Both spellings, which have origins in the Old English grǽg, have existed hundreds of years.1 Grey gained ascendancy in all varieties of English in the early 18th century, but its dominance as the preferred form was checked when American writers adopted gray about a century later. As the Ngram below shows, this change in American English came around 1825. Since then, both forms have remained fairly common throughout the English-speaking world, but the favoring of gray in the U.S. and grey everywhere else has remained consistent.

Both spellings are used for the participles, grayed/greyed andgraying/greying, as well as for most of the words and phrases involving gray/grey. For instance, grey area/gray area, referring to an area having characteristics of two extremes, is commonly spelled both ways. So is graybeard/greybeard, referring to an older man with a beard, and gray squirrel/grey squirrel (which refer to closely related types of squirrels on opposite sides of the Atlantic). There are at least a couple of exceptions, though: greyhound, for the breed of dog, always has an e,while grayling, which refers to several types of fish, always has an a

http://grammarist.com/spelling/gray-grey/

Here in the Colonies we tend to spell the shade gray but ride the Greyhound Bus. At the races we bet on the dogs.