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Trading News Is spread betting gambling or not?
Trading News Is spread betting gambling or not?
Is spread betting gambling or not? |
| Written by Trader Hideout Editor | |||
| Saturday, 13 December 2008 11:16 | |||
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The answer to this question probably lies in what you are spread betting on. Spread betting is high risk, there is no doubt about that. Rather than gambling your stake money, you can make profits or losses that are virtually unlimited, although there are ways of limiting your losses which we will not go into here. The markets you can spread trade or spread bet on are also endless. You could spread bet on the general election or sport or you can spread bet on the financial markets and here is where the difference of opinion lies. If you spread bet on politics or sport, then it is pretty fair to say that it gambling. However, financial spread trading can be a different beast altogether. If you bought shares in a company, they could go up or down and you could make a profit or a loss, would you call that gambling or an investment? Financial spread trading is the same but with two main differences. Firstly, if you buy a share, you pay the stockbroker’s fee, plus 0.5% stamp duty plus if you make any money when you sell you have to pay capital gains tax if you have made more than the government’s allowance. With spread trading, you can place an ‘up-bet’ on a share that will give you exactly the same exposure as if you had actually bought the shares but you are not locked in and you have no fees or tax to pay (at the time of writing). Bookmakers do need to make their money and they make their money by widening the gap between the offer price and the bid price, which will therefore be slightly wider than a stockbroker’s spread, but otherwise, spread betting is a better option.
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