[alphazard]

It depends on the person making the bet. With sophisticated enough brain scanning technology, we could distinguish between "placing the bet to achieve a feeling" vs. "placing the bet because they believe it is mispriced".

It's not possible for a 3rd party to, at a distance, determine why someone placed a bet in a prediction market. At a casino, it is possible. Most of the games are negative EV. So if someone plays any of the games, then it can't be because they are trying to maximize EV, it must be for some other reason (like a feeling).

[arretevad]

I guess I’m trying to say that in both cases you outline, the purpose of the act lies solely in the risk itself. Believing something is mispriced simply means the perceived risk is very low (or even negative) but the action is taken _because_ of the risk itself. No other purpose is served. Unlike other monetary instruments which could be consider stores of wealth. or other life decisions which have outside intrinsic values in which the risk is a consideration but not the primary object.

[alphazard]

> Believing something is mispriced simply means the perceived risk is very low (or even negative)

That's not what risk means. Risk is the amount you stand to lose, and expected value is the mean outcome (calculated by integrating across all possible outcomes). The EV can be positive or negative, and that corresponds to a mispriced asset. Risk can only go to zero, but it can also be arbitrarily high.

Managing risk is its own thing, but to give an intuition: How much should you bet on repeated fair coin tosses that pay out 3:1, if you have $100? More than 0, because it is positive EV, but definitely not the whole 100. Risk management is about playing vs. not playing and bet sizing.

Gambling is taking on risk without positive EV. A 1:1 cointoss is the quintessential example. EV is 0, you won't make or lose anything in the long run playing this game. But it adds uncertainty, you could have twice as much or nothing. Gambling is risk-seeking, the variance of outcomes has value (to a gambler) on its own.