Why I don’t think gambling is part of financial services

Did I mention that I’ve been writing a book lately?  Or that it’s called No Small Change and is available for advance order on Amazon?  Oh, I did, did I?  Sorry about that.

Writing a book makes you think about things so that you have something to say when you write about them.  One of the things that my co-author Anthony Thomson and I had to think about was the question of what should, and what shouldn’t, be included within our definition of “retail financial services.”  And without more than a few moments’ deliberation, we decided that gambling – whether in casinos, on sporting events or on who’ll replace Theresa May and when – was out.

If you think harder about it, this was a questionable decision.  As consumers in group discussions never tire of telling us, perceptually gambling exists at the right-hand end of a financial services spectrum which has mainstream investing roughly in the middle or towards the middle-right, and building society savings over to the left.  And in fact there are other things over towards that right-hand end which are undoubtedly gambles, but which are undoubtedly financial services too – things like spread betting, CFDs and these scary-sounding newish things called Binary Options.  At the end of the day, they’re all about putting money in and hopefully, though not probably, getting more money out.

So why did AT and I take seconds to exclude gambling from the book?

I guess partly it’s that gambling doesn’t present itself in any way as a part of the financial services world.  Gambling as seen on TV, at any rate, presents itself overwhelmingly as part of the world of sport – presented by football commentators and pundits, and featuring people, mostly young men plus Ray Winstone,either playing or watching the game and occasionally doing things on their phones while other youngish men plus Ray Winstone shout at us on the soundtrack.

But as financial services marketing professionals, AT and I aren’t taken in by this determination to break the category rules.  Plenty of other brands do that – how about animated meerkats? – but Comparethemarket.com is still part of the financial services world.

No, I think the reason we made the decision to leave it out was simply that we hate it, don’t want anything to do with it and definitely don’t want it cluttering up our book.  The business is horrible, the propositions are horrible and above all the advertising is horrible.  There’s a lot wrong with financial services, and it’s taking a distressingly long time to put it right.  But thank God we’re not working in gambling.

One thought on “Why I don’t think gambling is part of financial services

  1. Wow! You must have a very cynical view of financial services in order to think that gambling warrants consideration as to whether it falls within it. Financial services are one thing. Gambling is another. There are those who buy and sell financial services with a gambling mindset, but it does not make the gambling industry part of financial services. I shall explain.

    Financial services are, as the name implies, a service for those who need finance. A simple example would be someone who is in need of funds that they don’t possess: they can “buy” the use of those funds from someone who has funds that aren’t currently being employed. The “price” the acquirer pays is called interest or dividends, depending on the nature of the acquisition.

    Another example would be someone who has a contingent need for finance if a certain eventuality occurs, for example the costs that may arise if one damages one’s car. The car driver can purchase that right to funds by paying an “insurance premium”. The probabilistic nature of that type of insurance may have something in common with gambling, which also depends on probabilities, but the buyer of the insurance policy is buying finance that they will need. The law requiring the policyholder to have an “insurable interest” in the event is designed to prevent people buying an insurance policy as a gamble on an event in which they would otherwise be disinterested. Most insurance pays out only to the extent that it reimburses a cost, rather than a pre-agreed sum.

    Gambling, on the other hand, involves buying the right to a pre-agreed amount of money on the happening of an event even though the event does not give rise to any financial need on the part of the gambler. It is entirely different from insurance. I believe that, historically, gambling contracts were unenforceable in law. The law changed about ten years ago, but the existence of the previous legal position demonstrates that there has been a longstanding recognition that gambling and financial services can be identified separately.

    As I said above, there are those who see the financial services market as an opportunity to buy and sell financial products with a gambling mentality, rather than as a purchase to meet a need. The same is true in other markets, for example exchanging contracts on a new build property off-plan with a view to selling it again before completion. This is done as a gamble to make money, rather than as a property service. But it does not make gambling part of the housing market any more than it is part of the financial services market.

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