There are indeed several differences between investing and gambling, but many people don’t know what they are… and this leads them to making major financial mistakes.

Reading this article will save you from such mistakes as it reveals the many differences between investing and gambling, as well as provides very interesting tips to help you. 


Investing Vs Gambling and Importance of Knowing the Difference

When it comes to risking one’s money, many would say that the “casino” located on Wall Street in New York is no different than the average casino on any entertainment strip found in a number of cities.

They would further argue that sitting in front of a console and watching the “Big Board” is no different than sitting down at a blackjack table or in front of a slot machine.

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Also, they might compare the placing of money on a company’s earnings or a company’s projected earnings is no different than placing money on a number at the roulette wheel.

So, the question “Is there a difference between risking money on a company or risking money at a casino?”

Therefore, let us move past the bright lights and promise of a return on one’s investment and explore any possible differences between the two “investments” that actually have the promise of a financial return.


Get Rich Quick

There are always those in the world who want to get rich quickly.

In history, the gold rush days attest to this reality, investment opportunities guaranteed to double your money or other get rich quick schemes.

Both gambling and investing sometimes offer promises of good returns.

Therefore, in wanting to be a good investor of one’s money, perhaps a comparison of investing and gambling might prove both interesting and informative.

Both offer a return on one’s investment but the difference between what is real and what is promised is sometimes a significant gap.


13 Differences Between Investing and Gambling


1. Diversification

A significant difference between investing and gambling is in the key area of diversity.

Investing is the process in which the investor takes a risk but spreads that risk across a broad spectrum of investment opportunities.

Specifically, the investor can invest in index funds and with this scenario being investment across a broad spectrum of businesses.

On the other hand, a gambler or gambling does not diversify their risk.

The gambler places a one-time bet on one game of chance in hopes of a return.

That return can be a win or loss situation with no option of reducing or mitigating their management investment risk.


2. Playing the Odds

As it relates to gambling as being an investment, with a casino the odds always are slanted or in favor of the house or the casino.

A simple look around the opulence of a casino will certainly reveal that a lot of people’s money and subsequent losses have gone into providing for the majestic look of these casinos.

On the other hand, with a strategy, doing one’s investment homework, and working with investors who know their way around the market, the odds are considerably more favorable to the investor.

Also See: Left Hand Itching Lottery MeaningRight Hand Itching Lottery Meaning.


3. Long Term 

An important aspect of being a successful investor is staying with one’s investment over a period of time.

This commitment in staying with an investment and riding out the ebbs and flows of the stock market, over the long-term, will, most likely, provide a return on one’s investment.

On the other hand, the gambler who places his or her money on a winning outcome will either win or lose.

There is no middle ground. They either receive more chips or they forfeit their chips.


4. Anticipated Results 

The purpose of investing is to utilize one’s money in order to get or receive a proper and worthwhile return on one’s money.

In other words, having money just stored away in a non-or low interest-bearing account is not beneficial to the individual.

The same can be said is true of a gambler who wants a return on their investment.

However, the investor is content with, for the most part, slow and steady gains.

While the gambler wants an instant an immediate return on their money.


5. Chance vs. Calculated Risk 

An investment, needless to say, is risky.

Risky being defined as there is no guarantee and that an individual may lose money.

However, the risk is magnified with gambling because it is a win or loss proposition.

Additionally, with a gambler, control of the risky venture is nonexistent.

This is due to the fact that an individual sits at a blackjack table or a slot machine, should realize there is no control whatsoever as to how the cards are dealt.

With an investor there are risks but they can be managed and ultimately the investment can be withdrawn, sold, or reinvested elsewhere.

Related: Difference Between Speculation and Gambling.


6. Certainty of Return 

A significant difference between investing and gambling is the anticipated return of the money that is invested.

With an investment risk, the investor does not expect their money to be doubled or some outlandishly high percent of return.

However, as with a gambler, the expected or anticipated return is considerable and often not achieved.

Consequently, this leads to disappointment and often causes further good money thrown after bad.


7. Foundation 

Generally, an investor makes their decisions based on a number of factors.

Those factors can include a company’s financial statements, management of the company, speculation on future sales, etc.

In other words, an investor analyzes and takes into consideration a number of factors before they proceed or not with their investment.

On the other hand, a gambler has no foundational charts, or graphs, or educated guess how the cards will be dealt out, or where the wheel stops, or when the slot machine stops spinning.

In other words, the foundational thinking and action of a non-professional gambler are based on luck and chance.


8. Legal Issues 

As it relates to gambling and investing, there are potential legalities that come into play.

Investing is not only a tried-and-true option for an individual to endeavor to maximize their money through investing, but it is a widely accepted practice.

In addition, investing in stocks, bonds, mutual funds, index funds, etc. is completely legal.

On the other hand, there may be some legal issues associated with one who is involved in gambling.

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Specifically, it is it legal within the state, is it being conducted outside of a sanctioned gambling facility, etc.


9. Character of Individual 

Although it’s not fair to characterize an individual based on whether they gamble or invest, there may be some possible assumptions that one can recognize about an individual’s persona.

For example, a gambler may be an individual who throws caution to the wind.

Perhaps they enjoy the excitement of the moment and live in that moment and not worry or be concerned about their gambling as it relates to their future financial security.

An investor may be an individual who is more calculating, thoughtful, and deliberate with their money and with a critical eye to their personal future.

Again, it is not good to stereotype an individual.

However, there may be some validity to these assumptions.


10. What Is Purchased 

At the end of the gambling excursion, it is important for the gambler, who thinks of gambling as an investment, to realize what they are leaving the casino with.

It could be some additional cash than what they entered the casino with, however, in most likelihood; their pockets are a little less empty.

All that to say is what does a gambler have to show for their commitment of time and the use of their money.

On the other hand, with an investor, even if the investment does poorly, at the end of the investment cycle, they still have that asset which, through good investment strategy, has increased in value.

And so, for an investor, they have ownership of that investment at the end of the day.


11. Knowledge 

A significant difference in how the decisions are made between a gambler and an investor is the thinking process behind the investment.

For an investor, the individual will utilize all sorts of knowledge to make a wise choice based on all of the knowledge factors.

This is not to negate the gambler who may pride themselves on having a system, counting cards, or taking certain steps when certain gambling factors come into play.

However, the bottom line is for a gambler, the decisions still weigh heavily in the balance of luck and chance.

Also See: Help If Lost Money GamblingHelp With Gambling Debt.


12. Slow and Steady 

One glaring difference between thinking of gambling as an investment over actual investing is the pace at which a possible return on the investment is provided.

For the gambler/investor the return is almost instantaneous.

A bet is made, the gambling action is taken, and if the gambler wins, they have an immediate payout.

For the investor, this is not the case.

The time process for an investor is over a period of time.

It is the classic story of the rabbit and the tortoise.

The rabbit and its speed are compared to the gambler/investor and the slow and steady winning process of the turtle in finishing the race.


13. Taxes 

Another implication as it relates to investing and gambling is the potential of money being taxed.

With an investment, there are tax shelters that can be incorporated and legally utilized to help protect one’s investment and potential gains.

On the other hand, if an individual hits the jackpot or does well while sitting at a table, any monies that they win be taxed by the government at the appropriate tax rate.


Similarity Between Investing and Gambling



It is important to note that there is a similarity between gambling and investing.

That similarity is that there is no sure thing and to receive a return on one’s investment implies a certain amount of risk.

However, the risk associated with an investment opportunity is less risky due to the possibility of the investor taking in all of the reports provided by a company, the performance of their investment, and where that investment may be headed.

In other words, an investment is a calculated risk.

On the other hand, gambling, although may be based on a system or a feeling or a method of playing, is still a riskier venture.


Control the Risk 

Even though there is a similarity of risk being a common denominator between the investor and the gambler, it is the qualifying aspect of risk.

In other words, anything that an individual does has the potential of having a risk.

Getting behind the wheel of a car has some risk with the potential of an accident.

Being downsized in a job is a potential risk in any employment situation.

However, the risk is mitigated when that individual in the car is experienced, obeys the traffic laws, takes courses on being a safe driver, etc.

Additionally, for the driver of the vehicle financial risk is managed by having insurance.

On the other hand, the risk is an overshadowing factor when it comes to gambling.

There are no safety nets and there are no loss prevention strategies.

With gambling, you either win or lose. There is no gray area.

Check out the following for more tips on investing:


Investing and Gambling Difference FAQs


What Is a Gambling Addiction?

An individual who compulsively gambles can possibly have a gambling addiction challenge in their lives.

For the gambler, it would be the equivalent of an individual needing to take a drug or to have a drink of alcohol.

Gambling can cause anxiety and distress and often,

“Chases their losses” thinking they can win back any monies that were lost.

Gambling can adversely affect an individual’s life, the life of their family, and lead to financial ruin.


Can You Deduct Gambling Losses on Your IRS Return?

The amount of any gambling losses cannot exceed the winnings that are reported on one’s IRS tax form

For example, if an individual’s gambling winnings in the amount of $5,000 and $8,000 in losses, according to IRS rules, you could not deduct that $3,000 difference.



Gambling can be fun if this activity is perceived correctly.

For the most part, gambling is not a sound strategy for financial retirement planning nor is it a way to supplement one’s budget in order to pay the rent or put food on the table.

Gambling rather than investing is more of an investment scheme based on chance and the capriciousness of luck.

Being an investor is a steadier course of action to get a better return on one’s money.

You can bet on it.

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Apart from being a seasoned Personal Finance expert who has written for top publications around the world, I bring significant personal financial experience. Long story short... through bad financial choices... I found myself $100,000 plus in debt. I was able to dissolve this indebtedness and regain financial solvency. This financial turn around was accomplished through reading, studying and implementing a financial plan. My financial plan included paying down my debt through budgeting, being cognizant of where my financial resources were being spent, changing my attitude about money and understanding the binding chains of the improper use of credit. Today, and for 10 years, I have been debt free and have invested wisely to enjoy my current retirement. This is allowing me to write to help others make, save and grow money wisely!