Oct 022012

Economists at Nottingham Trent University and Nottingham University Business School claim that they have devised a manner in which money can be made from spread betting. The idea first appeared in a paper delivered at the Royal Economic Society’s Annual Conference by Dr Leighton Williams and Dr David Paton. The paper, entitled Forecasting outcomes in spread betting markets: can bettors use ‘quarbs’ to beat the book?, is available online. Dr Williams is Head of Economics Research at the first institution named, while Dr Paton is Senior Lecturer in Industrial Economics at the second and edited The Economics of Gambling and National Lottieries.

The method could be tested for free using a spread betting training account. The two economists studied one of the most  heavily- traded markets that of the number of bookings points of Premier League football matches. Ten points were awarded for every yellow card and 25 for every red card, which leads to dismissal from the field. In the period studied, there was an average of 40 points per match, and a maximum of 125.

The key is to take advantage of different odds offered by different spread betting companies, so it is necessary to have accounts with the companies involved. An example would be if one bookmaker offered odds of 3:1 for England to win a football match against Brazil, while another offered 3:1 on Brazil winning. This is an arbitrage position, where it is possible to buy high with one company and sell low with another, making profit certain. Spread betting companies have been known to restrict the amount of money that can be bet in such a situation and it is said that accounts have been closed as a result. Situations where prices are different but less than an arbitrage are known as quasi-arbitrages, or quarbs.

The economists say that following their method would have led to success in more than 60 percent of matches in the last two seasons: 86 out of 140. A punter betting a mere £5 per point in each case would have gained almost £5,000 in two years.

Dr Williams says that if punters bet sensibly, they can turn the odds in their favour. He adds the note of caution always seen at the websites of spread betting providers, that spread betting is infamously volatile and it is possible to lose much money in a short space of time.

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