Islamic View on Gambling (Maisir)

Saiful Azhar Rosly, Ph.D saiful@inceif.org

International Center For Education in Islamic Finance (INCEIF)
www.inceif.org

The main idea behind the prohibition of gambling (maisir) in Islam is that
money should be earned by way of work and effort (kasb) i.e. knowledge
and not by mere pure chance. The Quran says, “They question thee about
strong drink (khamar) and games of chance (maisir). Say: In both is greaty
sin, and (some) utility for men; but the sin in them is greater than their
usefulness” (Al-Baqarah: 219)

When knowledge and skills are used to earn a livelihood, it exemplifies a

life that gives due attention to morality and healthy living. This is because
earning money by virtue of pure chance can mean two things:

Life under desperation

Life under recklessness

Life under desperation means an illusion that one will eventually win the
lottery prize although by the law of large numbers, it is highly unlikely he
will ever win it. This is the problem of the desperate poor.

And life under recklessness refers to the attitude of a risk-lover who is

willing to put his money at risk knowing that the rewards are not
commendable enough. This is the rich man problem some of whom readily
finds thrills and excitement only in gambling.
Shariah scholars usually brought up the gambling issue as one of the
underlying prohibitions of Islamic finance. Financial transactions
implicated are:

Insurance
Commodity forward trading
Financial futures and options

This short essay shall examine what is gambling and tries to see whether
the above transactions embrace the salient features of gambling.

Playing a lottery is one form of gambling. There is not debate in the Islamic
circle that it is not. However, there has been arguments and legal opinions
(fatwas) that insurance, forward trading and financial derivatives are
gambling.

Gambling include any activity where a person pays something of value for
the chance to win a prize. When someone gambles, it will involve three
things, namely:

Prize: anything of value: money, physical items, software

Consideration: what the person must pay to enter
Pure chance: something that is opposite to the pure skill. For example,
chess requires pure skill and slot machine require pure chance.

It seems apparent that the chance factor is the dividing line between
gambling and non-gambling functions with a consideration. For example,
risking $10,000 (i.e. the consideration) in a joint-venture (JV) project is
not gambling because the outcome of the JV is based on knowledge and
market skills. The person can steer his business towards success in many
ways; improving efficiency, seeking cheaper source of supplies, cutting
unnecessary overheads, creative marketing and exploring new markets. In
other words, he has some control over the business. He is taking part in the
business itself. He is not a spectator. He is a player. He rides the horse.

In a lottery, a bet is made on an event that he has practically no role to play

in determining the outcome of the betting game. He is a spectator and
relies on pure chance to win or lose.

Likewise, in commodity trading, a trader buys a forward contract at a

stated price but has no control or role in determining the market price (i.e.
actual price) at expiry date. At expiry date, if the strike price is lower than
the actual price, he makes big money. He is only a spectator to the event.

The same applies to stock futures and options. The person buys the future
indexes at a strike price of which the business outcome (i.e. gains and
losses from sale and purchase of contracts) is based on the actual index at
expiry date. Whether the actual index is higher or lower than the strike
price (i.e. index) is beyond his ability to control. It’s like making a bet in
horse-race. The trader is the spectator. He is not the guy who rides the
horse!