Why was this man at his desk at 3.30 yesterday morning?

Greg Wood spent a tense night with Sporting Index, watching spread betting in action

The Oval, London, 3.30, and the performance of England's cricket team is the focus of attention. It could be a scene from a balmy afternoon in late summer. The difference: it is 3.30 in the morning, the carpet of snow is growing thicker by the minute, and Mike Atherton's side are in Peshawar, half a dozen time zones and 30 degrees of heat away.

In the offices of Sporting Index, a few hundred yards from the cricket ground, Dave Garbacz, Lindsay McNeile and Nick Hagan are ready to go to work. Their business is spread betting and even in the middle of the night they are confident that there will be punters to bet on England's match against the Netherlands. Garbacz is a market maker, specialising in football and cricket. McNeile, who is also a director of Sporting Index, and Hagan will be his traders.

Markets, traders, buyers and sellers. Even in what we are told is a share- owning democracy, the stock-market language of spread betting perplexes many punters, even those who could work out the odds on a double at 4- 9 and 13-8 during the short walk to the pay-out window.

For novices, though, cricket can be an ideal introduction. To launch a new market - on England's total in their innings yesterday, for example - Garbacz first decided what he expected the outcome to be. His estimate was 290 runs. This was represented as an opening quote of 285-295.

Now, it is decision time for the punters. If they think Garbacz has been too generous, they will ``sell'' the spread at a unit stake of, perhaps, pounds 10 per run. If England do indeed show their familiar incompetence, and stumble to a total of 235, the punter wins pounds 10 for every run short of 285, in this case pounds 500.

In spread betting, the more right you are, the more you win, but there is an obvious and potentially ruinous downside to this equation. In the same example, if Hick, Thorpe and Atherton cut loose and England reach 335, the cheque for pounds 500 will be heading in the opposite direction.

The move from fixed-odds betting to playing the spreads is like trading in a jalopy for a Porsche - it is frightening, but the danger adds immensely to the excitement. Consider the client who phoned at 6.15, when Graeme Hick had made 62, and Garbacz's quote on his final total was 93-97. He bought the spread at 97 for pounds 100 a run, so Hick had to make another 35 before his backer started to show a profit.

If he had been out next ball, the loss would have been pounds 3,500. Shortly afterwards, Hick hit a six which passed straight through the hands of a fielder on the boundary. Somewhere in Britain, a spoonful of cornflakes went down the wrong way.

The excitement is not confined to the punters' end of the telephone. Garbacz had worked a 15-hour day to 11 o'clock on Wednesday night before returning to the office after three hours' sleep, but his interest in events was fuelled by more than mere caffeine.

Like both his co-workers, he also enjoys playing the markets. ``To be a good market-maker, you need to be a gambler as well," he says. ``You need to be able to feel the market, otherwise you won't be able to set a price which people want to play at. My problem is that I don't stick to betting on things I know about. I end up punting on the horses and dogs, but I suppose that's the addiction in me.''

After 50 overs, England reach 279 with Hick undefeated on 104, and Garbacz's computer works out the company's position. After settling about 100 bets, Sporting has lost pounds 1,700. Four hours later, the picture is rather different. After the swift dismissal of Nolan Clarke, the Dutch opener, Garbacz decided to ``take a position''. Suddenly, everyone wanted to sell the Dutch total at 180, and the market maker was happy to accommodate them. A batting collapse would have resulted in a substantial loss, but ultimately his judgement was richly vindicated. The Dutch reached 230, and Sporting finished the match pounds 20,000 ahead. It was a good night's work.

McNeile admits that his firm has at least one client ``who we know we will never beat. He bets very rarely, but when he rings up we go away to work out where we got it wrong.'' A new client recently won pounds 120,000 in six weeks. Others, though, have overall losses well into six figures. A few are half-way to seven.

The potential for gain and loss is spectacular, but one thing seems certain. Since a mere 49 runs separated England and the Netherlands, when Atherton's side face South Africa on Sunday morning, Dave Garbacz and his colleagues will be sitting in south London, selling England by the pound. By the pounds 100 too.