Spread Betting on Sporting Events

From: The Rockstar

Spreads in sports wagering
Spread betting was invented by Charles K. McNeil, a mathematics teacher from Connecticut who became a bookmaker in Chicago in the 1940s.[4] The idea became popular in the United Kingdom in the 1980s. In North America, the gambler usually wagers that the difference between the scores of two teams will be less than or greater than the value specified by the bookmaker.

Here's an example: The bookmaker advertises a spread of 4 points in a certain game..

• If the gambler bets on the "underdog", he is said to take the points and will win if the underdog's score plus the spread is greater than the favorite's score. If the eventual score is Underdog 8, Favorite 10: (8 + 4) > 10, so the gambler wins; if the eventual score is Underdog 8, Favorite 13: (8 + 4) is less than 13, so the bet is lost.
  
  
• If the gambler bets 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. If the eventual score is Underdog 4, Favorite 10: (10 - 4) > 4, so the gambler wins; if the eventual score is Underdog 8, Favorite 10: (10 - 4) is less than 8, so the gambler loses.

Spreads are frequently, though not always, specified in half-point fractions to eliminate the possibility of a tie, known as a push. In the event of a push, the game is considered no action, and no money is won or lost. However, this is not a desirable outcome for the sports book, as they are forced to refund every bet, and although both the book and its bettors will be even, if the cost of overhead is taken into account, the book has actually lost money by taking bets on the event. Sports books are generally permitted to state "ties win" or "ties lose" to avoid the necessity of refunding every bet.

A teaser is a bet that alters the spread in the gambler's favor by a predetermined margin, often six points— for example, if the line is 3.5 points and the bettor wants to place a teaser bet on the underdog, he takes 9.5 points instead; a teaser bet on the favorite would mean that the gambler takes 2.5 points instead of having to give the 3.5. In return for the additional points, the payout if the gambler wins is less than even money. At some establishments, the "reverse teaser" also exists, which alters the spread against the gambler, who gets paid at more than evens if the bet wins.

Spread bets on the total (over/under)
In addition to the spread bet, a very common "side bet" on an event will be the total (commonly called the over/under or O/U) bet. This is a bet on the total number of points scored by both teams.

Suppose the Bears are playing the Giants and the total is set at 44.5 points. If the final score is Bears 24, Giants 17, the total is 41 and bettors who took the under will win. If the final score is Bears 31, Giants 24, the total is 55 and bettors who took the over will win.

Check out the scoreboard. If this was Bears/Giants game situation and you were holding the over ticket, what needs to happen for you to win? What if you had bet on the under? In either case, the winning over/under wager has not been determined, so the final 1:33 will be very exciting!

The total is popular because it allows gamblers to bet on their overall perception of the game (e.g., a high-scoring offensive show or a defensive battle) without needing to pick the actual winner.

In the UK, these bets are sometimes referred as spread bets, but rather than a simple win/loss, the bet pays more or less depending on how far from the spread the final result is. Example:

• In a soccer match the bookmaker believes that 12 or 13 corners will occur, thus the spread will be set at 12-13. A gambler believes that there will be more than 13 corners, and 'buys' at £25 a point at 13. If the number of corners is 16, the gambler wins (16 - 13) = 3 x £25. If the number of corners is 10, the gambler loses (13 - 10) = 3 x £25.
  
• A 'sell' transaction is similar except that it is made against the bottom value of the spread.
  
• Often "live pricing" will change the spread during the course of an event, allowing a profit to be increased or a loss minimized.

In North American sports betting many of these wagers would be classified as over-under (or, more commonly today, total) bets rather than spread bets. However, these are for one side or another of a total only, and do not increase the amount won or lost as the actual moves away from the bookmaker's prediction. Instead, over-under or total bets are handled much like point-spread bets on a team, with the usual 10/11 (4.55%) commission applied.

Many Nevada sports books will allow these bets to be used in parlays, just like team point-spread bets, making it possible to bet, for instance, "the Vikings and the over," and be paid if both the Vikings "cover" the point spread and the total score is higher than the book's prediction. (Such parlays usually pay off at odds of 13:5 with no "vig," just as a standard two-team parlay would.)

In 2004 Cantor Fitzgerald launched the spread betting exchange Cantor Spreadfair, which matches up spread bettors opposing views and allows them to bet with each other. This removal of the faceless bookmaker allows clients to bet at the spread size and monetary level that they request, and in turn this creates a tighter spread margin, which in turn allows users to lose less and win more than with the non-exchange spread-betting firms.

The mathematical analysis of spreads and spread betting is a large and growing subject. For example, sports that have simple 1-point scoring systems (e.g., baseball, hockey, and soccer) may be analysed using Poisson and Skellam statistics.