A new wave of traders has entered into the markets, attracted by heightened volatility driven by the coronavirus pandemic. A number of demographics make up this new wave, including, an uptick in participants in the gambling sector.

As Finance Magnates previously analysed, the bump in new market participants includes first-time traders, dormant traders reconnecting with their investment portfolio and investors who previously only traded one asset class – such as equities, branching out into different assets.

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However, there is also another section of new traders – gamblers, who haven’t been able to bet on professional sport as lock-down measures have postponed all sporting events around the world.

Gamblers heading to market is simple evolution

Andrew Anastasiou, the Co-Founder of WireWallet

Speaking to Finance Magnates, Andrew Anastasiou, fintech entrepreneur and Founder of WireWallet, explained that there are essentially two reasons for why this trend is occurring: “it’s a simple evolution to turn to online trading. However, it would seem appropriate that the vast majority of Traders who have come to the industry from online casinos or sports betting will not stay long, as in general these individuals are either seeking the thrill of a win, or are used to placing a bet which is more calculated by chance as opposed to a financial calculation.

“This isn’t to say that individuals coming to online currency trading are not educated, but there is a clear divide between taking a calculated risk on a currency trade, and placing a bet on a sporting event or playing in an online casino.

“Also, being in lockdown has created quite a significant level of boredom and a change in lifestyle for most. Therefore, individuals would be looking for new ways to spend their time and with no sports events happening, the individuals would have been looking for somewhere to use their money and find some enjoyment.”

Joe Wainer, Co-founder BingoDaily.co.uk

A natural progression

Joe Wainer, Co-founder BingoDaily.co.uk, said to Finance Magnates that it would be a natural progression for gamblers to head to the trading industry.

“Since the lockdown begun in the UK in March, we’ve seen a noticeable uptick in user acquisitions within the bingo sector. Although BingoDaily’s target audience isn’t in the financial field, we cover the financial going’s on of the big UK publicly listed gambling operators, so we see a definite cross over in interest from what may be considered the unlikeliest of gambling areas.

“Recent UGC statistics have shown that online gambling has grown despite the complete lack of sports betting. People’s appetite for online spending/gambling is clearly there, so it would be natural that the trading industry saw an uptick in users too.”

Will gamblers stick around?

Whilst this trend is great for the industry and the brokers that operate within this space, as volatility decreases, is it likely that these new traders will stick around? According to Wainer, it’s all up to brokers.

“A lot does depend on the trading companies themselves,” he explained. “How they retain the new clients, keep them interested and engaged. What nobody wants is a return to the dark days of unregulated investing/gambling like we saw with Binary Options. Education, transparency and strong regulation – something the UKGC have been working hard on – would help the trading industry retain new traders. And yes, we hope they come back to gambling.”

Anastasiou, however, believes that the vast majority will return to casinos and sports betting: “I believe there will be a certain amount of individuals who will enjoy the calculated risk involved in making a trade online. However, as mentioned I feel that the two industries operate on different fields when it comes to the types of ultimate services they provide and the feeling they provide for the Trader or player.

“Once we return to normal, I would estimate that the vast majority will return to casinos and sports betting, as there is a substantial thrill difference when placing a bet or playing in an online casino.”

Retaliation from the gambling sector

With some gamblers heading to the trading markets, could we see more crossover between gambling and trading? Once sporting events open back up, companies within the gambling industry might try and entice traders that have moved to the trading markets during the pandemic. 

“There should be more of a crossover,” Wainer pointed out. “Spread betting promised this but hasn’t delivered on expectations. One trend I do think will emerge will be the FCA following the UGKCs protection of problem gamblers. If a lot of new traders are not educated properly, they will more than likely lose their money and there will be more scrutiny from the FCA.”