For a lot of regular traders, making a distinction between stock or commodity investment and real-money online gaming is not necessary. There are clear distinctions between the two, and regular traders understand that gaming is not a form of investment.
With that said, the distinction is more necessary to cover for some first-time investors, and particularly for young people. Recent data indicates that younger adults are not investing, and one of the primary reasons cited for this is a lack of trust. For the most part, people under 40 have grown up at a time that more or less taught them not to have faith in traditional financial markets. This has in turn led to their seeking out alternative options, and at the same time it’s become easier to find real-money gaming options online.
That in and of itself does not make gaming a form of investment. However, it does indicate that there are some who may be equating the two more closely than others have in the past. And it is therefore necessary to consider the specific ways in which investment and real-money online gaming differ.
Strategy vs. Chance
To think of investing as a skill-based activity is a mistake for most people. As MarketWatch determined through an exploration of data and statistical studies, there is more luck involved in investing than most people realize (or want to admit). However, there is a difference between skill and strategy. Skill is overrated in investment in that it is generally unrealistic for people to expect to “beat” the market with intuition or a talent for reading charts. Strategy, however, is a crucial component to any investment plan.
This can be the case in some type of online gaming and betting as well. For instance, there are mathematical odds at play in games like poker and blackjack that allow players to make strategically sound decisions — even if those decisions are far from being guarantees of victory. But skill plays very little role here as well. And more crucially, some of the most prominent real-money casino games available don’t even involve much of a strategic component, if any.
Slots come to mind first in this regard. They are the most common and most popular online casino games, and their outcomes are driven entirely by chance. The same can be said of Slingo, which is a game being brought back to prominence through digital casinos of late. Leading the charge in the Slingo revival by showcasing the best and most-liked games from across the internet, Foxy Games describes this particular game as a game “played on a bingo card with reels you spin to match the numbers on your ticket.” It is in other words a straight-up combination of bingo and slots — both of which are wholly reliant on chance.
That so many of the most popular games fit this description establishes the most significant difference between investing and gaming. While neither involves skill the way people would like to imagine, the former allows for strategy where the latter often does not.
Another key point of contrast is the ability to diversify holdings. When investing strategically, traders commonly follow the practice of spreading their money out across different assets. Even within the forex market, traders will often buy trade a range of currency pairs at once. The point of this is to ensure that there isn’t a significant chance of a crash relating to one asset causing major losses. Instead, a crash can be contained to merely a portion of total investment. Simultaneously, the odds of the total investment package producing gains are higher.
This approach can theoretically be applied to gaming as well. However, there is less reason for probabilities to work out the same way. We’ll put it this way: A trader investing in gold, Apple stock, and the U.S. dollar can reasonably expect that if one declines, it won’t necessarily mean that the others will also. But a gamer who plays poker, blackjack, and slots can just as easily lose at all three as just one.
This is a more straightforward point, and it actually applies less to forex trading than to investment more generally. But generally, conventional financial investment allows for the potential of long-term maturation. A given stock holding, portfolio, or fund buy-in can sit for years accumulating wealth passively. This is simply not an option in gaming, even for the most strategic and successful players.
More recently, the potential for automated assistance has become another significant difference between investing and real-money gaming. We have written about the rise of forex robots, which can — when used properly — can help to make it easier to manage a currency trading account. And in other forms of investment too, various versions of bot trading or automated assistance are also becoming more popular. In short, people can enhance their investing capabilities though technology.
This is not the case in gaming. There are of course free games, simulators, and other tools that can give gamers practice, and help them understand rules, betting processes, and so on. But employing automation technology in actual games is not an option.
Ultimately these distinctions should make it clear that there’s really no reason to equate investing with the opportunities for potential gains that exist in gaming. It’s certainly possible to earn money through games, but it is not a strategic practice, and it should be looked at as a form of entertainment more than anything else.
This is a contributed article and not necessarily the views of this website.