The president of the New York Stock Exchange claims that the stock exchange is not a casino. Here’s what academic research says.


With the wild moves in GameStop GME stocks,
-3.53%
and AMC Entertainment AMC,
-5.92%,
or last week among cannabis manufacturers, it is not illogical that some consider the stock market a casino, a description recently used by Senator Elizabeth Warren, the Democrat of Massachusetts.

In an interview with Axios broadcast on HBO, Stacey Cunningham, president of the New York Stock Exchange, a unit of the Intercontinental Exchange ICE,
+1.18%,
says she rejected that comparison.

“Markets are not a casino. They are highly regulated and highly monitored. … We run a marketplace that provides opportunities for investors to come in, invest in the companies they believe in, they believe will grow, and then share in that wealth creation.

Casinos, it should be pointed out, are also highly regulated and supervised, although unlike the stock market there are no long-term positions that can be entered into, for example, a game of blackjack.

Academic research suggests that stock trading and more traditional gambling have a lot in common. An article published in January indicates that there is 3.5 times more gambling on stock markets than in more traditional venues like casinos and lotteries.

The article – by Alok Kumar of the University of Miami, Houng Nguyen of the University of Danang and Talis Putnins of the University of Technology Sydney and the Stockholm School of Economics – says that the United States and Hong Kong have the highest per capita levels of what they call stock market gambling in the world. They identify so-called lottery stocks by looking at volume divided by market capitalization and looking for unusually high ratios.

That’s not to say that all stock market investing is gambling. Researchers say about 15% of stock market volume in the United States is associated with gambling, a percentage that rises to 30% in stock markets in China and Thailand.

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