1. Purpose: derivatives serve primarily as risk management instruments. Gambling serves pure profit and entertainment.
2. Topics: derivatives focus financial assets, commodities and economic risk. Gambling focuses on micro, generally sports, events.
Obviously you could make an argument that both instruments can be used for both purposes.
If I'm a worker at a football team who's job depends on my team qualifying to the Uefa Champions League, betting on my team not making it can be considered risk management.
In the same fashion futures on oil prices can be equally used for pure profit and entertainment purposes.
[–] howunfortunate 1 day ago
This is the ideal, yes. But I'd bet about 99% do the opposite and double their risk by betting on their preferred outcome.
Also, betting on something you have control over introduces perverse incentives. It's easier to sabotage an effort than make it succeed.
[–] epolanski 1 day ago
That should be plain illegal, in the same way sportsmen are barred and punished for being anywhere near betting.
But we have politicians, their staff and administrations openly trading and betting on outcomes they can influence.
In the large US professional sports leagues (NFL, NBA, MLB), it's not uncommon for some of the most long-term losing teams to be the most financially profitable.
In the case of the NFL, the league itself is owned equally by each of the 32 teams. They each get a 1/32nd share of league revenue regardless of win/loss. While many costs like player contracts are capped, other costs (like coach contracts) aren't. Since the majority of income is equally split, one way to max profits is to spend less than other teams where they can.