5 ms·

How is a raffle not gambling out of interest?

by techer 8y ago

jrockway 8y ago
How is insurance not gambling?
- conception 8y ago
  At some point, hedging becomes gambling but of course, it's a grey line.
  - koboll 8y ago
    All of the speculation here hinges on the legal definitions of terms like "money", "credit", "bet", and "wager", which we're using as lay terms here, but which probably have well-defined contours honed by precedent.
- cdumler 8y ago
  The purpose of insurance is such that individuals share the burden to cover random, life-impacting events. From the consumer side, insurance is the purchase of a service to cover any a future debt falling under the category of the service, ie. an unforeseeable, unintentional act of damage by or to the consumer. I have no intention of burning down my house. I pay so that if it were to happen, I am not stuck paying off a house I'll never own. From the servicer side, it is the sale of a product whereby consumers get covered for unexpected events, yet the company gets a profit for provider the service. Assuming a correct amortization, the company gets a profit.
  - shkkmo 8y ago
    So how is that different from hedging your bets? Insurance is gambling. The servicer is the house and always wins (unless they screw up). That is not to say that gambling can't serve purposes other than entertainment, because it can. That doesn't make it not gambling.
    - tkxxx7 8y ago
      > So how is that different from hedging your bets? Correct me if I’m wrong, but I think the difference is, no one is betting that you actually do have an unforeseen incident, so there is no bet to hedge against.
      - shkkmo 8y ago
        > I think the difference is, no one is betting that you actually do have an unforeseen incident, You are. When you buy insurance, you are betting that you will have an unforeseen incident and will utilize your insurance. The fact that you are doing so to offset some financial risk doesn't change the fact that you are gambling. I don't see why source of a risk matters here. I believe the position I am arguing against is that that motivation of hedging against risk makes gambling-like behavior not gambling. As far as I can tell your position is: Gambling-like behavior is not gambling if it is done to offset non-gambling related risk.
        tkxxx7 8y ago
        > You are. When you buy insurance, you are betting that you will have an unforeseen incident and will utilize your insurance. Almost, but I don't feel like this is 100% accurate, because neither involved party wants an unforeseen incident to occur - the 'win' situation, if you could call it that, is the same for both parties. I can sort of see the argument that you are betting you "won't win", but I can't see it as gambling behavior: > I don't see why source of a risk matters here. Gambling implies taking a risk for possible gain, no? To me, part of the difference is that the risk/chance involved (life) is not intrinsic to the transaction - it is more or less known what your returns will be, and under what conditions. Contrast this to, say, a slot machine, where the 'win' conditions are owned by the house and unbeknownst to you. There is no situation where you can know you will be paid out for any given parameters. What about flight insurance? Is that a gamble because no one knows if you'll make your flight? Are you betting that you won't make your flight because you purchased it, or are you paying for a conditional service? (mostly not serious) aside: if what you posit is true, is the peace of mind one gains from having insurance akin to gambling addiction?
- pessimizer 8y ago
  Of course it is. Especially when it's taken out by people who don't even own the asset being insured. For people that do, it's ideally like taking an opposing bet to the bet that you've implicitly taken by owning something that has the possibility of failure. I guess the line is that if you're on both sides of the bet, it's not gambling. Selling insurance is definitely gambling, but it's subject to the law of large numbers like everything else - at some point, all of the risk is ironed out by the number of things you insure. At that point, it's a government concession.
- Ajedi32 8y ago
  Insurance is the precise opposite of gambling; instead of concentrating reward, it distributes risk. When you buy insurance you're not betting that something bad will happen to you, you're hedging your otherwise implicit bet that something bad _won't_ happen to you.
  - paulcole 8y ago
    You're just rephrasing it. How about: I'm betting State Farm $12 a month my apartment will burn down before I die or move out.
    - Ajedi32 8y ago
      Think of it this way: if your apartment burns down and you don't have insurance, you lose your apartment and everything in it. If your apartment burns down and you do have insurance, you still lose your apartment, but that loss is completely (at least in an ideal world) offset by money provided by the insurance company. Which scenario is the bigger gamble?
      - paulcole 8y ago
        If I don't bet on the Patriots when I'm a Chiefs fan and the Patriots win my heart is broken. If the Patriots win and I bet on them, then my heart is still broken but that loss is offset by money provided by my bookie. I remain unconvinced that insurance is anything but a legal gamble.
        Ajedi32 8y ago
        If everyone treated sports bets that way, maybe it wouldn't be considered gambling. Though I kinda doubt a subscription service offering payouts whenever your favorite sports team loses would be a very successful business, as you'd have to be a pretty hardcore fan for emotional damage due to a loss to be something so significant that you can't take the hit without monetary compensation to console you.
    - jstarfish 8y ago

How is a raffle not gambling out of interest?

by techer 8y ago

How is a raffle not gambling out of interest?

jrockway 8y ago

How is insurance not gambling?

conception 8y ago
At some point, hedging becomes gambling but of course, it's a grey line.
- koboll 8y ago
  All of the speculation here hinges on the legal definitions of terms like "money", "credit", "bet", and "wager", which we're using as lay terms here, but which probably have well-defined contours honed by precedent.
cdumler 8y ago
The purpose of insurance is such that individuals share the burden to cover random, life-impacting events. From the consumer side, insurance is the purchase of a service to cover any a future debt falling under the category of the service, ie. an unforeseeable, unintentional act of damage by or to the consumer. I have no intention of burning down my house. I pay so that if it were to happen, I am not stuck paying off a house I'll never own. From the servicer side, it is the sale of a product whereby consumers get covered for unexpected events, yet the company gets a profit for provider the service. Assuming a correct amortization, the company gets a profit.
- shkkmo 8y ago
  So how is that different from hedging your bets? Insurance is gambling. The servicer is the house and always wins (unless they screw up). That is not to say that gambling can't serve purposes other than entertainment, because it can. That doesn't make it not gambling.
  - tkxxx7 8y ago
    > So how is that different from hedging your bets? Correct me if I’m wrong, but I think the difference is, no one is betting that you actually do have an unforeseen incident, so there is no bet to hedge against.
    - shkkmo 8y ago
      > I think the difference is, no one is betting that you actually do have an unforeseen incident, You are. When you buy insurance, you are betting that you will have an unforeseen incident and will utilize your insurance. The fact that you are doing so to offset some financial risk doesn't change the fact that you are gambling. I don't see why source of a risk matters here. I believe the position I am arguing against is that that motivation of hedging against risk makes gambling-like behavior not gambling. As far as I can tell your position is: Gambling-like behavior is not gambling if it is done to offset non-gambling related risk.
      - tkxxx7 8y ago
        > You are. When you buy insurance, you are betting that you will have an unforeseen incident and will utilize your insurance. Almost, but I don't feel like this is 100% accurate, because neither involved party wants an unforeseen incident to occur - the 'win' situation, if you could call it that, is the same for both parties. I can sort of see the argument that you are betting you "won't win", but I can't see it as gambling behavior: > I don't see why source of a risk matters here. Gambling implies taking a risk for possible gain, no? To me, part of the difference is that the risk/chance involved (life) is not intrinsic to the transaction - it is more or less known what your returns will be, and under what conditions. Contrast this to, say, a slot machine, where the 'win' conditions are owned by the house and unbeknownst to you. There is no situation where you can know you will be paid out for any given parameters. What about flight insurance? Is that a gamble because no one knows if you'll make your flight? Are you betting that you won't make your flight because you purchased it, or are you paying for a conditional service? (mostly not serious) aside: if what you posit is true, is the peace of mind one gains from having insurance akin to gambling addiction?
pessimizer 8y ago
Of course it is. Especially when it's taken out by people who don't even own the asset being insured. For people that do, it's ideally like taking an opposing bet to the bet that you've implicitly taken by owning something that has the possibility of failure. I guess the line is that if you're on both sides of the bet, it's not gambling. Selling insurance is definitely gambling, but it's subject to the law of large numbers like everything else - at some point, all of the risk is ironed out by the number of things you insure. At that point, it's a government concession.
Ajedi32 8y ago
Insurance is the precise opposite of gambling; instead of concentrating reward, it distributes risk. When you buy insurance you're not betting that something bad will happen to you, you're hedging your otherwise implicit bet that something bad _won't_ happen to you.
- paulcole 8y ago
  You're just rephrasing it. How about: I'm betting State Farm $12 a month my apartment will burn down before I die or move out.
  - Ajedi32 8y ago
    Think of it this way: if your apartment burns down and you don't have insurance, you lose your apartment and everything in it. If your apartment burns down and you do have insurance, you still lose your apartment, but that loss is completely (at least in an ideal world) offset by money provided by the insurance company. Which scenario is the bigger gamble?
    - paulcole 8y ago
      If I don't bet on the Patriots when I'm a Chiefs fan and the Patriots win my heart is broken. If the Patriots win and I bet on them, then my heart is still broken but that loss is offset by money provided by my bookie. I remain unconvinced that insurance is anything but a legal gamble.
      - Ajedi32 8y ago
        If everyone treated sports bets that way, maybe it wouldn't be considered gambling. Though I kinda doubt a subscription service offering payouts whenever your favorite sports team loses would be a very successful business, as you'd have to be a pretty hardcore fan for emotional damage due to a loss to be something so significant that you can't take the hit without monetary compensation to console you.
  - jstarfish 8y ago