The difference between insurance and gambling is about what happens to your risk - whether it's a hedge or not. When you buy insurance, you pay a premium to ma

The difference between insurance and gambling is about what happens to your risk - whether it's a hedge or not. When you buy insurance, you pay a premium to make you whole should a random event occur in the future. You exchange a payment for certainty about future cash flows with respect to the insured risk. When you place a bet, you do the opposite. You exchange a payment for uncertainty about future cash flows with respect to the subject of the bet. If you insure against a risk to which you're not exposed (like: you take out a life insurance policy on a person you don't know with you as the beneficiary), then yes - that's risk taking rather than hedging. Commodities futures have similar aspects: if you're an aluminum producer then you can trade futures in order to reduce your exposure to variations in the market price. On the other hand, if you're a hedge fund trading those futures then you're probably doing the opposite - looking for exposure to risk. If you're going to take the position that a known cashflow now that returns an uncertain cashflow in the future is "gambling" then essentially all forms of economic activity are "gambling". It's reductio ad absurdum.