> What made one gambling and the other not? What makes any given bet a legitimate financial trade versus pure gambling?
Legally, it's whether the bet meets the legal definition of gambling as per the legislation applicable in your jurisdiction and any binding case law. There's no universal answer.
But from an ordinary language perspective, the difference is whether it involves an element of skill sufficient (at least in theory) to win in the long run if you possess that skill. For example:
Roulette - generally gambling
Blackjack - usually gambling these days, sometimes not if count counting is feasible
The examples don't hold in most jurisdictions (except for the stock market and if short sells are allowed).
All of the three categories are defined as gambling in pretty much all jurisdictions across the globe. However, they are classified as different types, e.g. roulette is closer to slots than poker is. Then poker can be "cash tables" vs "tournament". The main classifier difference is "game of chance" vs "game of skill", yet there are lots of nuances.
As I stated in my comment, they weren't examples of the legal definition of gambling. What the law says something is can often differ greatly from the every day understanding. The legal definition can also change according to the whims of the legislature while the every day meaning tends to stay more static.
In the distant past of 2011, offering online poker to Americans, even from overseas, brought serious Federal prison time. That was before the lobbyists got to work.
That entirely depends on the asset classes you invest in. Proper stonks? Sure, that's not gambling. But as soon as you enter the fun world of derivatives and daytrading...
It's a common refrain, but I don't agree that it's correct. You're essentially boiling the definition down to the degree of risk:
If (risk > some_threshold) then gambling = true; else gambling = false;
With derivatives your risk is often greater than with traditional stocks. But that's not universally true. If you invest in a startup your risk is massive, whereas if you invest in a well diversified and low leveraged portfolio of derivatives your risk might be substantially lower.
And in any case, so what? If you place a small bet on every number of a roulette table your risk is essentially zero: you'll simply make a guaranteed fixed loss of 5.26% on every spin. On the other hand, if you invest in the Vanguard Total Stock Market index tracker, you might hope to make around 8 to 10% per year, but in some years (e.g. 2008) you might make a big loss (37%), so the risk is significant. Yet I think most people would agree that the former is gambling while the latter is not.
The important factor isn't how much risk you take on, it's whether a sufficiently skilled person can achieve a positive mathematical expectation over a series of similar bets.
> You're essentially boiling the definition down to the degree of risk
Indeed, but I'm not alone in making this decision, it's a common thing in the finance world, known there as "accredited investor" [1].
Generally, the distinction between gambling and investing (a fine line that especially Kalshi and Polymarket are attempting to walk, by the way) often is "can the investor / gambler influence the outcome of the investment by knowledge". Say, a stock like GME... the initial analysis by DFV clearly was investment, based on very thorough research. The Army of the Apes however that m00ned the stonk? That was pure degenerate gambling, with the point not being profits but hedgefunds closing down.
I think a more effective definition involves socially productive activity. If support the creation of value to others in hopes of getting paid back over time through getting a fraction of the value created, that's investing. If I put money into something volatile in hope that I get more money out, that's gambling.
Alternately, you could frame it in terms of positive sum vs zero/negative sum systems. The former is investing, the latter gambling.
Legally, it's whether the bet meets the legal definition of gambling as per the legislation applicable in your jurisdiction and any binding case law. There's no universal answer.
But from an ordinary language perspective, the difference is whether it involves an element of skill sufficient (at least in theory) to win in the long run if you possess that skill. For example:
Roulette - generally gambling
Blackjack - usually gambling these days, sometimes not if count counting is feasible
Poker - not gambling
Stock market investing - not gambling