So, there can be a wealth test - but no competence test! – for investments that might be positive expectation? But then absolutely no limits to who and how much

So, there can be a wealth test - but no competence test! – for investments that might be positive expectation? But then absolutely no limits to who and how much someone can spend on rigged games of chance with guaranteed negative-expectation. How does that make sense? You're right, the 'public'/'private' distinction is confusing and outdated. It should just be 'high-reporting' (certified by accountants/lawyers/exchanges to meet certain standards) and 'low-reporting'. Perhaps tax-advantaged retirement accounts shouldn't be allowed into 'low-reporting' situations. But with a person's own excess money, they shouldn't face a wealth test to invest it anywhere their judgement guides them - if they're allowed to gamble, donate, burn, over-leverage, etc that money a thousand other ways to zero as well.