Is spread betting a form of gambling or investment? The answer seems to be, it depends where you place your bet.
Is Spread Betting Gambling or Investing?
Actually, it has been around for many years but it has become popular in financial trading during recent years due to greater accessibility to the financial markets. It was invented back in 1940 by Charles McNeil, a mathematics teacher from Connecticut when he became a bookmaker in Chicago.
Initially, this form of betting was applied to the outcome of sporting events. Indeed, betting on sports events is still very popular today.
The object of a spread bet is to predict the value of an outcome. It is a wager on the differential of an outcome rather than a straight win or lose situation. With sports betting the bookmaker will try to balance the books by attracting opposite bets on the spread. The bookmaker charges a commission on the bet so providing the bet spread is even they gain from the commission. The object is to bet on whether the outcome will be above or below the spread.