A NEW form of Internet betting has taken Great Britain by storm - spread betting.
We have something similar here, as I will explain.
BET #1 -Sports Bets
In the UK, you can make a spread bet on "the total number of goals scored" in a football match between Arsenal and Manchester United. Internet betting is illegal here. (See report below.)
The spread is 2.4 to 2.7 goals. You think a lot of goals will be scored so you 'buy' and pay 2.7. You must buy at the higher price because the bookmaker takes the spread between the 2.4 and 2.7 goals.
Your 'buy' order is for $100. It means you win $100 for each goal scored in excess of 2.7.
In this match, five goals were scored, so you win 5 - 2.7 = 2.3 x $100 = $230.
You can also wager on the total number of corner kicks and even the number of red and yellow card bookings.
Another bet is the time required to score the first goal. If the bookmaker says 33 minutes and the goal is scored in five minutes, you win $100 x (33 - 5)= $2,800.
BET #2 - Singapore Pools
How do spread betting odds compare with Singapore Pools?
We don't know since Singapore Pools does not disclose its payout for football bets.
It told me: "We are unable to comment as it involves confidential business information."
In a way, it doesn't matter. You are certain to lose since gambling odds are always against you.
Good odds mean you lose your money slowly. Bad odds mean you lose quickly. Either way, the outcome is the same.
The promotional literature paints a brighter future.
The Singapore Pools website quotes final-year communications student How Kay Lii: "Spending a small amount of money for a dream of a better future is sometimes necessary.
"Everyone dreams of becoming wealthy. I do not see this as gambling. I see it as buying a little bit of hope."
While there is hope, is it a false one? Remember, in the long-run, there has never been a winner in a game of chance.
BET #3 - Financial Bets
The latest way to sell gambling is to make it look like investing.
Take spread betting. It has moved to the stock market.
To make a spread bet on Hong Kong's Hang Seng stock index (HSI), you only need to take a view. If you think the price will rise over the next few weeks, you buy. If you think it will fall, you sell.
Since you are betting and not buying shares, you only have to put up a little money, like 5 to 10 per cent of the stock's value. The small margin amplifies the gains and losses, which makes it risky.
Oh well. Higher risks produce higher returns, right?
Sorry. Not with gambling. Commissions paid to the bookmaker or casino keep long-run returns negative. It means 'sure lose'.
Compare this to investing. Average returns are positive because of technological change and population growth.
Over the past few hundred years, it has resulted in long-run economic growth of 4 to 6 per cent per year.
BET #4 - Structured Warrants
Here in Singapore we don't have spread betting, but we have something similar - structured warrants.
Both are short-term bets that share prices will move up or down. Both settle the bets in cash.
Two problems: First, studies show that short-term price movements are not predictable without special or insider information. In its absence, structured warrants are a pure gamble.
Second, the betting is not transparent. The six foreign banks issuing most structured warrants embed their charges in the price. Banks won't disclose these hidden expenses and most traders don't even know they are paying them.
Structured warrants are very actively traded. The underlying value of the stocks they represent is set to surpass the value of the traded shares. It substantially raises the speculative nature of our stock exchange.
Spread betting illegal here
CHECKING with the police, it turns out that no type of online betting is legal here.
While illegal, it is not an easy law to enforce.
To do so would require drastic action, like obtaining a court order for the records of Internet service providers like SingNet and PacificNet.
Also, a court order isn't foolproof since free-surf zones and Internet cafes can make detection difficult.
In the US, online gambling came to a screeching halt in October last year.
Why? The US government passed a law making it illegal to use electronic funds transfers,credit cards and cheques to place bets with gambling sites worldwide.
It holds banks and credit card companies responsible for enforcing the law.
