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Gaming firms to put money on spread bets

ZETTERS, the pools and gaming giant, wants people who are wary of investing in volatile markets to trade in virtual stocks and shares by offering free training in spread betting.

And Finspreads, Zetters' financial gambling subsidiary, will let people from across the class divide take a punt with 1p bets on the internet on how much a share price will move outside a range specified by bookmakers.

The move is intended to exploit and provide a further boost to the surging popularity of spread betting, which offers the possibility of placing tax-free bets on markets without buying shares.

As share prices fluctuate, experts say huge sums could be made by those who call the markets correctly without buying a share.

The recent emergence of a clutch of spread betting firms suggests a pursuit which began life as a niche is moving into the gambling mainstream.

The most common forms of financial spread betting involve gambling on how much a stock, index, or currency may move outside a range set by bookmakers.

Sports fans could bet on how many more, or fewer, points Glasgow Rangers may win in a season than bookies expect.

In the case of Vodafone, whose shares yesterday were trading at 100p, City Index - one of seven firms offering spread bets - was quoting a spread of 99p to 101p. A bullish punter expecting it to do better could "buy" the share at 101p, while a bear might sell at 99p, reckoned Tom Houugard, market strategist at City.

If the share price moves to 110p in two weeks, the spread would change to 109p to 111p. Then anybody who bought at 101p and staked £10 a point would gain £80, ie 109 to 101 times 10.

Anyone who expected a fall and "sold" at 99p would have to pay 111 to 99 times, ie £120, to settle their bet, although maximum losses could be fixed in advance at a cost.

Given the relative complexity of spreads compared to fixed-odds betting - in which fixed risks offer fixed returns - Finspreads hopes to demystify things with a free, eight-week course. It includes written guidance on trading and telephone pep talks from professionals.

It is offering cheap internet bets during the course to encourage experimentation.

The move by Finspreads, which Zetters bought for £9m recently, follows a surge in betting as markets swung wildly.

Betting volumes have doubled in the last six weeks for Finspreads to 7000 a day. Founded in March 1999, the company has 10,000 clients and expects one million bets this year.

The market turbulence follows dramatic growth in the popularity of spread betting in recent years.

IG Index, the market leader which floated in 2000 and is capitalised at around £200m, had 5000 clients in 1998. The company, which reports results next week, had 15,000 by last March.

Pre-tax profits rose from £1m to £15m over the same period.

Paul Austin of IG says spread betting has been going mainstream since 1992, when Sporting Index started taking football bets.

"Now bets like the number of bookings or sendings off in a Glasgow Old Firm game are hugely popular. As you can keep betting throughout a game, if someone like Hugh Dallas is refereeing and has booked three in the first 10 minutes the spread will go up," he said.

Because spread betting is the only form of gambling regulated by the Financial Services Authority, IG has to vet all potential account holders and deals mainly with well-off punters.

Nonetheless, the game is no longer the preserve of City types. IG and City Index have thousands of clients in Glasgow and Edinburgh. The advent of the internethas made it possible for people anywhere to take part.

Finspreads says, without quoting numbers, an increasing proportion of women clients has helped the company to become extremely profitable. It expects to ensure more of the same by offering low-stakes online gambling to allow even low-paid workers to have a flutter.