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A 'bet' produces no value. It is a fixed pot of money that a middleman may take a cut from before distributing the remainder to the people who have paid into th
by by 17y ago
A 'bet' produces no value. It is a fixed pot of money that a middleman may take a cut from before distributing the remainder to the people who have paid into the pot. The pot is static. The participants never get more out than they collectively put in.
Shares and derivatives on the other hand are linked to the price of an asset which may increase in value. When people buy and sell them they change the price of some aspect of the asset and therefore re-allocate capital to the most efficient and profitable investment. Done correctly the participants are making money, not 'betting'. The size of the 'pot' can go up.
- yummyfajitas 17y agoA bet absolutely can produce value, it just can't produce money. Consider a bet on a dice roll which is done solely for the purpose of entertainment (unlike bets on events which reveal information). The gambler gains utility from playing the game which presumably exceeds the utility lost due to the house take (otherwise, why bother playing). Consider a simpler game: Street Fighter III. The house take is two quarters and you've got no chance of winning any money. Nevertheless, value is created since the players have a good time playing.
- by 17y agoYes, I agree that the company running the gambling is selling entertainment. But the word 'bet' is wrong when applied indiscriminately to shares and derivatives. The way nazgulnarsil is using the word 'bet' marks a profound confusion about betting and stock markets. The whole point of stock markets is that the 'pot' can increase. With gambling the 'pot' decreases - in line with the entertainment value gained by the participants.