Regardless of whether you’re gambling online or in land-based sports books, the notion of sports spread betting involves any wagering done on the outcome of a sporting event, where the payoff is based on the accuracy of the bet, and not on which team / individual won or lost (bets dependent on the “win or lose” outcome is commonly referred to as “fixed-odds” or money-line betting).

A spread is a range of different outcomes, and the wager is whether the outcome will be above or below the spread.   The general purpose of spread betting is to create a balanced, active market on both sides of a wager.  Let’s consider a really strong team that’s going against a historically weaker team.  Normally, bettors would wager in favor of the stronger team, resulting in very few, if any, betting on the team with the worse track record.   By using a “point spread”, the market is evened out with an equal number of bettors on each side of the wager.  A bookmaker therefore accepts bets on both side of the spread, charging a commission for his counter-party services to each participant.  As long as the number of bettors on each side is about the same, the bookmaker is not concerned with the event’s actual outcome, his profits come in on his commissions.

Spread betting became popular in the United Kingdom in the 1980s.  In the US, the bettor usually wagers that the difference between the two competitors will be less than or greater than the value specified by the bookmaker.

Here’s an example of spread betting in action:

A bookmaker announces a spread of 4 points in a certain game.  Let’s say the bettor wages on the underdog.  He will “take the points” and win if the underdog’s score plus the spread is greater than the other competitor’s (the favorite) score.  To illustrate, let’s explore two different outcomes:

  • The eventual score is Underdog 8, Favorite 10: since 8 + 4 is greater than 10, the bettor wins;
  • The eventual score is Underdog 8, Favorite 13: since 8 + 4 is less than 13, the bettor loses.

On the other hand, if the bettor wages on the favorite, he “gives the points” and will win if the favorite’s score minus the spread is greater than the underdog’s score.  Let’s illustrate again:

  • The eventual score is Underdog 4, Favorite 10: since 10 – 4 is greater than 4, the bettor wins;
  • The eventual score is Underdog 8, Favorite 10: since 10 – 4 is less than 8, the bettor loses.

Oftentimes, spreads are specified in half-point fractions which eliminates the possibility of a tie (also known as a push).  In case there is a push, the game is considered no action, and no money is won or lost.  Obviously, this isn’t the desired outcome from a sports book perspective, as they’re forced to refund every bet, possibly actually losing money if their overhead costs are taken into account.  Sports books might be allowed to state “ties win” or “ties lose” on certain bets to circumvent this from happening.

Unlike in fixed-odds betting, the amount won or lost during spread betting can be unlimited, since there isn’t a single stake to limit any loss.  It is, however, usually possible to negotiate ceiling limits with the bookmaker.  For example:

  • A “stop loss” or “stop” will close the bet automatically if the spread moves against the bettor by a specified amount.
  • A “stop win”, “limit” or “take profit” will close the bet automatically when the spread moves in a bettor’s favor by a specified amount.

Related to spread betting, a teaser is a bet that modifies the spread in the bettor’s favor by a predetermined margin (often six points).  For example, if the line is 3.5 points and the bettor places a teaser bet on the underdog, he’ll take a 9.5 points instead; a teaser bet on the favorite would mean that the bettor takes 2.5 points instead of having to give the 3.5.  In exchange for the additional points, if the bettor wins, the payout is less than even money (even money means that if the bettor loses a bet, he or she stands to lose the same amount of money that the winner of the bet would win).  Some sports books allow “reverse teasers”, which modifies the spread against the bettor, who gets paid at more than even money if the bet wins.