Will this highly dubious legal loophole allow you to open a casino anywhere? The new “stock market casino” app proposal will amaze you.
- In most regions of the world, gambling is regulated by government bodies.
- Unrelatedly, one of the criticisms of the stock market (especially the derivatives market) is that many participants use it exactly like a casino.
In regions where gambling is prohibited, but access to a stock market exists, a stock trading app could be designed that is a thinly-disguised casino.
Instead of playing the slots in a traditional casino, participants in this “stock casino” could spin a wheel to buy random stocks or mysterious financial instruments (Figure 1).
Normally, a person who is day-trading stocks might need to wait for weeks in order to realize a substantial profit (or loss). Fortunately, this process can be hastened using leverage, which will allow gains and losses to be multiplied. A user will be able to win big—or lose it all!—on just a 1% price movement of a stock, if they use enough leverage. In this way, a user can win or lose within hours, rather than needing to wait for weeks.
As a secondary bonus feature, we can “gamify” the stock-buying experience in order to encourage more trading activity (i.e. more profit for the operator of the app).
Specifically, we will use the “in-game achievement” system (AKA “badges” or “trophies”) in which users are awarded special app “badges” for particularly noteworthy or dangerous trading-related activities (Figure 2). This could encourage users to make a lot more trades than they otherwise would (and risk a lot more of their savings).
One complication of this “stock casino” system is that stock markets have limited hours, but we really want to keep the app operational 24 hours a day. A developer would probably need to include stock exchanges in other time zones as well, which increases up-front development complexity.
Just to be safe, anyone developing this app should do it in close collaboration with (and in the territory of) a nation that does not extradite.
PROS: Great way for a developer to make a profit while promoting financial irresponsibility.
CONS: Probably not a great idea to base your business and future not-being-in-prison status on a highly theoretical “loophole” that may not even exist.