British Speculators Place a Losing Bet

The line between gambling and investing is sometimes pretty thin, and in Britain you can erase it completely. Companies such as IG Group Holdings let clients take positions on markets without buying or selling actual securities, a practice known as spread betting.

To wager on the movements of a stock, bond, commodity, or currency, customers go to one of the companies’ websites. As in sports betting, the companies try to keep the bets balanced, sometimes by adjusting the price of a transaction, so the amount of money betting on a security to fall equals the amount betting it will rise. When trades are not equally weighted, the companies can take the risk themselves or try to hedge it with other firms or in the securities markets. Almost 100,000 Britons regularly made spread bets last year, compared with 91,000 in 2010, according to Sydney-based research firm Investment Trends. Revenue from spread betting reached £900 million ($1.4 billion) last year, according to data compiled by Bloomberg.