Lotto, gambling, and good judgement

[Ridgerunner]

In a way, though, doesn’t government cushion the blow a little bit for you? Tax breaks, bankruptcy protection, etc. Does that make it morally better than throwing money into a slot machine where you have knowledge of preset odds of winning and play for entertainment purposes?

Whether the government does or does not cushion the blow (and most investors would dispute whether that has anything to do with their motivation) is not relevant to the question whether an investment is more or less moral than gambling. I do not argue that all investments are good or that all gambling is bad. I am just saying that they are different things, most of the time. Most investments are not “day trader flings”. Most are investments in productive assets that produce real things. Most are reasonably, if not entirely, predictable if one does his homework. A farmer buying breeding stock, or a man building an office complex, is just not the same thing as spinning a roulette wheel, even though there is an element of chance in both. Even having a child involves chance, but it isn’t “gambling” in its fundamental purpose. It’s giving life.

 

[Ridgerunner]

Bob:

I should have added that “governmental protections” are nearly the same in investing and gambling. You lose money at the track, you can offset that against what you won at the track, taxwise. You get into debt over gambling, you can bankrupt out of it unless Big Louie threatens to break your legs if you do.

What they are NOT the same in is this. If you buy a producing asset, you can deduct the cost of it, on the theory that it will produce income that will get taxed in due course. Gambling is not like that. The money you lose at the track today won’t produce any income for you in the future. So you can’t deduct that, except, as I said, against gambling winnings.