Gambling Dens

"Do you think Harvard's tuition will exceed $59,000 in 2026?"

It's a simple yes/no question, and now some investment firms will let you bet on it.

Here's the headline from Advisor.ca: Canadian regulators are opening the doors to prediction markets.

"Prediction markets" is a euphemism for "a place to place yes/no bets." That sounds like gambling to me, so for the rest of this post I'll refer to them as gambling dens.

So why are Canadian investment regulators, instead of provincial gaming and lottery regulators, opening the door to online gambling dens?

I understand some individuals still think traditional investing (i.e., buying stocks) is gambling. But it's not. Let me explain.

When you invest in the stock market, you buy shares of a business. You become an owner of a business. That business could fail. Most do. But that's why you own shares in many businesses, not just one.

I've never heard someone say, “I was a long-term bettor and now I'm living my retirement dream.”

That’s because you don't own anything when you place a yes/no bet. The gambling philosophers will say that when you place a bet you own a potential outcome, but a potential outcome isn't real until it happens. If it happens at all.

Since the Dutch East India Company first sold stocks to the public, people have considered investing gambling. And the investment industry has spent the same amount of time fighting back, reminding investors that you own something when you invest. That investing isn't even close to gambling.

Why, then, is the investment industry getting into the gambling den market?

The answer, of course, has to do with gaining market share.