Whichever way you look at it spread betting (whether on financial or sports) is more akin to stock market trading rather than traditional bookmaking and has been described as "the crack cocaine of gambling".
The attraction of spread betting is that when you place your bet you have no idea how much you are going to win or lose. That is totally dependent on the nature of the result of the event you are betting on.
The concept is based around the premise that the more you are right the more you win but the flip side is the more you are wrong the more you lose.
Spread betting is possible in a variety of sports but let's take an example from horse racing:
A spread firm may come up with a market for the accumulative distances between first and second at a particular meeting in all the races. They will come up with a figure to match their judgment – say 12 to 14 lengths. (The gap between the two figures is called the spread and is, in effect, the spread company's margin).
Let's say you think it will be more that 14 lengths. You then would buy the spread at 14 lengths for a set amount, say £5. If the accumulative distances makes up to 20 lengths, you would win 6 (20 – 14) x £5 = £30.
Alternatively if the market makes up at 10, you would lose 4 (14 – 10) x £5 = £20.
If you think the distances will be lower than the spread then you sell at the lower figure (in this case 12).
Spread firms have far more complicated and in-depth markets than the distances example above and it is well worth going to a site to look at the rules before getting involved. Some firms offer practice zones and low-exposure accounts so that you can ease your way into this exciting, but dangerous, form of gambling.
The loses that you can incur on spread betting could be huge, especially if you place a bet that doesn't limit your exposure. Get some advice and don't expose yourself to money you can ill afford to lose.