In an office in Kennington seven grown men are taking it in turns to throw a grapefruit-sized basketball at a hoop hung in the corner of the room. A shot goes in. 'Two points]

All day the seven have been sitting in front of computers, taking betting instructions from clients on such imponderables as the number of favourite winners at Newbury racecourse, the total number of points to be scored in a rugby league match between Wigan and Sheffield and how many corners there will be in, let's say, the FA Cup final between Manchester United and Chelsea.

They may sound like normal bookmakers. They're not. These are betting's most exclusive bookmakers; their customers are among the wealthiest punters in Britain. They offer a new high-risk form of gambling. Thousands can be won or lost on a referee's decision. So - who are they?

In the mid-Eighties, when there was money to burn, a new form of sports gambling became popular. City 'index firms, which had always offered those with the know-how the chance to gamble on the movement of share prices, gave their punters a chance to bet on sports events.

What made this form of gambling different was that it was based on the principles of the stock exchange. It became known as 'sports spread betting. The risks were high. You could make or lose a small fortune (the latter was more usual). Sports spread betting developed a following.

Then came Black Monday. Overnight Porsches were swapped for Vauxhalls. Sports spread betting was another luxury to suffer.

Until two years ago it appeared that sports spread betting had had its day. And it probably would have if a group of ex-City traders had not decided to give it another chance. Compton Hellyer, chairman of Sporting Index, is a horse racing fanatic; he runs the syndicate which owns the highly successful National Hunt horse, Docklands Express. He's the right man to explain the revival: 'These

two young chaps called Angus Hamilton and Paul Johnson had been experimenting with a sports spread betting operation on a shoestring budget in Edinburgh and wanted to expand.

'Having worked on the futures and options market I understood how it worked. So I decided to help them raise the money to start a national company.

Sports spread betting is entirely based on the principles of buying and selling stocks and shares. The best way to explain it is to go through an example of a bet. Sporting Index might offer a 'market on the number of corners to be given by a referee in a football match.

Sporting Index might estimate that there would be between 11 and 13 corners - this is the 'spread - in the game and invite punters to gamble on whether there would be more or fewer corners.

If there were 15 corners, anyone who gambled on there being more than 11-13 corners would have won twice their stake; a bet of pounds 10 per point above the spread would have have won pounds 20. Anyone who gambled on there being fewer would have lost the difference between the bottom end of the spread, 11, and the actual result, 15; a loss of four times their stake.

The sports spread bet involves more risk than the traditional gamble. Hellyer explains: 'If Docklands Express is 8-1 to win a race, all you've got to decide is whether you think it is good odds at 8-1. If you make a bet you know exactly what you could lose. But, at the moment of striking a spread bet, you have no idea how much you are going to win or lose.

The big money is won or lost when there are freak results. For example, Brian Lara's record-breaking 375 against England in Antigua. Sporting Index had estimated that he would score only 90 runs and lost a total of pounds 95,000 on the outcome. Two account holders won pounds 25,000 each. The flip-side is that a few people who bet on Lara scoring below 90 runs lost a lot of money.

Since Sporting Index began in April 1992, interest has almost tripled. In the first year there were 1,000 clients making an average of 700 bets a week. Now there are roughly 2,700 making 3,000 bets a week. The largest percentage of its membership works in the City; 30 per cent earn their livings on the stock exchange or deal on the futures and options market. Other members include professionals and businessmen as well as overseas gamblers from as far afield as the US, Hong Kong, South Africa and Australia.

A major difference between spread betting and normal betting is that all losses as well as winnings must be paid - with normal bookmakers large winning bets are not legally enforceable and they can welsh on bets.

One consequence of this is that anyone who opens a spread betting account must go through a careful vetting process. Sporting Index is required by government regulators to make sure that they do not take on customers whom they might bankrupt.

Hellyer says: 'If you want to open an account here, we want to know where you live, what your job is, what your income is. We reject an incredibly large number of applications.

In Sporting Index's first year it made a loss of pounds 11,000. This year it's heading for a six figure profit.

On the office floor the bet-takers have cast the basketball into a corner and are ready to watch an early evening match. I ask one of them if he minded working late.

He looks amazed. 'I'm dealing in something I absolutely love. We're going to have fun here tonight.

Sporting Index, Gateway House, Milverton St, Kennington SE1 (071-820 9780).

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