No, it is not.
But what is the difference?
I am glad you asked. Let me begin here…
The term gambling has long been attached to the concept of investing, and the term has always been associated with risk, unwarranted gains, “luck”, buck-ups and chance. Gambling has multiple definitions and I feel I must clean up some of the broad strokes that the word ‘Gamble’ has painted over the financial market.
‘Gambling’, when uttered from many lips, is a negative or bad word, sometimes due to the misquoting scriptures from the Bible or cherry-picking verses or lines from the context of Biblical stories of wisdom. First Timothy 6:10 is the most popular point of reference and it reads: “the love of money is the root of all evil” but the verse continues to read “which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows.” That, my friend, is the entire verse. The ‘love’ of it (money) and the ‘covet’ of it (money) will or may cause one to go against the teachings of the faith; which takes us to ‘greed’. On many occasions, that one line, usually repeated as ‘money is the root of all evil’, is used to say gambling is bad. But what really is gambling? Is it a game of chance? Is gambling a mathematical probability? Is it simple or complicated?
Gambling has three (3) break out meanings:
- Play games of chance for money; bet.
This definition is speaking about games like horse racing, cash pot or the lottery. These games are designed for anyone to place a wager of money on a game of probability, a mathematical game of chance, game of numbers, accidental outcomes, “buck-ups” or situations where all the variables or most are beyond the player’s control.
- Take risky action in the hope of a desired result.
This definition applies to almost all forms of income-earning ventures, like starting a business, FX trading, trading futures, commodities, etc. More of the unknown, the ‘variable’, is in your hands and within more of your control, but if you do not know how to do record keeping in your business; or under the seasons for FX trading; or the terms and conditions of stock trading, your success will be left to chance. Under this definition, you can invest your monies, but you can also take back your money out of a business if it is not going well or make changes to your sales pitch or demographics.
With a game, which is the premise of many gambles, your wager cannot be redeemed because you get the jitters or see a better opportunity, not even at a penalty. You cannot stop the bleeding until the game is over or the race is done, but your ticket is a chance for the desired result, but with no other input from you. If you have an input, it is usually against the regulators of the game and therefore illegal.
- Wager of money or something of material value on an event with an uncertain outcome with the primary intent of winning (gaining) additional money and/or material goods.
This definition is a mixture of sorts of the two above definitions but games like Bingo or a raffle is still considered gambling and, in most countries, still must be regulated by some external authority. The bigger the prize, the more likely that a governing body has to step in. However, a simple game of cards or a board game can also be a gambling venture once money or something of material value enters the event or the activity or is pinned to the results of the game.
My simplification of the three definitions boils down to ‘if my money or something of value goes into something and that (money or something of value) is not used to enhance or create or assist in the production or service to others before it comes back to me, and yet I still have a chance to lose some or all, then it is a gamble’. Even simpler, “my money fi work, and if it naw work, then is bandooloo”. Schemes and pools that promise or guarantee large outcomes without the input of consumers or a transaction is a gamble for me. Now let us look at the term ‘Investing’.
Investing is defined as ‘the putting of money into a financial scheme, shares, property, or commercial venture with the expectation of achieving a profit’. I would add more to that definition by saying ‘Investing means the putting in of time, effort and/or money into an activity with the expectation of later profit’. The word ‘expectation’ is where terms like ‘risk’ and ‘loss’ would be lurking. So, investing, by definition, does not take the concept of chance or the entertainment factor of a game into account, it considers profit or earnings.
In summary, if you are not able to identify a product or service that is benefitting from your input of funds, then you are likely playing a game of chance (gambling). Investing from a place of understanding protects you from falling into the space of gambling with your money. Risk is involved in investing, but it can, and should, be managed according to your ability.
