Paddy Power, the online bookmaker, is launching a spread betting service.  Now there’s no doubt that this will be a professional outfit and we wish them well.  However there is a concern that these bookmakers may find contracts for difference tough going.  They are an investment vehicle and not a way of gambling.

We had previously noted that Betfair was getting in on the act, but Betfair is a different type of online betting operation to Paddy Power. Paddy Power, despite its hi-tech reach and cheeky advertisements is a traditional book maker.  They run the whole operation on their own book.  They are not a bet matching service.  This is a far more traditional sports betting crowd compared to Betfair.

Spread betting is one of the most unfortunate names as it gives the impression that this whole operation is simply a gamble with about as much knowledge as a football match.  In fact the stock markets are not sports.  Sports are carefully designed to be unpredictable and evenly matched, that’s what makes them exciting.  Financial markets are simply there to allocate funds efficiently and they do this by reflecting what people know about the economic future.  This is not a punt; this is something that requires some research and thinking through why we believe that a price is out of whack (although to contradict ourselves, we have had some of our best gains that originate in a feeling in the stomach).

As the number of providers expands its important to keep on top of what is becoming a bewildering variety of offerings.  It is more important than ever to look at Financial Spread Betting and CFDs comparison sites, such as the one we provide.