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Comment by SilverElfin | Hacker News Reader

Why is it any different than betting on the stock market? Buying a house is also a bet. Even if Americans view it as a bad thing, it should be allowed.

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Stocks have positive expected returns: the risk premium. Sports bets have negative expected returns in aggregate and if you are good enough to only bet the ones you can spot with positive expected returns they ban you from the platform.

Stocks do not have positive expected return. The return on the average stock is 0% in the US which is negative after fees (this is a common misconception, market returns are positive only because large companies get larger and this is contextual, when this isn't true then even the market will lose money). This is to say nothing of 0DTE options.

There is a risk premium but this premium can be positive or negative. It has been negative in many countries, do you suggest they ban stocks?

I don't think stocks are the same thing as gambling btw. But it is significantly more complex in that they overlap, some financial products clearly exist in the US because gambling was illegal. A sports bet is clearly not an investment, but neither is a ODTE option. Both are entertainment, the former probably more logically so than the latter, I am not sure what appeal that latter can have other than to gambling addicts.

If stocks did not have positive expected return no one would invest. What you're talking about is daytrading where there's a large failure rate so much so people call it gambling because of the nature of how swingy and illogical it can be.

Besides that, there's also the perspective that options help stabilize the market via hedging.

Then why do people gamble? Negative expected return, they still do it.

I am also not sure what you are saying. The return on the average stock is negative, it is a empirical fact.

No one should be buying 0DTE options, it’s idiotic.

You should only use options as a way to make some extra money for actions you might have taken anyway, such as buying/selling a stock at a certain price.

>they ban you from the platform

Use a respectable platform that doesn't do that then.

Are you familiar with any? I know people who bet on sports for a living and one of their biggest operational challenges is keeping accounts unbanned long enough to make consistent income.

Polymarket.

There's no such thing. The house always wins or the business collapses.

Yet, Polymarket exists where no one takes a cut* as it all happens on a blockchain.

*there are small gas fees for sending transactions on the blockchain

The odds are manipulated to give the gambling company the advantage. Big winners are identified and dropped. It is designed to drain money from gamblers.

Stocks are not that, in general. A particular fraudulent investment could be that. Crypto investment comes to mind.

You don’t need to even win to get banned (limited from making bets larger than a couple of dollars). You just need to make bets that look too smart and might result you winning in the future.

https://youtu.be/XZvXWVztJoY?t=667

Sports betting is just looking for chumps that have little to no chance of winning.

I’m not sure what you mean by odds being manipulated. The bookmaker will generally adjust odds to where the money is being placed. Example, in American football if a team opens up as a 7 point favorite and betters put more money on the underdog than the favorite, the line gets smaller so more will take the favorite. Generally the opening line is what the book will think half the betters are willing to place on the favorite, and half on the underdog. Doesn’t always work out that way which is why you see lines move.

Also not sure what you mean by winners

Listen to season 4 of Michael Lewis' podcast. He covers the downsides in detail.

https://www.pushkin.fm/podcasts/against-the-rules

I think this is the ep that gets into the most detail, but I haven't read the transcript.

https://www.pushkin.fm/podcasts/against-the-rules/vegas-spor...

IIRC, if you're too professional or too lucky, the betting apps will restrict you and then lock you out. They only want the dumb money playing.

> Also not sure what you mean by winners

https://www.vegas-aces.com/articles/how-betting-sites-limit-...

Various forms of this have been practiced in traditional casinos for almost a century with increasing sophistication, it’s a well-established art by now.

> Why is it any different than ... Buying a house

Because your money will at least get you a roof over your head. It's not a bet because it involves an element of chance. I can't believe you're seriously raising such an argument.

Certain forms of stock market operations are indeed banned from retail - for example "binary options" in the UK.

Because the outcomes and demographics for sports betting vs the other two show different aggregate money movements and we make judgements about what we consider to be acceptably and unacceptably informed and consenting risk accepting behavior.

> Why is it any different than betting on the stock market?

We could honestly say gambling and investments were similar - if they typically had similar outcomes.

In late 1990s, I set up two customers (in retirement) with PCs and internet. One was a day trader and the other did online casinos. After a year they were both about as good as their contemporaries.

The day trader made more money than he lost but I don't know how much.

The gambler hid his habit from his wife. He lost their entire retirement savings, maxed out their credit cards, got more cards and maxed those out - and took out 2 mortgages on their formerly paid-for house. It ended their marriage.

These truly aren't similar outcomes.

I think this is a good question, I’m sorry you’re being downvoted.

I think the difference is that buying/betting on a house or stocks are not a zero-sum game. It is feasible for everyone to buy a house, all the houses to increase in real-world value, and everyone benefit. Likewise with stocks. And on top of that effect, the bets being made are useful for society at large to make better plans, because they are a measure of society’s best predictions. Sports betting on the other hand, is truly zero-sum (although I think you could make an argument that it's actually worse than zero sum). Additionally, it is not useful for society to predict which team will win some set of games. This is just wasted effort on a curiosity. There’s nothing wrong with that effort as entertainment, but it is bad to incentivize our minds to take up sports betting, as opposed to say finance, engineering, art, or anything productive.

Options markets are zero sum.

The important distinction between gambling and options is that there are many additional information sources available to bias the outcome.

Options are a Bayesian game. Jane Street is much more likely to win than I am, but there are still rare cases where I could come out ahead with very high certainty (I know something they don't).

Card counting and being escorted out of the casino aside, there aren't any ways to acquire private information in a gambling context.

Why? Both sides could use hedging, both sides could derive economic benefits, etc.

On a per transaction level, for every dollar someone makes on a put/call option, the other person has to lose equivalent. Even more when you factor in exchange fees

Hedging is just an additional transaction that limits the damage if the bet doesn't pay off. You can do the same thing in gambling.

I buy a house to live in it, WTF are you buying one for?

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