A Better Legal Definition of Gambling: With Applications to Synthetic Financial Instruments and Cryptocurrency
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A BETTER LEGAL DEFINITION OF GAMBLING:
WITH APPLICATIONS TO SYNTHETIC
FINANCIAL INSTRUMENTS AND
CRYPTOCURRENCY
W.C. Bunting*
I. INTRODUCTION
In many cases, gambling is relatively easy to identify. Purchasing
a lottery ticket, betting on a particular team to win the Super Bowl,
and playing blackjack at a local casino, all these activities
undoubtedly constitute gambling. You just know it when you see it.
But sometimes you do not. In some cases, gambling is not so easy to
identify. Over time, questions have arisen as to whether certain
transactions, often of critical importance in the moment, constitute
gambling. Roughly a decade ago, for instance, there was considerable
debate around whether trading in synthetic collateral debt
obligations (CDOs) constituted gambling no different than placing a
bet on the Yankees or, instead, served a socially useful purpose in the
management of risk.1 More recently, there has been a similar debate
about the intrinsic value of cryptocurrency and whether
cryptocurrency is merely a vehicle designed to enable gambling,
allowing buyers and sellers to participate in what is, in effect, a
* The author is an Assistant Professor at Stetson University College of Law. This research
did not receive any specific grant from funding agencies in the public, commercial, or not-for-
profit sectors. The author thanks seminar participants in 2022 Junior Scholars in Legal
Studies Online Workshop. The Article has benefited from useful conversations with Mike
Schuster, Angela Aneiros, Gregory Day, John Holden, Sam Ehrlich, Angelica Guevara, Rachel
Chambers, Andrew Appleby, Ellen Pogdor, Grant Christensen, and Phoebe Jean-Pierre. All
errors should be attributed to the author alone.
1 See Timothy E. Lynch, Gambling by Another Name: The Challenge of Purely Speculative
Derivatives, 17 STAN. J.L. BUS. & FIN. 67, 70-71 (2011); Christopher L. Culp, The Social
Functions of Financial Derivatives, in FINANCIAL DERIVATIVES: PRICING AND RISK
MANAGEMENT 57, 58 (Robert W. Kolb & James A. Overdahl eds., 2010); Thomas Lee Hazen,
Disparate Regulatory Schemes for Parallel Activities: Securities Regulation, Derivatives
Regulation, Gambling, and Insurance, 24 ANN. REV. BANKING & FIN. L. 375, 436-38 (2005);
Andrew Ross Sorkin, True Investment or a Sucker's Bet?, TAMPA BAY TIMES (Apr. 21, 2010),
https://www.tampabay.com/archive/2010/04/21/true -investment-or-a-suckers-bet/
[https://perma.cc/8TXP-HWMQ].
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A Better Legal Definition of Gambling: With Applications to Synthetic Financial Instruments and Cryptocurrency
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