How Does Handicap Betting Work?

In identifying the favorite and underdog of a sporting event, handicap betting adds points to one side or the other before the actual event begins, based on the anticipated outcome of the game. The handicap, or "point spread," may fluctuate if the majority of public wagers are placed on one side.

Consider a college basketball game between Michigan State and Duke, in which MSU is a six-point favorite. Duke would appear on the betting line as (+6), while the Spartans appear as (-6). Essentially, for a wager placed on Michigan State to pay out, the Spartans would have to win the game by seven or more points, as six is subtracted from their final total. Just the same, money wagered on Duke is good if Michigan State wins by less than six points, or the Blue Devils win outright because six points are added to Duke's tally. An MSU victory by exactly six points would therefore result in a "push," in which wagers on each side would be refunded by the house.

The game line is determined by a number of factors, including the records of each team, location of the game, injuries and more. Because the "house" takes a small percentage of each wager, the line is set in an effort to draw an equal amount of money on each side from the betting public. Should heavy money come in on Michigan State, the point spread could move to (-7) or (-8) to encourage wagers on Duke, thus balancing the money played on each side.

In betting with the "handicap," the bet payout tends to be the same, regardless of which side the wager is on. In contrast to this method, "moneyline" wagering involves placing a bet on one team to win "straight up," without adding or subtracting points from the final score, according to sports analyst Danny Sheridan. This could involve winning significantly more (if wagering on a heavy underdog) or significantly less (if playing the heavy favorite) than the amount of the stake.