Ethical problem. It occurred to me that there’s an easy, obvious way to make money by playing slot machines: Buy stock in a casino and wait for the dividends. Now, is this ethically ok? On the one hand, you’re exploiting a weakness in other people’s brains. On the other hand, your capital seems unlikely, at the existing margins, to create many more gamblers, and you might argue that you are more ethical than the average investor in casinos.
It’s a theoretical issue for me, since my investment money is in an index fund, which I suppose means I own some tiny share in casinos anyway and might as well roll with it. But I’d be interested in people’s thoughts anyway.
Investing in a company is different than playing slot machines. Casinos are entertainment providers: they put on shows, sell food and drink, and provide gaming. They have numerous expenses as well. Investing in a casino is not guaranteed to make money in the same way the house is in roulette, for instance. Casinos do go bankrupt and their stock prices do go down.
In addition, when you buy a share of stock on the open market, you buy it from another investor, not the company, so you’re not providing any new capital to the company.
I don’t believe there is anything ethically wrong with either gambling or funding casinos. If people want to gamble, that’s their choice.
Nu, nothing’s certain, but buying stock does presumably have a positive expected value.
Touching the capital, you can reframe the question as “Buy casino bonds” or “invest in a casino IPO. Besides, even when buying stock from an existing investor, you are sending a signal of the value of that stock—so many mills higher than what the next guy in line would have paid—and that provides working capital in the form of the value of the self-owned stocks, against which the casino can borrow.
I curious what made you think about this problem. I’m sure you’re aware of the efficient market hypothesis… do you have some private information that suggests casino stocks are undervalued?
By coincidence I was in Las Vegas a couple of weeks ago and did some research before I left for the trip. It turns out that many casinos (both physical and online) offer gambles with positive expected value for the player, as a way to attract customers (most of whom are too irrational to take proper advantage of the offers, I suppose). There are entire books and websites devoted to this. See http://en.wikipedia.org/wiki/Comps_%28casino%29 and http://www.casinobonuswhores.com/
It was a random thought. I don’t think casino stocks are particularly undervalued, but that doesn’t affect the basic analysis: If you own such stocks, you’re basically making money off slot machines, in the same way that owning stock in a widget factory means you’re making money from the production of widgets.
Ethical problem. It occurred to me that there’s an easy, obvious way to make money by playing slot machines: Buy stock in a casino and wait for the dividends. Now, is this ethically ok? On the one hand, you’re exploiting a weakness in other people’s brains. On the other hand, your capital seems unlikely, at the existing margins, to create many more gamblers, and you might argue that you are more ethical than the average investor in casinos.
It’s a theoretical issue for me, since my investment money is in an index fund, which I suppose means I own some tiny share in casinos anyway and might as well roll with it. But I’d be interested in people’s thoughts anyway.
Investing in a company is different than playing slot machines. Casinos are entertainment providers: they put on shows, sell food and drink, and provide gaming. They have numerous expenses as well. Investing in a casino is not guaranteed to make money in the same way the house is in roulette, for instance. Casinos do go bankrupt and their stock prices do go down.
In addition, when you buy a share of stock on the open market, you buy it from another investor, not the company, so you’re not providing any new capital to the company.
I don’t believe there is anything ethically wrong with either gambling or funding casinos. If people want to gamble, that’s their choice.
Nu, nothing’s certain, but buying stock does presumably have a positive expected value.
Touching the capital, you can reframe the question as “Buy casino bonds” or “invest in a casino IPO. Besides, even when buying stock from an existing investor, you are sending a signal of the value of that stock—so many mills higher than what the next guy in line would have paid—and that provides working capital in the form of the value of the self-owned stocks, against which the casino can borrow.
I curious what made you think about this problem. I’m sure you’re aware of the efficient market hypothesis… do you have some private information that suggests casino stocks are undervalued?
By coincidence I was in Las Vegas a couple of weeks ago and did some research before I left for the trip. It turns out that many casinos (both physical and online) offer gambles with positive expected value for the player, as a way to attract customers (most of whom are too irrational to take proper advantage of the offers, I suppose). There are entire books and websites devoted to this. See http://en.wikipedia.org/wiki/Comps_%28casino%29 and http://www.casinobonuswhores.com/
It was a random thought. I don’t think casino stocks are particularly undervalued, but that doesn’t affect the basic analysis: If you own such stocks, you’re basically making money off slot machines, in the same way that owning stock in a widget factory means you’re making money from the production of widgets.