will fall for the stronger of the two teams. A gambler may decide to take chances on the weaker team mostly referred to as the underdog. However, a bet can be put on the favorite by speculating whether or not the favorite team will surpass a speculated point spread. The point can be put at any level so that it pulls enough participants to either side of the spread. A bookmaker charges a commission to accept wager from either sides of the point. The bookmaker is not concerned about the outcome of the game since he gets his profit from the commission charged, however this only works if the total amount wagered is almost equal on both sides.
When choosing to do financial spread betting it is important to