The downside to spread betting can be wide spreads from the spread bet firms and during volatile trading periods can mean wider spreads than normal. However this can happen on traditional share trading through an exchange but there is more liquidity in share trading than there is in spread betting. However, in time liquidity will improve. When opening a spread betting account it is important to shop around and compare the spreads for the products you want to deal in. Also check the daily financing charges especially if you want to carry the bet forward.
Some firms charge very high financing charges.
The majority of spread betting firms offer many diverse products from sports spread betting, financial betting, politics etc. In some ways spread bet firms offer too much. Although each department is separate a financial institution offering financial spread betting as well as other financial products would surely offer a more comprehensive service in their own arena. Maybe even adding more liquidity to their spread bet prices. As the market matures so will the spread bet firms and we may also see more specific companies like financial institutions offering spread betting as part of their financial product services.