28 US Code §5362(1)(A) defines a bet or wager to be:

the staking or risking by any person of something of value upon the outcome of a contest of others, a sporting event, or a game subject to chance, upon an agreement or understanding that the person or another person will receive something of value in the event of a certain outcome

(1)(E) then explicitly states that this does not include, inter alia, "any contract for insurance".

My question is this: Ignoring (1)(E) and relying solely on the literal text of (1)(A), would insurance contracts have to be considered bets or wagers?


Gambling creates a risk where none exists. Gambling provides the opportunity for gains or losses.

Insurance mitigates an existing risk of loss. The buyer of insurance has no opportunity for gain. The opportunity is to be made whole.

EDIT: I suppose that I have provided the practical difference. The legal difference is that the statute distinguishes between the two.

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  • This does not answer my question. – Kenny LJ Aug 14 '15 at 14:10
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    That's a very idealistic view of insurance. The seller of insurance certainly has an expected positive gain. The buyer has an opportunity for gain, although he can't have expected positive gain without committing fraud. – feetwet Aug 14 '15 at 23:19
  • Idealistic, perhaps. Widely accepted, definitely. – jqning Aug 14 '15 at 23:20
  • @KennyLJ: how does this not answer the question? The insuree does not receive something of value, they loose something of value, and then have all or a portion of that loss repaid. Insurance reduces your loss, it does not eliminiate it, because your payments are not repaid. – jmoreno Mar 14 '18 at 23:36

I would say no.

The language requires a bet or wager to be based upon one of:

  1. a contest
  2. a sporting event
  3. a game

Since insurance involves none of those things, I would say the answer is, "no."

I assume when you write "insurance" you mean the typical types of insurance like property, casualty, life, fire, etc.

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  • I agree with this. I'll delete my answer. – jqning Aug 14 '15 at 20:52
  • What about event insurance (a.k.a. cancellation insurance)? Especially if bought for a sporting event? (Not sure what this would prove, other than that it's important to read statutes in their entirety?) – feetwet Aug 14 '15 at 23:32
  • @feetwet: Agreed. My comment in italics was intended to exclude "specialty" type insurances like "raffle ticket insurance" or "hole-in-one" insurances that are often purchased and sold for promotional events. I'm sure the insurance companies have various carveouts in their respective codes for that (e.g., (1)(E)). But I felt the intent of the question was aimed at insurance in the main. – Alexanne Senger Aug 15 '15 at 0:17
  • Is there a legal definition of what "a game subject to chance" is? (It would seem to me that a contract with payouts contingent on whether the White House burns down is no less "a game subject to chance" than a contract based on whether the New York Yankees win the next World Series.) – Kenny LJ Aug 15 '15 at 2:53
  • @KennyLJ: Not sure if there is a legal definition of game. But there is a dictionary definition: "a form of play or sport, especially a competitive one played according to rules and decided by skill, strength, or luck." There is also a "game theory" definition: "...the outcome is determined by the behaviors of at least two players according to a set of rules." The scenario you present is "subject to chance" but not "a game" under those ordinary definitions. If you have a definition of a game that would include a naturally disaster as one, please share it. I would be curious. – Alexanne Senger Aug 15 '15 at 11:20

In general insurance is not gambling (according to that law). However consider a golf club which has a tradition that if you hit a hole in one, you buy everyone in the club a bottle of champagne. In that case, you might take out insurance against those costs, and that depends on "a sporting contest" (or possibly "a game"). As such, without the exception you quote, this insurance policy would be illegal gambling.

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