Is There A Relationship between Participation in Gambling Activities and Participation in High-Risk Stock Trading?

Abstract

The purpose of the present study was to investigate whether or not there is an association between engaging in traditional forms of gambling and engaging in high-risk stock trading and, if so, to examine game play patterns of high-risk stock traders, as well as identify any socio-demographic similarities or differences between the two groups. Logistic regressions on data from two large Canadian data sets were undertaken to examine which variables best differentiate traditional gamblers from high-risk stock traders. The results indicate that high-risk stock traders have a higher frequency of gambling, engage in a larger range of gambling activities, and are more likely to be problem gamblers. Additionally, the type of gambling activities that high-risk stock traders participate in suggests that they are a sub-group of skill-based gamblers who also prefer gambling on casino table games, sports betting, dog and horse race betting, and games of skill for money over chance based games such as electronic gaming machines, bingo, and instant win tickets. High-risk stock traders, compared to traditional gamblers were more likely to be male, have a higher income, be better educated, and to be of Asian or “other” descent, not be divorced, widowed or separated, and be self-employed or employed full-time. However, unlike other skill-based gamblers, high-risk stock traders tended to be older rather than younger, and had a high income rather than a low income.

Cryptocurrency investment: A safe venture or a new type of gambling?

“…When the relationship between investment behaviours and socio-demographic data is viewed, we note the following compelling finding. Previous studies show that female stock market investors take less risk, show less pathological trading behaviour, and are less impulsive than men, whereas those who take more financial risk are mostly young, educated men (Arthur et al, 2015;Deck et al, 2014;Jadlow & Mowen, 2010). In our study, however, no statistically significant difference emerged between women and men in terms of pathological trading, gambling and impulsivity.…”

The psychology of cryptocurrency trading: Risk and protective factors

“…Indeed, similar arguments have been raised in relation to the daytrading of shares, which appears to entail a significant element of luck or chance, inconsistent returns, and a likelihood of poor returns for most investors (e.g., Arthur, Delfabbro, & Williams, 2015;Arthur, Williams, & Delfabbro, 2016;Barber, Lee, Liu, & Odean, 2009;Dorn, Dorn, & Sengmueller, 2014;Gao & Lin, 2015;Jordan & Diltz, 2003). As Arthur et al (2015) point out, day-trading differs from conventional long-term share investing in that the event frequency (time between purchase and sale) is often short. Purchases and sales may also be more based on "technical analysis" than appreciation of the intrinsic or long-term value of the stock.…”

“…These many characteristics of crypto trading has led some commentators to suggest that this new activity shares much in common with online gambling (Gainsbury & Blaszczynski, 2017;Millar, 2018;Mills & Nower, 2019). Indeed, similar arguments have been raised in relation to the daytrading of shares, which appears to entail a significant element of luck or chance, inconsistent returns, and a likelihood of poor returns for most investors (e.g., Arthur, Delfabbro, & Williams, 2015;Arthur, Williams, & Delfabbro, 2016;Barber, Lee, Liu, & Odean, 2009;Dorn, Dorn, & Sengmueller, 2014;Gao & Lin, 2015;Jordan & Diltz, 2003). As Arthur et al (2015) point out, day-trading differs from conventional long-term share investing in that the event frequency (time between purchase and sale) is often short.…”

The stock market as a casino: Associations between stock market trading frequency and problem gambling

“…The behavioral finance literature has largely considered cognitive (Barber and Odean, 2001) and educative factors (Fernandes et al, 2014) for suboptimal investment behaviors. This study adds to a body of previous evidence, that at least for some investors, a behavioral dependence to gambling or risk-taking may also be a contributing factor (Arthur et al, 2015;Cox et al, 2020;Dixon et al, 2018;Grall-Bronnec et al, 2017;Granero et al, 2012;Shin et al, 2015;Team and Turner, 2011;Youn et al, 2016). A behavioral dependence explanation would indicate that the increasing ease of financial trading via new investment platforms may have negative consequences for some investors (Stewart, E., 2020).…”