Gambling: Key Differences In both gambling and investing, a key principle is to minimize risk while maximizing profits. But, when it comes to gambling, the house always has an edge—a. Investing vs gambling: Investors and gamblers both want to put more money in their pockets. But by building a diversified portfolio with stocks, bonds,.

Gambling Vs Investing – What’s the Difference?

Since the financial crisis of 2008, many consider investing in the stock market a form of gambling. I was among this crowd that developed a negative view of investing. I felt like the stock market was one big online casino and that your money wasn’t safe. At least if you head to a casino to go gambling you’ll get free drinks…

Gambling Vs Investing – Gambling Pros and Cons

Gambling And Stocks

One thing that gambling has going for it is that the odds of each game are fixed. You know exactly what you’re getting when you approach a game to play. Most online casinos that have slots, poker, black jack, etc. are all required, by law, to implement the appropriate odds in their games to match their physical counterparts.

Another pro of gambling and online casinos are that they are fun – some times a little too fun 🙂 They can become addictive in a way – much like active day trading in the stock market.

What are the cons of gambling and online casinos? Well, in the long run the game odds are stacked against you. Ever heard the saying that the house always wins? Unless you work to develop some sort of gambling skill (counting cards, card playing systems, etc.) you WILL come out behind in the long run.

Can you make a lot of money gambling? I know a friend’s brother that made ~$75,000+ one year by gambling through an online casino at Texas Hold’em poker (before online gambling and online casinos were outlawed in the US). He also was invited free of charge to a Texas Hold’em 7-day cruise! So yes, you can make money with online casinos IF you know what you’re doing and you have a lot of practice!

Gambling Vs Stocks Quote

Gambling Vs Investing – Investing Pros and Cons

When I talk about investing, I’m mainly discussing investing in public equities through the stock market. What investing has over online casinos and gambling is that over the long run, the market rate of return for the stock market is ~8%. This means that over the long run, if you keep your money invested long enough, you will come out ahead! Another pro of investing vs. gambling is that your dividends and capital gains are taxed as long term capital gains. This means that you’ll pay only 15% taxes. Gambling proceeds are generally taxed as income at a much higher rate. An additional pro that investing has going for it is that if you just decide to invest in market index funds, you’ll find it pretty easy to get started. And, you’ll net yourself some great returns.

Now, what about the cons of investing vs. gambling? Well, investing is pretty boring if done properly. Compared to online casinos and gambling, investing is about the most boring thing in the world – almost like watching grass grow. Also with investing, you may be limited by the liquidity of your investments. This means that if you’re investing in a thinly traded stocks that crashes, you may have a very hard time pulling your money out. Another con of investing is that there is a bit of a learning curve to get started if you decide not to use market index funds. With gambling and online casinos, you can login, click the slots, and be playing for free or with real money in less than a minute – it’s hard to beat that in terms of simplicity!

Gambling Vs Investing – Comparison Table

Here’s a simple table that brings a lot of the concepts discussed here together:

Gambling Vs Investing – Final Thoughts

Which is right for you? While gambling with online casinos can be a lot of fun, it really isn’t a strategy that I’d personally recommend to develop your wealth for the long run. Sure, online casinos and gambling are fun, but unless you’re willing to put in a lot of time to develop your gambling skills, you’re very likely to come out behind over the long run 🙂

Sports Betting Vs Stock Market Reddit

This post published by Tom Shannon
Coming from Sheffield, Tom’s hobbies include writing, recording music, and creating video games. He also runs events to do with video games where people come to watch tournaments. Tom is currently studying in his final year at university

Sports gamblers have lots in common with stock market investors.

They both believe they can predict the future, and they sometimes fall into the trap of making decisions with their hearts instead of their brains. And of course, they both hate to lose.

But don't let those similarities fool you. Gambling on sports may be more fun, but it's definitely a more risky use of money than putting it in the stock market.

In the long run, investors have the chance to make more money because there are fewer downside risks.

To put it another way, the stock market is a lot more forgiving than the MGM Grand (let alone your local sports bookie).

Gambling Vs Stock Market

'A lot of people regard investing as gambling, but I frequently say no. Which casino in Atlantic City, Las Vegas or Macau pays the bettor 73% of the time?' said Sam Stovall, chief investment strategist at S&P Capital IQ.

That's the percentage of time that Stovall's research shows the S&P 500 -- the gold standard in the stock market -- has increased in value during the years since 1926.

Those are pretty good odds.

The betting appeal: Americans bet an estimated $380 billion each year on sports. It's easy to see why fans may be tempted to gamble on their favorite teams and athletes. Gambling on football star Peyton Manning to win might seem like a safe bet, especially compared with picking winners in the stock market.

'You're making a wager based on some facts and some intuitions. And in neither instance can you be guaranteed to be correct,' said Randall Fine, managing director of The Fine Point Group, one of the casino industry's largest consulting firms.

Manning is really, really good at what he does for a living. Heck, even his commercials are funny.

But take it from one person who has lots of experience in both worlds.

'Betting is more difficult and riskier,' said one resident of Hoboken, New Jersey, who bets on illegal gambling sites and also invests in stocks. He asked for his identity to be withheld due to legal concerns.

'A large, steady company has a low chance of plummeting and causing you to lose all your money, but even Peyton Manning doesn't cover the spread sometimes,' he said.

All or nothing: Gambling on sports tends to be a zero-sum game. A bettor gambling on the Green Bay Packers will instantly lose his or her entire $500 bet if Aaron Rodgers and his teammates fail to win or cover the spread.

However, someone sinking $500 into Apple stock has little risk of losing that entire initial investment, especially in the short term. The stock might go up and down some, but it typically doesn't go to zero.

Investors also have the ability to spread their money out among many stocks. People often invest in funds that buy dozens or even hundreds of stocks, which helps reduce the risk.

And investors have greater access to tools that can minimize the risk of losing money. For example, a stop-loss order instructs a broker to dump a stock when it tumbles below a specific price.

Such hedging tools are not as readily or even feasible to sports gamblers, Fine said.

At the same time, investing in stocks actually carries higher upside potential. While many stocks offer steady returns, investors sometimes hit the jackpot (think: buying Apple back in early 2009 or Tesla in 2012).

Gamblers and investors also have far different time horizons.

A stock can theoretically be held onto for an infinite amount of time, but a sports bet can end in the blink of an eye.

Sports Betting Vs Stocks

Even the unlucky investors who jumped into the market at its peak in October 2007 eventually made their money back when stocks reclaimed their pre-recession levels in 2013.

The same can't be said for those who bet big on the Denver Broncos last Super Bowl.

'You can hold onto your betting tickets all your life, but you're not going to get squat,' said Stovall.