What Is Handicap Betting?

The Facts

Handicap betting operates differently in various countries, but the basic concept is the same. In the U.S., casino oddsmakers set a "line" or "spread" for each game that represents the margin of victory that will determine the outcome of the bet. Bettors choosing the favorite not only need the favorite to win, but they also need the favorite to win by a certain number of points or goals. Bettors choosing the underdog can win the bet without the underdog winning the game.

The word "handicap" comes from a 17th-century bartering game called "hand in cap," in which players placed their wagers in a hat or cap. Over time, "handicap" came to mean any action that made a contest more equitable. In horse racing, for example, a handicap race is one in which the better horses carry more weight than their competitors.

Team A and Team B are playing a football game, and the oddsmakers believe Team A should win by a touchdown or more. They assign the favorite minus-7 points, and Team B gets a plus-7. Bettors must decide if Team A is likely to win by at least a touchdown or if Team B can keep the game closer or even win. If Team A wins by 8 points, bettors choosing the favorite win the bet. If Team A wins by fewer than 7 or loses the game, bettors choosing Team B win the bet. If Team A wins by exactly 7 points, the bet is a tie, and the bookmaker must return all bets.

Casinos attempt to avoid returning bets, so those oddsmakers commonly use a fractional handicapping system. In the above example, the oddsmaker would set the line at 7 1/2 points or 6 1/2 points instead of 7. It's impossible for Team A to win by half a point, so there's no possibility of a tie in the wagering.

Bettors should monitor the bookmaker's line, because it can change until the event begins. To avoid a lopsided payout, casinos typically move the line if too many people are wagering on one side. Gamblers can "lock in" odds they like by wagering early, and savvy bettors may bet one team at the initial odds and place a second bet for the opposing side later if they consider the new odds for that team appealing.