The Future of Spreadbetting
Spreadbetting has been in the UK for over 10 years now. In a nutshell, it is tax-free financial trading, in other words you do not have to pay any tax on your profits. Gambling as a whole in the UK is tax free… this means that spreadbetting is classified the same as the casino.
There is also a fine line in trading whether it’s gambling or not. I think for the majority of people it could be classified as gambling as they don’t actually have a plan and don’t really know what they are doing. These people may make money now and again through luck by overall, they will lose money. People who actually do make money in spreadbetting over the long term are not gamblers.. they are highly trained (usually takes years to get to this level). The clever thing about spreadbetting is that it’s not easy to distinguish who is gambling and who is not. This means that those who can trade the financial markets can make a tax free income.
The title of this article is the Future of Spreadbetting.. mainly because of the Google Insights graph below:
This showed the interest over the years in the Google search engine for the term ‘Spreadbetting’ and it really surprised me. I read frequently on the news that the spreadbetting companies are doing well and making money but the graph above tells me that interest in it is dying.
The graph start from 2004 and at it’s peak, hits 100 (I don’t know what the scale is, just look at it relatively). From there, it’s a gradual decline. Today, you can see that the figure is around 20 which is a 80% decrease from 2004. Google Insight also does a forecast looking at the previous information to predict a price going into the future. It’s looks like a further dip in 2013 to around 10, which is another 50% drop from current levels.
If I was a spreadbetting company I would take heed of this type of information and find out what’s going on. Is it just that people are getting less and less interested in spreadbetting? Does the industry has a bad name? Or is it just that people are more aware of spreadbetting and don’t need to search for it anymore? It’s a very interesting graph…
There are many Spreadbetting companies out there. The biggest one is Igindex who have been in business for 10 years or so. I looked at their 5 year revenue and they seem to be making money year on year still (see below).
I also recently heard that Worldspreads has closed down… if you go to their website, you see this:
So it looks like that profits from the larger and more financially strong spreadbetting companies are squeezing the smaller companies. The smaller companies profits will drop and in the worse case scenario, close down like in the Worldspreads case.
There maybe a couple of spreadbetting companies left but what after that? If the popularity of spreadbetting continues to fall then we’ll have none left which will be really sad. The innovations in technology that these companies have in their trading platforms are excellent, I love being able to trade and look at live prices from my iPhone. They really offer the dream of being able to trade anywhere so lets hope these companies are able to prevent the decline which we are seeing.
IG has been in business since 1974:
http://www.iggroup.com/corporate/ab_history.html