Hacker News Reader

In your scenario, you are using gambling as insurance, and that's different. If you bet $20 on the Greenfeet it's not because something bad happens to you if they win.

Isn't the fact that you cand use gambling as insurance and insurance as gambling support the idea that they are the same? If it all depends on the context, then it's not the activity that is different, but the context.

To me it sounds like you're saying whenever you like it, you will call it insurance, and whenever you don't like it, you will call it gambling. "It" is not apriori anything, until you have decided what you want to call it. That makes it all the same thing, pretty much.

You can use some gambling products as insurance, but insurance products are designed so you cannot use them as gambling. At least in terms of products sold broadly to the general public, which is the main situation where people worry about gambling being immoral.

As other commenters mention, the main way this works is by making it impossible to "win" at insurance. You aren't hoping for the rare payout event to happen, like you would be when gambling. Having your house burn down, or getting into a car accident, or needing treatment for cancer, or dying are all really bad even if insurance reimburses the monetary costs involved.

This is probably why the concept of "insurable interest" exists; without it, it would be possible to use insurance products as gambling.

You’re using a tool and choosing to give the tool different names based on how you feel about it.

If I’m the landlord of a pub in Glasgow, and Scotland get to the finals of Euro 2024 (we won’t, but work with me here), betting on Scotland losing the final is a reasonable hedge against the profits you’ll lose when everyone goes home depressed after the final rather than buying another round. Is that a contrived example? A little bit, but it’s structurally reasonable. (If you’re a sponsor of the Scotland team, gambling on the result could be hedging media risk).

Can you leverage yourself up? Yes, but you can do that in the stock exchange or futures market too. They’re all the same thing.

No, betting on the Scotland game to try and hedge expected profit loss doesn’t turn it into insurance. The payout isn’t tied to the thing you want to hedge, so it’s just hedging your bets (gambling payout vs beer sales).

Insurance might be a kind of “hedging” but in a limited way that makes it not gambling.

In general, you are not able to buy insurance for more than the value of something. If you could, that would be a form of gambling. But up until that line it's anti-gambling.

Buying a position out of nowhere is gambling. Buying a position to directly counteract the position you already have is not gambling.

If you short 50 shares of a stock when you already owned 80 shares, you are doing the opposite of gambling. You are reducing your position.

I would describe every single one of these as active risk management - and the difference between one sort of active risk management and another is vibes, not reality. There’s an implied moral judgment here that gambling is inherently bad.

I don’t think gambling is inherently immoral; I think mismanaging risk (in either direction) is one of the ways people mess themselves up and therefore encouraging people to take bad risks is immoral. This is not quite the same thing, though it’s close - but the difference between these two positions is what led to prohibition.

Don’t get me wrong, bookies are awful in many ways, but so are bars and crypto exchanges and E*Trade. The right approach in all cases is harm reduction.

The difference is not vibes! Reducing your position is the opposite of increasing your position, and those things are very objective.

If someone has an equal number of short and long shares in a single company, they are not gambling. Surely we can agree on that, right? We don't have to use the word gambling, we can say they're not investing either. Their money does not change at all based on the stock market or any other external factors.

Now what if they have more short or more long shares. We can say that gambling or investing is happening, right?

What do we call the process of moving from a net-nonzero position toward net zero? Isn't it the opposite of gambling? Or the opposite of investing?

They are absolutely gambling; there are various ways that position can blow up. (Consider counterparty risk.)

What counterparty risk? You own stocks and you owe stocks. How can that go wrong?

But come on, counterparty risk with big institutions is such a small thing. Are you going to tell me that putting your money in a vault is gambling because someone could steal it? Is subscribing to Netflix gambling because the servers might go down?

Having a net-zero position is the closest to not gambling anyone can get.

How about this, can we agree that having short or long stocks is a high number out of 10 on the gambling scale, but just counterparty risk with an enormous company is a 2 out of 10? What do we call the process of reducing your number from high to 2?

> the goal is different, but the object used is not.

That’s not how the English language works. Insurance is a noun (I have insurance) but gambling is not (you can not possess a gamble). In your analogy, you would “cook” your food or “commit arson.” The purpose of your action is intrinsically tied to the words we use to describe it.

Gambling is engaging in a game of chance to get a favourable outcome. Insuring is paying money now to mitigate the risk of losing more money later. The fact that both are financial activities doesn’t mean they’re the same thing.

> In betting on outcomes, there are two roles - bet (“long”) and lay (“short”).

I have no interest in the Humpty Dumpty principle of word usage. My point was not about the names we use for things, but about the things themselves. You can't make what has been called "gambling" in the discussion up to now the same thing as what has been called "insurance" in the discussion up to now by changing the words you use to describe them.

> You’re saying that because these are morally different

I have said nothing whatever about the relative morality of gambling vs. insurance. I have only pointed out that they are not the same thing, they are opposites--gambling is taking on risk, insurance is transferring it.

Both are transferring risk. If I insure against political risk, is that any different from betting on the presidential election? No, it isn’t. The distinction between insurance and gambling is cultural, they’re both just risk swaps.