Spread betting is a very popular form of betting nowadays but it can be difficult to understand how much built in profit there is in the prices offered. The reason is simple, the concept spreads is not so easy to understand. With normal bets a stake is placed on an event, this stake is the amount of risk taken by the punter in his financial enjoyment of the outcome of the event.

With spreads this is not the case, the amount that is won or lost is derived by a multiplier value chosen by the punter (i.e. the stake). The punter then wins or loses an amount that is the product of the stake multiplied by how right or wrong the punter was in his assessment of the outcome.

An example best clarifies this, a bookie proposes a spread of 0.9-1.1 for a future football match - Manu versus Blackburn. The punter can choose that the goal difference derived by the result (Manu score - Blackburn score) will be lower that 0.9 or higher than 1.1. Suppose the punter correctly chooses higher than 1.1 at a stake of 2. The final score is Manu 3, Blackburn 1. The goal difference is 3-1=2. The punter wins 2 - 1.1 = 0.9 goal difference * 2 giving a profit of 1.80.

Consequently it can be seen that the built in advantage of the bookie can be calculated by assuming a situation where both higher than, and lower than, bets are taken at a token value of 1 each way. Regardless of the outcome the punter will lose 0.2 for an investment of 2.

The built in profit margin (in this case) is therefore is 100 * (0.2/1.0) = 10%

Generally the built in profit is 10-15%. This means that your assessment of events has to be about 15-20% more accurate than the layers, and they are professionals!