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!