casinos are based on pure chance which nobody cares about (what does it matter to the outside world if a coin came up head or tails?) and the house still takes a cut.
financial markets are based on stochastic events which do matter very much, such that paying a broker is worth it. If it's not worth it to somebody, they should not participate, but in that sense they shouldn't participate in casinos either.
(FYI casinos have among the highest daily throughput of money and do not even compare with the crypto-token industry.)
The whole financial system is based on risk management. Options and other derivatives are fundamental tools to that extent. Here is a simplified example: you have two products A and B. You toss a coin: on heads A returns $100 otherwise $0 and B does the reverse. What is the expected value of A or B? What is that of A and B together -- do you want to re-evaluate A or B now? That is what options give you. And there is no such thing as the house kicking you out if you have any advantage. Which casinos do.
So comparing casinos and selling or buying options is fundamentally flawed. If you go in and start selling or buying with no idea what you are doing, well yeah you are doomed. It is like asking a 5 year old to fix a jet engine. It might manage to do so, but guess what is most likely to happen.
Any serious broker will get you through a bunch of questions to allow you to trade options or even basic stocks. And they will offer assistance etc. That is something you should blame some platforms with. They are not blameless. But they are not casinos or lotteries.
But serious people spend time modeling etc before even thinking of placing a trade. They don't walk in and buy a next day expiration contract... Which is something that a lot of people entering for a quick buck do. I am sorry but at some point we need to say to the patient "ok, you want to kill yourself, go ahead but don't damage your family."
There are other industries that the casino metaphor better fits: gaming (EA aka most hated company) and lotteries (aka state theft/extra tax) are some.
Stock Market and Casino both have Fees/House Advantage.
The difference is that Casino is more or totally based on luck while there is a skill factor involved in the stock market.
Also the stock market isnt a zero sun game because of economic growth
In the end Casino has nearly the same odds for everyone while in the stock market there is much more variance.
But i would inclined to say that for most casino is the better option
The difference between speculating (in the stock market/shares/commodities) and a casino is that casinos' house-odd games (i.e., odds that are always in favour of the house) are guaranteed long term losing propositions by definition.
Speculating on the markets is not gambling in the same way as in a casino - there's some element of skill in speculating in the markets, and there's not house-odds on the markets. I would compare speculating on the markets to be similar to a game of poker (which is not a house-odds game).
There's a meaningful difference between casino-style gambling and investing in something like stocks or cryptocurrency.
Specifically, in a casino the odds are known and fixed in favor of the house. If I'm playing roulette at the casino and place $1000 on black, I have a less than 50% chance of winning (18/38) due to the two green spaces on the wheel. Over a long enough period of gambling the house will win and I will lose.
With stocks or cryptocurrency, things are very different. The odds are not known in advance, nor are they controlled by a specific organization. You can have a situation, particularly with stocks, where value is actually created and there is a net increase in wealth - this is not possible in traditional gambling, which is explicitly zero-sum.
It is in fact fundamentally different from gambling. In Vegas, there’s a non-zero chance of recouping your “investment” or even to make money. Not even a possibility here.
The difference is that in a casino you loose on average.
In stock market, you win on average.
Not to mention that stock market is much more a game of skill than game of chance (as is most of casino games).
I did very well in stock market and I don't feel like I'm gambling. I recognize there is risk and I lost money on some investments but I can usually pin point the reason I lost. It's not random.
Can't you also have a situation where value is a lost and there is a net loss in wealth?
I think it's mostly about how predictable the risk is. In a casino, the odds are stated and known. In stocks, (in the US) companies are supposed to file statements with the SEC to honestly report the risks to their best extent. With crypto, no one seems to have to report any risk evaluation.
I guess the other difference is that in casinos, the bet typically goes to zero faster than with stocks and sometimes crypto, as it seems rare that those will zero out, so people may not lose 100% of a bet but sure can lose 99%.
But I agree with OP, that it mostly depends on whether someone likes it whether they see it as gambling, less so in actual definitions of what gambling is.
I agree with you in principal but there is one difference...
Gambling involves the creation of risk to speculate on for no other reason than the thrill of speculation.
Participants in financial markets (at least in theory) take positions in risk that already exists. In other words, they assume existing risk for others.
Lotteries and casinos are recognized as a form of entertainment - gambling - people may not behave rationally and they may end up ruining their lives, but there is a certain folk wisdom that gambling just loses money and you shouldn't do it (except for fun).
Investing has different norms and expectations. Few people think that financial analysis is "fun" in the same way that going to a casino or buying lottery tickets is fun - so the "entertainment" value isn't there in the same way. But many financially unqualified people will be bamboozled by con-artists who take advantage of the apparent "respectability" of investing.
financial markets are based on stochastic events which do matter very much, such that paying a broker is worth it. If it's not worth it to somebody, they should not participate, but in that sense they shouldn't participate in casinos either.
reply