A wager that is dependent on an event’s outcome and where the payout is based on the wager’s accuracy is usually referred to as “spread betting”. It is employed as opposed to a win or lose outcome using fixed-odds betting or parimutuel wagering. The spread is a range of different outcomes and the gamble is that the outcome will be either greater or lesser than the point spread.
For many years, spread betting was the primary wagering method where American sports were concerned, but it is now popular in the UK as well and has become a major gambling market. There are approximately one million spread bets placed in the UK every year now and those numbers appear to growing. The potential for greater losses or gains is a characteristic of spread betting so it carries a higher risk level. The Financial Services Authority regulates this type of betting in the UK rather than the Gambling Commission.
The primary purpose of betting the spread is the creation of more active markets on both sides of the wager. In sporting events, where a strong team is matched up against a weaker team, the former is referred to as the favourite while the latter is called the underdog. It is not uncommon for more bets to be placed on the favoured team although a primary strategy is to always bet on the “home” team even if they are the underdog. The reason is that a home team, regardless of their won-loss record, typically plays better in front of their hometown fans.