Please help me make a billion dollars!

[MattyKGB]

Hi all,

I've had a problem on my mind for a while, sharing it here in the hope that you guys will have some interesting thoughts. If I can solve this problem it will undoubtedly make me one of the richest people in the world, so I will take good care of you when I make my first billion

If you'll allow me to get theoretical for a moment...

Imagine there is a commodity, let's call it X.

There is a set of people for whom X is an unwanted by-product of a production process, similar to engine exhaust or nuclear waste. To these people, X has negative value - such that they willingly pay a company to have their supply of X destroyed.

There is another set of people for whom X has positive value - they have a demand for X and they will pay a company to manufacture it for them. The company manufactures X, from scratch, at their own expense, and sells it to paying customers.

Now, in this hypothetical world...wouldn't there be a lot of money to be made by a someone who can bring together the company that is destroying X and the company that is manufacturing X, and have the X simply get transferred from the people who don't want it to the people who do?

It is my claim that X is a real thing - it is RISK.

People and businesses buy all kinds of insurance to eliminate risk. Insurance companies basically "destroy" the risk by pooling it with many other independent risks (this is a bit of an oversimplification but you get the point). In addition, investors often accept lower returns in exchange for reduced risk - look at what a GIC pays these days compared to stock market returns.

Meanwhile, gamblers have a demand for risk. Slot machines, craps tables, lotteries...the only purpose of these things' existence is to create random outcomes on which to gamble - i.e. to "manufacture" risk out of nothing.

So, is there any way to bring together the "risk haters" and the "risk lovers"? For example, a special slot machine whose outcomes are tied to miniscule second-to-second fluctuations in a financial market somewhere halfway around the world?

Any ideas?

If you want to call me a nut, please do so in another thread...serious responses only here please

[rc99ar]

You'll have to be a bit more specific. Risk 'haters' and risk 'lovers' are brought together via exchange on free markets. The markets aren't perfectly efficient so there is money to be made bringing these folks together (market making, brokers, sales commissions, speculation, etc.). The type of risk and the premium you can charge to take it on varies wildly depending on the product. There's also could be a lot of murky legal water, can you elaborate more on your idea?

[MattyKGB]

You'll have to be a bit more specific. Risk 'haters' and risk 'lovers' are brought together via exchange on free markets.

That's my point, they're not...or at least, they're not in some cases. The risk lovers at the casinos are consuming risk that is manufactured artificially for their use, when there is perfectly good risk out there being destroyed.

[ChinMusic]

So what you need is a marketplace where a gambler can go and bet that my house will be destroyed in a fire. Or that I will crash my car.

[MattyKGB]

The opposite - a marketplace where a gambler can bet that you won't.

[ProlinePlayer]

The opposite - a marketplace where a gambler can bet that you won't.

I also didn't really think about and also assumed that I could bet on Chin's house burning down. But you're right of course - it's that fool Chin that's betting on his own house burning down.

PLP

[sabres]

The opposite - a marketplace where a gambler can bet that you won't.

I also didn't really think about and also assumed that I could bet on Chin's house burning down. But you're right of course - it's that fool Chin that's betting on his own house burning down.

PLP

And what a house it is.

Thanks OLG!

[BTS]

The opposite - a marketplace where a gambler can bet that you won't.

Congrats, you've just come up with the most boring gambling wager ever known to man.

These high probability low payout outcomes are of no interest to gamblers, only boring insurance companies.

[ChinMusic]

The opposite - a marketplace where a gambler can bet that you won't.

I also didn't really think about and also assumed that I could bet on Chin's house burning down. But you're right of course - it's that fool Chin that's betting on his own house burning down.

PLP

Of course you know that I already make that bet whenever I buy home insurance. With Matty's idea I'd be making that bet with a degenerate gambler instead of an insurance company. What a thought.

[ChinMusic]

The opposite - a marketplace where a gambler can bet that you won't.

Congrats, you've just come up with the most boring gambling wager ever known to man.

These high probability low payout outcomes are of no interest to gamblers, only boring insurance companies.

It's all about how you bundle it. Imagine if the gambler was betting that 10,000 different homes did not burn down. Now it gets a bit more interesting for him.