Definition of Spread Betting
|
| |
Prior to the 1940s, the predominant form of betting was a money line, also called fixed odds. This changed in the US after Charles K. McNeil, a Connecticut mathematics teacher turned Chicago bookmaker, created the spread bet.
With fixed odds or a money line, the book bases the pay-off of the wager on the simple outcome of the event: a win or a loss. With a spread bet, the book bases the pay-off on the accuracy of the wager rather than the event itself.
For example, the Indianapolis Colts visit the San Diego Chargers and win 34-31. The Colts were the favorite: -3 (spread) and -200 (money line). With the money line, a bet on the Colts wins because the Colts won outright. With the spread, a bet on the Colts loses because the Chargers get 3 points, which causes a tie, and ties go to the house.
The purpose of the spread is to promote activity on both sides of a wager. Sportsbooks make their money from the vig not the bets themselves. In order to remove the element of risk, they have to balance both sides of the wager.
In a competitive matchup, like the Colts vs. Chargers example, balancing the bet may be easy. But it becomes more difficult for the sportsbooks, even by adjusting money lines, when public perception is that the matchup is lopsided.
When considering a spread, it is vital to recognize it as an attempt to balance the wager across the board rather than an as assessment of likely outcome. As the public bets, the books respond to that action, and the spread shifts.
Because spreads shift, a bettor should act on a favorable spread immediately. On the other hand, if they expect the spread to cause a lot of action on the dog, it may be wise to wait to bet the favorite until closer to game day.
|
