Life's a Gamble

by Karl Simms

Somewhere on the internet a professional gambler justifies his way of life by claiming that ‘life’s a gamble anyway’. Whenever I get up in the morning, I run a risk of falling down the stairs; whenever I cross the road, I run a risk of getting run over. Since life is full of such risks, so the argument goes, life as such is constituted by risk, and so I may as well choose risk as a way of life. The non-sequiturs here are obvious: I may accept the risk of falling down stairs as the price for getting up, but only retrospectively, if I make a conscious effort to think about it. Indeed, if I did think about it beforehand, I would probably choose to spend the whole day in bed! And just because some risks are unavoidable, it does not mean that of necessity I should seek out risk as a way of life. In short, there is a difference between acknowledging the risks involved in living everyday lives, and seeing life as such as a gamble.

That said, I think there are some parallels between life and gambling, and that gambling can tell us something important about the structure of lived experience. Before moving on to that, though, we should clarify what we mean by ‘gambling’. Gambling, speculation and investment are all related, but have significant differences as well as similarities. At one pole I would locate what I would call ‘pure gambling’, which is a game of chance. In the gambling industry this is called ‘fixed odds’ gambling, since the likelihood of the outcome, but not the outcome itself, is known in advance: given a perfect die, for example, each number has precisely a one sixth chance of coming up on each roll. Most casino games, slot machines, etc. fall under this category. At the other pole I would situate investment, whereby the punter buys a stake in an entity (or more typically, in a portfolio of entities) in anticipation of the entity increasing in value in the future. Pure gambling is usually focussed on a single event that is brought about for the sole purpose of the gamble (most simply, tossing a coin with a wager attached), whereas investment is typically not focussed on an event, as such, but rather on an open-ended improvement, and the entity invested in usually exists for some primary purpose other than the investment opportunity (making widgets, for example).

Between investment and gambling there is speculation. Speculation takes place wherever there is a market in investments, and is constituted by the trading of those investments. It is akin to investment insofar as the entities traded (stocks and shares, bonds, currencies, commodities, futures etc.) do not exist in order to be traded, so the trading opportunity is a by-product of the fact of the investments in those entities being marketed. Nor is there a singular event attaching to the wager involved, other than in the relatively trivial sense that at some undetermined point in the future the value of the stock will rise or fall. Someone skilled at ‘playing the markets’ can use their knowledge of how markets behave in the face of external influences on them to make a profit without benefitting the entity invested in; in more sophisticated markets there are opportunities for hedging and arbitrage such that the investor will make a profit however the stock performs.

And finally, between speculation and gambling, there is what I would call ‘speculative gambling’. This is where a wager is placed on a singular event which will have a determinate outcome at a particular point in the future, just like pure gambling. However, as with investments, the event in question does not take place for the purpose of the wager. Moreover, the probability of any particular outcome is a matter of judgement, rather than of mathematical certainty, and this means that the punter, like the speculator, needs to deploy an amount of knowledge, skill and experience to make a profit. Sporting events lend themselves particularly well to this kind of scenario, but it can also apply to elections, TV talent shows, etc. – the essential thing is that there must be a future event.

It is speculative gambling that I find revealing about what I rather grandly called at the beginning ‘the structure of lived experience’, and I’ll discuss this in a later blog. But in what remains this month I should like to make clear why pure gambling is not interesting from that point of view (although it may be an interesting phenomenon for other reasons). Pure gambling is determined by the interaction of mathematical certainty with pure chance or luck, and tends to attract the superstitious, who falsely believe that their own luck can supersede the mathematical certainty. If a perfectly balanced coin is perfectly tossed an infinite number of times, it will land on heads precisely 50% of the time, and on tails precisely 50% of the time – that is a mathematical certainty (the odds are fixed at evens). This means that the probability of the coin landing on heads (or tails) at any one time is precisely 50%. However, the gambler who wagers on the toss of the coin surely believes that on this occasion, luck is with them, and that they will win. This initial superstition gives rise to others, such as the ‘gambler’s fallacy’ – that past mathematical outcomes will affect future ones: ‘The coin has come up heads five times in a row – surely it will be tails next time!’. No! Each toss of the coin is an individual event with the same probability of 50/50 heads or tails – only with a very large sample will this even itself out to a 50-50 distribution in reality, and only over infinite time will this be a precise 50-50 distribution. Gambling companies exploit this superstition ruthlessly, of course, which is why on a roulette table the history of previous winning numbers is displayed, and why during the National Lottery show on TV the commentator mentions how many times a particular number has come up before. (It’s a fact that the sequence 123456 is just as likely to come up as any other six-number sequence in the National Lottery, but very few people who enter the Lottery seem to believe this.)

Most real-life pure gambling situations are not so simple as the toss of the coin, meanwhile, and rather than the chances of a successful gamble being 50%, the house has an edge, be it the green slot on a roulette wheel, or the average pay-out of 72-92% on a fruit machine. Gambling companies love fixed-odds betting propositions, because – as a mathematical certainty – in the long term the punter must lose. This is why, since deregulation in the UK five years ago, fruit machines are proliferating in the country’s poorest areas, where the population is most likely to be uneducated, or credulous, or desperate. Rationalist as he was, Kant said that ‘We can only feel contempt for someone who wins money in a lottery’. He would have done better to say ‘We can only feel compassion for someone who enters a lottery’.
     To summarise, to make a pure gamble is to suspend rationality and to surrender to a belief in luck. Next time, by comparison, I’ll turn to variable odds, or speculative, gambling.

Karl Simms is Reader in Hermeneutics at the University of Liverpool. His books include Translating Sensitive Texts (1997), Paul Ricoeur (2003), Ricouer and Lacan (2007), and Hans-Georg Gadamer (2015). His latest book, The Unsaid: Hermetic Poetry between Hermeneutics and Deconstruction, will be published by Rowman & Littlefield in 2017. He is a Committee Member of the British Personalist Forum, and an Editorial Advisor for Appraisal.