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What is spread betting in horse racing?

Spread betting is a form of wagering that has more in common with derivatives trading than with the traditional parimutuel and fixed-odds systems used in horse racing.

Also known as exchange wagering, spread-betting providers offer horseplayers the ability to back their opinions on whether an individual market will head higher or take a tumble.

As Investopedia.com explains, “Unlike fixed-odds betting, it does not require a specific event to happen. You can actually close the bet at any time and take home the profits or limit the losses.”

In other words, it resembles stock market trading in that you can invest in a horse before a race, but then “sell” before it is run in order to lock in profits. Put another way, you could invest in a daily double and decide to sell at a much higher price after selecting a winner in the first leg. Or you could part with only part of the investment to hedge against an unfavorable outcome in the second leg. Either way, you have either guaranteed a profit or at least limited a potential loss.

Numerous providers offers spread betting in Europe, but it is only available in the U.S. to  residents of New Jersey, where Betfair’s exchange has been authorized for those who prefer it to parimutuel or fixed-odds betting.