3 ms·

It's actually somewhat easy... If you are creating financial exposure to an event with no underlying risk to it, and the point is exposure itself, you are gambl

It's actually somewhat easy... If you are creating financial exposure to an event with no underlying risk to it, and the point is exposure itself, you are gambling. In your snow example, those guys were gambling on snow for fun. The formal weather derivative - most weather derivatives have parties (usually players in the energy market, sometimes agriculture) who have real underlying risk and aren't entering those contracts to create risk for it's own sake. It's quite hard to get a market off the ground when there is no underlying risk - people purely speculating generally don't generate enough volume to achieve liftoff. Look at Kalshi and the volume on most bets - it's tiny.

vasco 2mo ago
Having "underlying risk" to something just means you invested in it before. So for you it's not a gambling as long as you... have gambled before in the other direction? Buy bunch of call options? Gambling. Buy a bunch of put options for stock I already hold, somehow honorable investing.
- hgomersall 2mo ago
  It's all gambling. You can dress it to as having a social purpose, but that's not why most people do it - they want the numbers to go up. The stock market is exactly the same - middle class gambling.
  - Dylan16807 2mo ago
    > You can dress it to as having a social purpose, but that's not why most people do it - they want the numbers to go up. Too cynical. This disqualifies basically anything you can do with money. If you put it in a bank to get interest you are solidly into the not-gambling end of the scale. And I don't think an index fund is that much more to the gambling side.
    - hgomersall 2mo ago
      Not really. The question is are you working for your money or are you hoping the money will provide free rent for you. If the latter, you're gambling. The only reason it's relatively risk free is because the system has been thoroughly stitched up in favour of the rent seekers.
      - Dylan16807 2mo ago
        I'm confused by the ideas you're combining here. Do you think all forms of rent-seeking are gambling or just ones that involve money in a direct way? The only risk in a bank deposit is up at the "societal collapse" level. Are you really so extreme as to say that's gambling, and if so isn't having money at all a form of gambling?
        deleted 2mo ago
        [deleted]
        hgomersall 2mo ago
        The point is largely around expectation. Sure, the base case of putting money in a bank is very safe, but the interest on that is not. Factor in inflation and its pretty easy to get negative returns on bank deposits. If you fiddle with "investments" with the intent of making money without doing anything else, that's gambling. Sticking money in the bank with the hope that it's still there next time you come back to it is not really gambling. You're just doing the default thing.
        Dylan16807 2mo ago
        > Factor in inflation and its pretty easy to get negative returns on bank deposits. But that applies to having money at all. That can't be enough to call it gambling. > expectation, intent I understand your argument here, but I disagree. Shifting to the bank that offers the best rate is good management, not gambling. Understanding how interest works and being motivated by interest to do bog-standard money storage doesn't turn that storage into gambling. > without doing anything else I don't understand how this connects at all. Maybe it reflects badly on you if you want to turn money into free income, but that doesn't make it any more or less of a gamble. It's a totally different axis.
  - nickjj 2mo ago
    > The stock market is exactly the same - middle class gambling. Our entire society is based on being forced to gamble. If you don't invest your money in some capacity then inflation will eat you alive.
    - hgomersall 2mo ago
      Why should having money ever give you a return on that? I ask that question in the context of moral philosophy, not a capitalist society. Surely there are better ways to determine how an individual should live that doesn't typically amount to emerging from a lucky orifice?
    - RussianBot9580 2mo ago
      @hgomersall: emerging from a lucky orifice is in fact the main thing in life if you think about it. After all, we are collectively a computer made of monkeys, and the function it is computing is natural selection. Kin selection is one aspect of it. Everything else - including money and innovation - is window dressing.
      - hgomersall 2mo ago
        Sure, so should we, as society, reward it further by also providing more free money?
        RussianBot9580 2mo ago
        Well, society is welcome to try to stop them. These appeals usually go like this: we should stop providing more free money to the people who are strong enough to go and take it. Individually we are weaker, so let's stop this collectively. But someone needs to lead the collective. And just like that - you have created another strongman who will just take what he can. In other words: Communism.
  - danielmarkbruce 2mo ago
    Buying small pieces of businesses isn't gambling. The fact the price moves around a lot isn't the point of it, it's just a result of people buying/selling. In gambling, the risk itself is the point.
- postexitus 2mo ago
  No - it means you are exposed to - electricity / gas / oil prices. Or Wheat maybe?
  - vasco 2mo ago
    Everyone is exposed to those so by that definition nobody would ever be gambling. I was trying to be charitable so assumed the bar was higher in the what-if.
    - danielmarkbruce 2mo ago
      You aren't exposed to football game outcomes, nor dice rolls or cards flipping. I, in california, am not exposed to electricity prices in the northeast. My exposure to wheat prices is extremely small - if I go and bet a lot on wheat going down, I'm gambling. If you are creating risk that didn't exist, you are gambling.
- danielmarkbruce 2mo ago
  If you are an oil company entering the futures market to reduce your risk on oil prices, you aren't gambling. If I enter the market and short oil for fun, I'm gambling. The stock market isn't gambling if you are just buying equities - you are literally purchasing a small stake in a company. The fact that prices move around a lot doesn't make it gambling per se. If I offered a new price on your house every day, it doesn't make your house purchase a gamble.
  - vasco 2mo ago
    Reducing risk is a form of gambling. You're just betting on the "please don't" rather than the "please do". The point is always the same, you want to end up better off than others that didn't buy what you bought. If the oil futures purchase turns out to have been worthwhile because price went up due either to production going down or demand up, that doesn’t somehow create new oil. You just get to buy it cheaper than others. You coulda yoloed on spy puts and used that money to buy the more expensive oil at market prices and it's all the same. But you call one gambling and another not gambling, idk, it's all similar to me.
    - danielmarkbruce 2mo ago
      No, it isn't. That's just not the definition that is used by people who gamble and are in financial markets. Words have definitions. No one uses the word "gambling" when they buy insurance on their house. They payoff is contingent, but it's not creating risk for it's own sake.
    - c22 2mo ago
      When I invest I don't really care if I end up better off than others. I'm just hoping to catch some slice of the ongoing economic growth so my at-rest wealth doesn't become devalued by inflation.
      - vasco 2mo ago
        Words have meaning, my sentence didn't stop where you stopped reading. The key words you're missing come right after when you stopped quoting.
throwawayqqq11 2mo ago
The "for fun" part is really important here. Addictive behavior comes from a hijacked dopamine system, into which you slowly get lured in. This makes it applicable to social media, drugs and if you squint, even to broad obsessions. This doesnt help the gambling distinction though. What activities can take over your neurological reward mechanism? Pretty much everything, like neurotically washing your hands. So you have to factor in societal scale and amount of (potential) harm and this is where the vague debate begins. A key point is a dealer/platform, profiting from your behavior, to exclude neurotics. A striking observation i made was, that gambling machines have deliberate delays between action (eg pull the lever) and reaction/reward for the brain to create tension and to break it with a dopamine spike. This deliberate design is how the machine exploits your brain and makes you an addict. A similar system is the endless social media feed (or even worse brainrot short videos). You scroll, you see new stuff, you identify content maybe emotionally. Its the same fast stimulus-reward cycle. Meassured in 1-2 seconds, same as gambling machines.
aqme28 2mo ago
How would Poker fit into that definition?
- danielmarkbruce 2mo ago
  Gambling.
wpietri 2mo ago
That definition sounds plausible but breaks down in practice. Every Chicagoan has snowfall-related risk. And conversely, a lot of those guys legally traded where they were not exposed to risk. They were just gambling.
- danielmarkbruce 2mo ago
  It doesn't break down. If you are creating risk for it's own sake, it's gambling. If you are doing something to hedge risk, it's not gambling. If your position is unrelated to a risk or wildly above the magnitude, you are creating risk for it's own sake. Gambling. The legality of it has zero to do with anything. You can gamble legally and illegally. You can gamble in markets which are made for hedging.
  - wpietri 2mo ago
    I do think it breaks down in practice for the goal of deciding which given trade/bet is gambling. I worked for market makers. Their theoretical job is to provide liquidity. They are required to always give a price. So if the theoretical cereal maker wanted to buy a wheat future to reduce risk, the market maker has to offer to sell them one. Then the theoretical farmer comes along later and the market maker buys a matching future and they're back to even. That by your definition is not gambling. But the fraction of trades that can be justified as actually helping hedge a real risk is very small. Some people trading are pure speculators, pure gamblers. But some of the non-gambler participants will trade in ways that are effectively gambling as well. I think it's effectively impossible to always tell on a trade by trade basis which ones are gambling. We could say it's all related to hedging, as the law does, but I think that's in practice ridiculous. It's a business filled with degenerate gamblers. So I return to my point that even though there's no bright line, it's still worth muddling though and finding some practical guidelines.
    - danielmarkbruce 2mo ago
      One side of a trade can be a gamble and the other a hedge. A single transaction doesn't need to be classified as a gamble or hedge - it can be both. As for the market maker themselves - they are definitely not gambling. They are trying to make money while reducing risk to the extent possible. You don't walk into the risk management committee and get an excited response because you increased risk all else equal, right?

vasco 2mo ago

Having "underlying risk" to something just means you invested in it before. So for you it's not a gambling as long as you... have gambled before in the other direction? Buy bunch of call options? Gambling. Buy a bunch of put options for stock I already hold, somehow honorable investing.

hgomersall 2mo ago
It's all gambling. You can dress it to as having a social purpose, but that's not why most people do it - they want the numbers to go up. The stock market is exactly the same - middle class gambling.
- Dylan16807 2mo ago
  > You can dress it to as having a social purpose, but that's not why most people do it - they want the numbers to go up. Too cynical. This disqualifies basically anything you can do with money. If you put it in a bank to get interest you are solidly into the not-gambling end of the scale. And I don't think an index fund is that much more to the gambling side.
  - hgomersall 2mo ago
    Not really. The question is are you working for your money or are you hoping the money will provide free rent for you. If the latter, you're gambling. The only reason it's relatively risk free is because the system has been thoroughly stitched up in favour of the rent seekers.
    - Dylan16807 2mo ago
      I'm confused by the ideas you're combining here. Do you think all forms of rent-seeking are gambling or just ones that involve money in a direct way? The only risk in a bank deposit is up at the "societal collapse" level. Are you really so extreme as to say that's gambling, and if so isn't having money at all a form of gambling?
      - deleted 2mo ago
        [deleted]
      - hgomersall 2mo ago
        The point is largely around expectation. Sure, the base case of putting money in a bank is very safe, but the interest on that is not. Factor in inflation and its pretty easy to get negative returns on bank deposits. If you fiddle with "investments" with the intent of making money without doing anything else, that's gambling. Sticking money in the bank with the hope that it's still there next time you come back to it is not really gambling. You're just doing the default thing.
        Dylan16807 2mo ago
        > Factor in inflation and its pretty easy to get negative returns on bank deposits. But that applies to having money at all. That can't be enough to call it gambling. > expectation, intent I understand your argument here, but I disagree. Shifting to the bank that offers the best rate is good management, not gambling. Understanding how interest works and being motivated by interest to do bog-standard money storage doesn't turn that storage into gambling. > without doing anything else I don't understand how this connects at all. Maybe it reflects badly on you if you want to turn money into free income, but that doesn't make it any more or less of a gamble. It's a totally different axis.
- nickjj 2mo ago
  > The stock market is exactly the same - middle class gambling. Our entire society is based on being forced to gamble. If you don't invest your money in some capacity then inflation will eat you alive.
  - hgomersall 2mo ago
    Why should having money ever give you a return on that? I ask that question in the context of moral philosophy, not a capitalist society. Surely there are better ways to determine how an individual should live that doesn't typically amount to emerging from a lucky orifice?
  - RussianBot9580 2mo ago
    @hgomersall: emerging from a lucky orifice is in fact the main thing in life if you think about it. After all, we are collectively a computer made of monkeys, and the function it is computing is natural selection. Kin selection is one aspect of it. Everything else - including money and innovation - is window dressing.
    - hgomersall 2mo ago
      Sure, so should we, as society, reward it further by also providing more free money?
      - RussianBot9580 2mo ago
        Well, society is welcome to try to stop them. These appeals usually go like this: we should stop providing more free money to the people who are strong enough to go and take it. Individually we are weaker, so let's stop this collectively. But someone needs to lead the collective. And just like that - you have created another strongman who will just take what he can. In other words: Communism.
- danielmarkbruce 2mo ago
  Buying small pieces of businesses isn't gambling. The fact the price moves around a lot isn't the point of it, it's just a result of people buying/selling. In gambling, the risk itself is the point.
postexitus 2mo ago
No - it means you are exposed to - electricity / gas / oil prices. Or Wheat maybe?
- vasco 2mo ago
  Everyone is exposed to those so by that definition nobody would ever be gambling. I was trying to be charitable so assumed the bar was higher in the what-if.
  - danielmarkbruce 2mo ago
    You aren't exposed to football game outcomes, nor dice rolls or cards flipping. I, in california, am not exposed to electricity prices in the northeast. My exposure to wheat prices is extremely small - if I go and bet a lot on wheat going down, I'm gambling. If you are creating risk that didn't exist, you are gambling.
danielmarkbruce 2mo ago
If you are an oil company entering the futures market to reduce your risk on oil prices, you aren't gambling. If I enter the market and short oil for fun, I'm gambling. The stock market isn't gambling if you are just buying equities - you are literally purchasing a small stake in a company. The fact that prices move around a lot doesn't make it gambling per se. If I offered a new price on your house every day, it doesn't make your house purchase a gamble.
- vasco 2mo ago
  Reducing risk is a form of gambling. You're just betting on the "please don't" rather than the "please do". The point is always the same, you want to end up better off than others that didn't buy what you bought. If the oil futures purchase turns out to have been worthwhile because price went up due either to production going down or demand up, that doesn’t somehow create new oil. You just get to buy it cheaper than others. You coulda yoloed on spy puts and used that money to buy the more expensive oil at market prices and it's all the same. But you call one gambling and another not gambling, idk, it's all similar to me.
  - danielmarkbruce 2mo ago
    No, it isn't. That's just not the definition that is used by people who gamble and are in financial markets. Words have definitions. No one uses the word "gambling" when they buy insurance on their house. They payoff is contingent, but it's not creating risk for it's own sake.
  - c22 2mo ago
    When I invest I don't really care if I end up better off than others. I'm just hoping to catch some slice of the ongoing economic growth so my at-rest wealth doesn't become devalued by inflation.
    - vasco 2mo ago
      Words have meaning, my sentence didn't stop where you stopped reading. The key words you're missing come right after when you stopped quoting.

throwawayqqq11 2mo ago

The "for fun" part is really important here. Addictive behavior comes from a hijacked dopamine system, into which you slowly get lured in. This makes it applicable to social media, drugs and if you squint, even to broad obsessions. This doesnt help the gambling distinction though. What activities can take over your neurological reward mechanism? Pretty much everything, like neurotically washing your hands. So you have to factor in societal scale and amount of (potential) harm and this is where the vague debate begins. A key point is a dealer/platform, profiting from your behavior, to exclude neurotics. A striking observation i made was, that gambling machines have deliberate delays between action (eg pull the lever) and reaction/reward for the brain to create tension and to break it with a dopamine spike. This deliberate design is how the machine exploits your brain and makes you an addict. A similar system is the endless social media feed (or even worse brainrot short videos). You scroll, you see new stuff, you identify content maybe emotionally. Its the same fast stimulus-reward cycle. Meassured in 1-2 seconds, same as gambling machines.

aqme28 2mo ago

How would Poker fit into that definition?

danielmarkbruce 2mo ago
Gambling.

wpietri 2mo ago

That definition sounds plausible but breaks down in practice. Every Chicagoan has snowfall-related risk. And conversely, a lot of those guys legally traded where they were not exposed to risk. They were just gambling.

danielmarkbruce 2mo ago
It doesn't break down. If you are creating risk for it's own sake, it's gambling. If you are doing something to hedge risk, it's not gambling. If your position is unrelated to a risk or wildly above the magnitude, you are creating risk for it's own sake. Gambling. The legality of it has zero to do with anything. You can gamble legally and illegally. You can gamble in markets which are made for hedging.
- wpietri 2mo ago
  I do think it breaks down in practice for the goal of deciding which given trade/bet is gambling. I worked for market makers. Their theoretical job is to provide liquidity. They are required to always give a price. So if the theoretical cereal maker wanted to buy a wheat future to reduce risk, the market maker has to offer to sell them one. Then the theoretical farmer comes along later and the market maker buys a matching future and they're back to even. That by your definition is not gambling. But the fraction of trades that can be justified as actually helping hedge a real risk is very small. Some people trading are pure speculators, pure gamblers. But some of the non-gambler participants will trade in ways that are effectively gambling as well. I think it's effectively impossible to always tell on a trade by trade basis which ones are gambling. We could say it's all related to hedging, as the law does, but I think that's in practice ridiculous. It's a business filled with degenerate gamblers. So I return to my point that even though there's no bright line, it's still worth muddling though and finding some practical guidelines.
  - danielmarkbruce 2mo ago
    One side of a trade can be a gamble and the other a hedge. A single transaction doesn't need to be classified as a gamble or hedge - it can be both. As for the market maker themselves - they are definitely not gambling. They are trying to make money while reducing risk to the extent possible. You don't walk into the risk management committee and get an excited response because you increased risk all else equal, right?