Understanding the Relationship Between Speculation, Investing and iGaming

Since the early 1900s the relationship between gambling and financial market activity has been debated. It is a debate that continues, and it is common to identify certain stock market activities that may resonate with this statement. Both industries entail a degree of financial awareness, yet many regard these two activities as fundamentally different. However, there are common features since a strong connection between skill and knowledge is a requirement for both player and investor success. Granted, a few sectors within the iGaming industry cannot be factored into this base equation as it is simply not applicable. However, an example of this seamless merger is sports betting, and especially horse racing. Players study everything about a horse, from their pedigree to the times and circumstances in which it has won or lost. For an investor, this translates to the time spent studying the economic and political factors which affect stock market.

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Playing the Odds

Both entities are playing the odds and looking for an edge that will enhance their performance. A professional poker player studies the betting patterns and mannerisms of opponents to gain useful insight on potential bluff signs and gameplay. Armed with this information, a skiled player can know enough to predict his opponents’ future behaviour. Similarly, investors study trading patterns and leverage charts in an effort to understand where future stocks are going.

Speculative Activities in Investment

At the same time you will find in the financial sector the continuum between speculative activities and investment. These speculative activities are often highly risky and are used with short-term profit as a goal. These speculative investments include the following:

  • Penny stocks of companies with either no assets or very few assets but with a small chance of multiplying or increasing their current value if the venture is successful.
  • High-frequency and day trading where people buy and sell stocks on the same day with the hope of making an immediate profit.
  • Derivatives also have speculative elements since individuals enter into off-exchange contracts that relate to the performance of an index, commodity or stock on the actual exchange where the asset might never even be purchased. For example, they purchase options to sell or buy a stock at a firm price before a specified date.
  • Shorting is a perfect example showing how iGaming relates closely to investments in the sense that individuals borrow the stock and sell it without actually owning it in the hope that the market value declines so that the investor can repurchase the same stock at the lower price. Then it is returned to the lender and the individual makes their profit.

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The extent to which iGaming is closely related to financial speculation is both conceptual and empirical. However, it is certain that compared to investing, speculation refers to financial market activities that are high risk, short term, with potentially extreme losses and gains. In speculation, the focus is on making a profit with no regard for the fundamental value of the asset.

Similarities between iGaming and financial speculation

iGaming is associated with various table games such as blackjack and poker, slot machines, sports betting, scratch cards, lottery tickets and bingo games. Players have access to odds comparison platforms to compare the best prices from top bookmakers. These platforms usually feature news about the latest big events, festival betting and tips. Most importantly, they help punters compare dozens of bookmakers for the best free bets and sign-up offers.

In the same token, investors in financial markets can also use  comparison websites as a resource. Speculation and investment are typically associated with purchases of collectables, derivatives, real estate, currencies, commodities, stocks, bonds and GICS. Comparison websites indicate where the best prices are listed and offer tips.

The financial and iGaming sectors are also similar in the sense that investment platforms offer lottery-linked savings bonds and accounts where interest is won in periodic lotteries by more than one person who holds these accounts or bonds. Financial indices wagering is another interconnection between iGaming and finance.

An undisputed difference between investment and iGaming is the concept of time. Stock and company investments last years and it takes an extended period before you can expect returns while players immediately have an outcome after a betting investment.

These results indicate that there is a conceptual intermediate between investment and iGaming in regards to speculation while empirically these have a similar personality, motivation and cognitive attributes.

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