Wednesday, August 17, 2005

Islam and Gambling (Maisir)

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!

27 Comments:

Blogger Maya Puspa Rahman (G0319620) said...

I believe another area to be critically assessed being tantamount to gambling is the investment in stock market. For 'punters', the stock market jargon of speculators, their intention is to make money, riding on the manipulation created by the market, rather than investing based on the fundamental of the companies. Does this resemblence gambling? Where do we draw the line? And what would be the timeline (i.e more than 6 months, more than a year) for an investment to be considered as genuine investment instead of merely speculative?

It is questionable since investing without studying the performance of the underlying companies requires no pure skill. Perhaps, we could link the scenario to the IT companies in US that created 'bubble' in the US stock market few years ago - where the stock prices of those companies listed cannot be justified by its earnings. So, the investment into these companies are rather speculative since the increasing in its prices are not earnings-driven (in which some effort must be done in boosting earnings). And I pose the question again, can that be considered as a genuine (pure) investment in the eyes of Shariah? ...I doubt so.

Thus, cautious should always be undertaken when we invest. As Muslim investors, I believe we need to be aware that pure investment (recognised by Allah) must involve the element of effort and risk-taking. Without these, the investment would contradict to what Allah had permitted us to do so and we must always be reminded that,
"If anyone does a righteous deed, it ensures to the benefit of his own soul; if he does evil, it works against (his own soul). In the end will ye (all) be brought back to your Lord" (Al-Jathiyah: 15)

Maya Puspa Rahman
Aug 18, 2005

11:21 PM  
Blogger siti hajar samsu said...

In general, Islam prohibited gambling because it is an activity that’s the outcome is purely relies on chance. In other words, the wealth we obtained from the gambling does not involve knowledge and effort and merely relies on the virtue of pure chance. From observation, gambling activities actually will only favor the gambling operator while bettors tend to lose in the games because the probability of winning is very remote.

The issue of gambling being crucial especially in term of stock market investment activities, because as it is recognized that we have no control or role in determining the outcome of investment and investing more towards making money objectives rather than the fundamental analysis of certain companies. Does such situation considering gambling? May be the alternative to this is to distinguish the net benefit from such activities either halal or haram.

All in all, there is one working paper has been draw my attention, the results of the analysis is something that we should critically assessed for the sake of Muslim and islamic principles. Essentially, this study examines the distribution of underwriting surplus in Insurance companies including conventional and islamic insurance i.e takaful. Surprisingly, the results reveal that these islamic insurance companies demonstrate traits of a gambler. And I believe this should not be the case because the companies are governing by shariah principles. Thus, we can conclude that this is actually what is being practice currently. Who’s going to be accountable for this?
Wallahualam….

8:42 PM  
Blogger weni hawariyuni said...

According to my point of view,pure chance is really relates with the gambling (maisir)in Islam. This is because we earn livelihood without knowledge and skill. Furthermore, in Islam money should be earned by work and effort. It means we are required not to rely on pure chance in our livelihood. We have to workhard and use our skill and knowledge to get something for our livelihood. It is not like the gambling which is pay money to get something that we can not control such as insurance,commodity forward trading,financial futures and options.On the other hand,the investment like joint venture is not gambling because in this case we are involved in this business and beside that we can control it. We can use our knowledge and skill in controlling our business. In addition, we are required to struggle and workhard in establishing our company.Basically, gambling happen for the people who life under desperation and under recklessness. For the poor people, they just hope lucky from that game, say slot machine without knowledge and skill to do it. However, for the rich people, they just make fun for their life without thinking that game will give profit or not. As a moslem economists in this case, we have to realize that our business is not dealing with the maisir or gambling.

8:44 PM  
Blogger kamaruddin said...

It is very interesting field to be examine in depth as far as gambling is concern from the Islamic worldview. The development of financial products to cater for a wide range of business needs have somehow affected the livelihood of us as a muslim. Therefore it is very important to draw a clear guideline of what can and what is cannot. For instance, the validity in participation in stock market. In principle buying share is equate to owning a portion of company concerned. Therefore, the buying and selling of the so called "halal" share clearly permissable. By buying a share in the company one have the power to exercise his right to determine the direction of the said company. Hence, it is not a game of chance as far as the fundamental ideas is concern. Contrary to lottery betting no matter how big the punter put his bet, he does not have a control over his destiny. With regard to those who profiteering from speculating that is consider as "bad apple" among investor. Therefore, it is up to the individual moral and values. We cannot simply brandishing something is not good if the players involved are lack of values concerned. It is happened in very facet of life whether we realize it not. The most important things is to have a clear guidelines of do and don't. The abuse by smoe party is up to their own discretion.

9:44 PM  
Blogger kamaruddin said...

I just want to add on and share the article that I have read about this matter. Hopefully we all can have an additional knowledge. wassalam.

AL- MAISIR (Gambling)

Definition




Maisir means a game of haphazard in all matters-particularly a game of chance by means of divinatory arrows. Maisir is of various categories. Some of these types of Maisir are seeking omen or fortune by divinatory arrows, back-gammous, chess, lottery etc.

The word Masir (game of chance) is derived from the root:

(i) Yasara: To become gentle to draw lots by arrows; or

(ii) Yasar : Affluence because Maisir brings about profit ; or

(iii) Yusr: Convenience ; ease : Maisir is so termed because it is a means of earning without toil and exertion ; or

(iv) Yasr: Dividing a thing into a number of shares and distributing them among themselves. Gambling is called Maisir because those who partake in the game of chance divide the meat of sacrificial animal among themselves.

All the above cannotations are vividly found in the word Maisir. Imam Malik (Allah be pleased with him) says that gambling is of two categories : a game of chance that is partaken in with a view of sport(fun) and the game of chance which involves gambling. Gambling means all dealings in which people are required to mane a bet and every dealing which involves some aspect of gambling is Maisir.




The Holy Qur’an on the Prohibition of Gambling

“They ask thee (O’ Prophet) about Khamr(intoxicants) and games of chance (gambling). Say: In both of them there is great harm although there is some advantage as well in them for men, but their harm is much greater than their advantages.” (2:219)

“O’ ye who believe, verily wine and games of chance (ungodly) shrines, and divining devices are abomination of Satan’s work. Avoid them, that ye may prosper. Only would Satan sow hatred and strife among you, by wine, and games of chance, and turn you aside from the remembrance of Allah, and from Prayer: Will you not, therefore, abstain from them ?” (5:90,91)

From these Verses of the Holy Qur’an, it is obvious that games of chance (Maisir) entail great sin and promises petty benefits and the Maisir is an abominable act of Satan. It is, therefore, imperative to avoid gambling in order to achieving success and happiness. Satan sows in our hearts the seeds of enmity and hatred against one another and turns us aside from the remembrance of Allah and His worship by means of games of chance. Its prohibition has, therefore, been declared obligatory. Similar is the case with wine. Both wine and games of chance go hand in hand to create corruption and both have been declared unlawful simultaneously.



Traditions on the Prohibition of Gambling

The Holy Prophet (peace and blessings of Allah be upon him) said : “Whosoever says to his Companion : Come let us play a game of haphazard, should give alms(as an atonement).” (Bukhari and Muslim)

It connotes that a mere invitation to gambling is such a serious sin as to warrant atonement thereof by charity. Then just imagine the position of a man who indulges in gambling. The Holy Prophet (peace and blessings of Allah be upon him) further said : “Whosoever plays backgammon is as if he dyes his hands with the flesh of swine and its blood.” (Muslim)

Ibn Abi Al-Dunya has reported Yahya b. Kathir as saying : “Allah’s Messenger(peace and blessings of Allah be upon him) passed by people playing back-gammon. He said, “Their hearts ar preoccupied in sport, their hands are ill and (their) tongues make absurd utterances. Every game which involves gambling or mischief, is a game of chance (Maisir).”

There is no difference of opinion among the jurists that every sort of gambling is harmful, except betting for hors-race and archery which have been declared lawful for persuading for horsemanship archery and preparation for Jihad because Allah says:

“Make ready for them all you can of (armed) force and of horses tethered, that thereby ye may dismay the enemy of Allah and your enemy.” (8:60)




Stone-altars

As far as stone-altars, they were stones erected round the Holy Ka’ba in the pre-Islamic period. People used to slaughter their sacrificial animal beside these altars and seek nearness to them through worship. Such altars were 360 in number.

On the advent of Islam, these altars were removed from there. This dismantlement of altars took place on the eve of the victory of Mecca when the Holy Prophet(peace and blessings of Allah be upon him) climbed on them with a staff in hand and demolished them one after the other and recited this Qur’anic Verse:

“And say: Truth hath come and falsehood hath vanished away. Lo, falsehood is ever bound to vanish.” (17:81)

Every stone, clod of clay, tree or sea that is worshipped falls under the category of altars.

We, therefore, seek refuge in Allah against every worked malignant and against the hovering Satan.

As far divining arrow (azlam), they are arrows cut off in thin slices of wood in the shape of arrows having no heads. In the pre-Islamic period the Arabs were taken to draw lots with a view to seeking good or bad omen.

As far abomination (rijs), everything loathsome, whether physically or abstractly, is rijs (abomination). Accordingly, it is said rajulun rijsun i.e., an abominable man, and rajulun arjasun i.e., abominable men.

Abomination is of various kinds: Abomination by nature, abomination in the eye of intellect abomination declared as an abomination by the Shari’ah like wine and game of chance or an overall abomination like a corpse because it si despicable by nature and in the eye of intellect and Shari’ah.






Scriptures on the Unlawfulness of Gambling

As far gambling or a game of chance, the past scriptures of the Jews and the Christians i.e., the Torah and Bible have no mention of prohibition of gambling. This position is indicative of the fact that their books are not perfect and intact. It is unbelievable that the books revealed to the Prophets of Israelites would not have the provision of prohibition of gambling despite the fact that gambling entailed economic and spiritual corruption of their ummah.


A Brief History of the Prohibition of Gambling in Islam

The history of the unlawfulness of the games of chance, gambling, is as old as the history of unlawfulness of wine because the prohibition of both has been declare simultaneously in Sura al-Baqara (2:219) and Sura al-Ma’ida (5:90,91) as already mentioned. But the game of chance was declare unlawful in two stages unlike wine which was declared unlawful in four or five stages.

The first stage was the revelation of Verse 2:219 in the month of Rabi-ul-Awwal, 4, A.H. (August 625 A. D.). Allah in this Verse has mentioned the game of chance (Masisir) as characteristic of great sin which ha paltry benefits for mankind. This Verse is, therfore, a clear proof of the gradual prohibition of the game of chance.

The second and the last stage is the revelation of Verses 5:90,91 in the month of Dhi-al Qa’da 6 A.H. (March, 627 A. D.). In these Verses, Allah has totally declared gambling (Masisir) unlawful leaving no room for relaxation.

4:32 AM  
Blogger Abduh said...

Muhammad Abduh (G0415065)

Assalammualaikum.
Allah SWT in Qur'an already order us as a muslim to make effort or find everything in the world, because Allah's grant is very big and wide. if we compare our knowledge with Allah like a foam in the ocean. it is so small. So, Allah order us to find His grant as much as possible but keep in line of Qur'an and Sunnah.

In finding Allah's grant in the world, Allah has determine the borders in doing it. one of it is halal, not haram. and gambling already clear in Qur'an that it is haram.

As we know, gambling has more dangerous side than good side. for example, gamble make us wonder about unreality life. it makes the person not think about doing something useful with effort but always thinking to gain something with easy way, and it makes him lazy. and if he become lazy, it is hard for him to get something with hard effort. like we know, to get success someone has to work hard to achieve it. there are some other negative side about gamble such as gambling usually makes the person become rather than become rich, because we seldom find somebody who do gambling always win, lose is often than he win. maybe there are several dangerous of gambling.

Muslim society nowadays is far to be left behind than Western society. if more Muslim do gambling, we will cannot run after our backwardness, even maybe Western society will dominate us or will colonize us once more if we still in our backwardness. maybe gambling also one of Western or Nasranian politics to make Muslim weak and more weak. make Muslim wonder beautiful life without doing hard effort to gain it. that's why gambling is dangerous to do. it will make us weak and lazy, personal and Muslim in common.

7:34 AM  
Blogger Adeila Radzlein Ahmad said...

Assalammualaikum.
To me, gambling is a process where people bet their money to receive something which is better than what they pay but they have to face the consequences if they lose their bet. Which mean there’s risk that they have to take if they gambles their money.
And before this I thought when we said gambling, meaning that what ever the situation is, (where it is stated that it is haram when there's prize, consideration and when it is by pure chance), it is still HARAM. But now after I read the article, then only I understand that not all things are haram but we have to base it back how we interpret it.
Before I read this article, I never thought that insurance can be considered as gambling. But after read it few times, and after think about it, I guess it is true especially the life insurance.

8:37 AM  
Blogger hazim said...

Generally elements of gambling are pure chance,consideration price and prize.The article mention that foward contract in some way resembles elements of gambling.
In my opinion,whether it is more of a gambling or of a trade depends on how settlement is done on the expiry date.

If the settlement is done in a way that one party acquire the comodity and the other gets the strike price payment, then it is a trade.there is element of iwad and more over this trade is consisten with characteristics of salam and istisna' contract.

If the settlement is done by delivering the value of the comodity(commonly in money form)then it is more of a gambling.there is no real iwad takes place in this kind of setlement.

In conclusion it can be said that going into comodity foward contract for the purpose of hedging is more likely a trade. whereas,speculatively getting into the contract is more likely a gamble.

wallahualam.
Ahmad Hazim Alias

8:53 AM  
Blogger Erwin Gunawan H/G.0422765 said...

Discussion about gambling (maisir) is still interesting and so inviting to put some comments, especially in it relations to the practices in Islamic banks and Islamic finance.

What have been raised by Prof. Saiful (the concept of kasb (i.e. work and effort) and elements of Gambling (Prize, Price or consideration, and Pure chance: 3P)) have equipped us to draw the border line between the two: Gambling and Non-gambling activities. But, in some cases this tool of analyses still “unable” in giving conclusion, at least for my self.

Let me pose a question, is involving money (who win will earn the money) in playing golf identical to gambling or not?
By using our tools (kasb and 3P), it is apparent that two competing parties will give their best work and effort (skill and knowledge) to win the game and the winner is not determined by pure chance. The players are taking part in the business themselves. They are not spectators. They are players and they ride the horse. But, for sure I know that is gambling.

Facing this problem, I want to propose a new criterion on this tools namely mashlahah (wealth) since this is the objective of any activities according to Islam. In this case, we will look whether the activity under consideration creates mashlahah (to both parties as well as to the society). Obviously, there is no mashlahah creation in this case. The winner gets the prize on the cost (burden) of the other. This is zero sum game.

As economist, wealth creation is the most important thing to take into account in justifying any activities. Otherwise we will be categorized as khusrn. The second step is assessing the way of it is created. Is it fulfilling the adalah principle or not. As we know, adalah (fairness) is the core value of Islamic teaching.

Wallaahu ‘alam bissawab

Erwin Gunawan Hutapea-G.0422765

8:33 PM  
Blogger Orawan said...

Because of intelligent of human being to struggle in finding another way to fulfill their desire rather instead of struggle to seek the pleasure of Allah. From the case above, in my point of view are by chance that Islam prohibited to take granted. In Islam encourage us to find rizki with many efforts and its based on Islamic law. Therefore, we need to critical and analyze clearly ( according to the purpose of Islamic law). Anyway, people claim that making a business similarly by chance and opportunity in sense of investment, so stock or horse-race can be applied in the same rule. Furthermore, they claim that they put many efforts to study and predict the possibility of the outcome. From these points, I disagree because these totally different in term of the outcome, benefits or returns (whatever we called its) already count and provided as a prize, in contrast in making business we do not know the amount of benefits actually or exactly but just predict in the overall and trend.

Orawan Heemmahmab
G0515464

9:12 PM  
Blogger leeanne said...

Assalamualaikum..Bismillah..

There’s this phrase which says, “Life is a gamble, whether we like it or not, we are gamblers in which if we take the chances offered by life, we’ll win, if we don’t, we’ll lose”. In a general sense, this is to some extend is true in that we do not know what lies ahead of us. If we want to succeed in life, we have to work in realizing the chance of success. But if we just lying around, doing nothing but only hope that our destiny will make better for itself, then this is what Islam has prohibited. Every activity has the element of chance or risk in it. But it is man who will make the choice on how to deal with the chances in his life. Whether he will make a game out of his chances or put effort and work in his activity, Allah SWT Has clearly Given the freewill for man to do so and of course Islamic Syariah has given the guidelines in what to do and what not to do.
Here I will only touch the issue whether a risk-lover can be equated with a risk-taker. In general, the similarity in both is that both take the risk. Risk is when we take the chance of doing something without knowing the final outcome. But there’s the similarity ends. The major difference lies in the process of achieving that final outcome. For a risk-lover, they will take the risk in an activity,i.e. gambling, which they know that no matter how much money or investment they put in, the probability of losing is greater than winning. On a same note, they take the risk in the said activity just to have the thrill of testing their luck. Thus, for risk-lovers it is enough to just invest their money and hope that the final outcome will be in their favor without putting any effort in making the outcome a success. These reckless traits are commonly found in rich people. But what about the poor people who live under desperation? They too unfortunately can be categorized as risk-lovers if they just gamble their money in activities that require no effort like slot-machines. They do not use the gift of knowledge, skill and limbs given by Allah SWT to earn their livelihood. They only hope that luck will bring them good fortunes without putting some effort and knowledge in achieving these good fortunes.
Gambling in general is prohibited because it is an activity that makes a game out of a chance where the gambler does not have a role and any control in the final outcome. He only relies on pure chance and keeps on betting and betting away his money even though he knows that the probability of winning is pretty slim or very highly unlikely. That is why insurance, commodity forward trading and financial futures and options are said to be similar to gambling since people put their money only with the objective of making more money without participating or controlling the activity from the beginning until the end to ensure that the final outcome is like what they have expected. As for the participation in the stock market, on principle, Muslim scholars accept it since the concept of ‘limited liability’ enjoyed by the stockholders is closely related to the concept of ‘juridical person’ or separate legal entity. Since Syariah accepts the concept of juridical person, it is therefore permissible for the Islamic banking system or Islamic companies to deal with stocks and shares. Since stocks represent a financial claim or is a title of ownership, this certificate therefore does not constitute money. With this title of ownership, stockholders may exercise their rights in controlling the direction of the company concerned. Besides the right to vote and getting paid dividends, they are also hoping for the prices of their stock to rise, so that they can get more profits. This is perhaps the element amounting to gambling. Since the trading of stocks are largely determined by the market forces, investors tend to invest their money based on the manipulation of the market prices of the stocks and not on the basis of the underlying performance of the companies. If they make the investment based on the performance, then they are the risk-takers since they are willing to take the risk of investing their money on companies that are sure to meet their expectations. The beauty of Islam is that the contracts permissible in the eyes of Islam have been provided to make certain activities valid. In the case of stock, its issuance is on the basis of Mudarabah, thus the capital-provider or Mudarib is the risk-taker. The Mudaribs must however be aware of the standings of the company, its performance and that the stocks are issued on the basis of Mudarabah. Thus, these Mudaribs are said to invest with knowledge and they are who we call risk-takers since they take the risk with knowledge, and on the same note, stock market is not a game of chance as far as the fundamental principles are concerned. Like what brother Kamaruddin has pointed out, it is only the behaviour of certain “bad apples” among the investors that makes it similar to gambling.
To conclude, risk-lovers to greater extent cannot be equated to risk-takers where the similarity only ends in both indulging in activities containing the element of risk itself. But the major difference between both lies in the fact that risk-lovers take the risk recklessly in the sense that they put large amount or even all their money away in an activity that they have no role in determining the final outcome, i.e. without effort (kasb) and knowledge. Such activities are like gambling, lottery betting, slot machines etc. While risk-takers are those who take the risk of investing their money in activities that they have control over and where they can put their own effort in determining the final outcome. Thus they invest their money and take the risk with knowledge and skills. In this sense, I think people who take the effort of making the calculations and have the skills to see what the final outcome of an activity would be are risk-takers rather than risk-lovers. But then again what differentiates them is in the activity itself. If people use their skills in calculating the outcome of a betting game, then this itself is prohibited. No question in that. Islam has clearly prohibited gambling and investment in activities that are valid in the eyes of Syariah is allowed. It is up to people’s moral and values to decide what course in life they want to take and after all, “the means do not justify the ends”.
Wallahu ‘Alam...

Nur Edzalina Hj Idris- G0512890

10:07 PM  
Blogger iryani said...

No pain, no gain. That’s what this life is all about, striving and great diligence creates better human being. Nothing in this world comes free. To obtain something, you must work on your own effort to achieve it. What you give is what you get. Similarly in Islam, it encourages the Muslims to work and absolutely condemns laziness. Likewise in gambling, it is certainly prohibited. Gambling only making people trap in idleness and outlay expenditure on something which is uncertain outcome. I do agree in earning money by pure chance only lead to life under depression as well as life under recklessness. Why people still wants to take risk on something that uncertain? Is this the only solution to get fast money? Or the easy path to achieve satisfaction in life? Or maybe, because of the prizes or the outcome returns are so seduces, making people attracted to it? Probability on you winning and lose are the same. The gambler only depends on theirs’ luck which is very lame to rely on. Uncertainties sometimes are good to wait for, but it doesn’t necessary can lead us to be careless and forgetful person. That is what against the religion. Life itself is a big gambling to play on. Either you win or lose, depends on your good hard work, effort and maybe sometimes on lucks. As a Muslim, prayer and worship to Allah are additional ingredients to give attention on. There is no short cut in success; by hook or by crook effort is the main key. Wallahu’allam.

A’ina Iryani Dol Razlan.

11:08 PM  
Blogger masa said...

The author has explained the main idea / reasons behind the prohibition of gambling in Islam and meaning and the rationale behind earning by way of work and effort (kasb): knowledge. Knowledge and skills leads one to morality and healthy living while earning by pure chance puts life under desperation and recklessness as gambling is very clearly prohibited in Islam.

Having explained the rationale behind the prohibition of gambling, the author analytically puts its implications to some of the financial transaction available in the market place i.e. Insurance, Commodity forward trading, Financial futures and options and implicates that they should fall under the purview of the prohibition as well. As long as the elements of gambling: prize hope, vague consideration and pure chance factor, are satisfied, such financial transaction should always be considered as being immoral and unhealthy way of doing business, and that prohibited in Islam. Taking part in the business itself: being a player and being in control of business should be seen in practice and applicable to commodity trading and stock futures and options. According to the author, commodity trading and stock futures and options embrace the salient features of the gambling or in other words, the elements of gambling are implicated.

Though in brief, the discussion on the implications of gambling in financial transactions in Islam induces readers’ analytical mind in understanding financial transactions in the market place and basic principles of earning in Islam.

The Quran says: “---Intoxicants and gambling, sacrificing to stones, and (divination by) arrows, are an abomination of Satan’s handwork: eschew such (abomination), that you may prosper.” (5:90)

Prophet Muhammad (SAWS) said: “Whoever says to his companion, ‘Come on, let’s gamble,’ let him give in charity (as penance)”

Accordingly gambling is prohibited, harmful and destructive to the whole society. Prosperity should come through hard work and honesty with ethical foundations. Gambling leads to harm, crimes, and hopes of something for nothing and victimizing the poor.

The author has left out insurance without discussing it in the light of the gambling prohibition. A brief discussion on the definition of the word “gambling” literally and technically would have been beneficial to the circle of readers.

Masahina Sarabdeen
G0518872

11:57 PM  
Blogger ronald rulindo said...

Talking about gambling, there are many moslem scholars who said that investment in the stock market is same with gambling. However, when i discussed with a practician from stock market industry, he said that stock market actually is not gambling but many people do gambling with it (by do short selling). When they think that the price of one stock will increase, they will buy that stock with hope that if the price is really increase they will gain profit.
Actually, most of them do not have any knowledge on it.So, it easy for them to get bankrupt.

This statement actually similar with the opinion of some moslem scholars. who said stock market is not prohibited at all but short selling is haram because it similar with gambling.
There are one old proverb which said that we can't be rich by gambling. It have been proven in stock market industy. Short selling can't make us to be a rich man. Warrrent Buffet, the second richest man in the world who gain billion dolars from stock market never do the short selling. One of his principle in stock market business is buy a good stock which you have knowledge on it and keep it (for a long time).

This principle was already proven by one professor (i forget his name). He is the author of "Millionaire in you". He also suggest to keep the stock for a long time because according to his research, this stratgy give more profit than the short selling. He also mention that for overall, people who do short selling is often get loss.

The other rich man who have same opinion is robert kiyosaki. He is the author of the best seller book "rich dad poor dad". In his book " Guide to investing" he mention that we have to be smart investor before go to the stock market by read and have many information. Then, he also mention that it is better to buy the stok which we have many knowledge on it and keep it for a long time.

Now, lets we back to the principle; gambling is prohibited and short selling is similar with gambling. Both Moslem sholars and many succesful practician were already prove this principle. So there are no other reasons which can allow the short selling. However, could we prohibit moslem investors to not do the short selling in stock market industry? How we can forbide them? What instrumen should we use to prohibit it? I think we can't control it except we prohibit the stock market at all, but it is not a wise opinion and it is really difficult to implement in real world because stock market also bring many benefit for the ummah.

1:31 AM  
Blogger nadiahaisyah said...

Before the discussion going further, first I need to clarify what I understand about insurance and other derivatives instruments as well as the purpose of their introduction in the financial market. As everybody knows, we buy insurance by means of getting protected from any unpredicted events (risks). Of course not all risks are insurable. The insurance companies will only considerate on risks that are predictable, measurable with some other determined criteria. So, as insured parties, we need to pay some premium to get into the contract. Derivatives are also introduced for the purpose of getting protected from risks that might occur in business. In definition, derivatives are the financial instruments that derive their value from the value of underlying assets. Derivatives by means do not have value (or only a small value) on their own.
Islamic jurists claimed that insurance is forbidden due to 3 principle aspects which are against Islamic rules; namely gharar (uncertainty), maisir (gambling) and interest (riba). So, in order for Muslim to as well get protected from unpredicted events, we create takaful (or what so called as islamic insurance), where takaful operates on the principle of mudharabah and tabbaru’. From the book-“critical issues on Islamic banking and financial markets”, you (prof. saiful) had mentioned that basically insurance doesn’t involve the elements of gharar and maisir. Your argument is all business involves risks and no profits attained without risks (al-ghorm bil ghonm) and speculative risk only exists when the act of gambling materializes. So, the only problem is interest (riba) gain from investment especially in non-halal area. I don’t think that takaful is apart from riba because it is operated in interest based financial system as well. So, if we discuss upon the principle of takaful’s operation, we may say that it is permissible, however, when interest or riba take place (especially on investment made), can we still claim that it is halal? For me haram is still haram no matter what it is. Since the economic root itself is riba, can we run away from it in order for us to safely run our owned islamic economic environment? Or in other words, can we beat the interest based system as a whole? Yes, we may if we really committed to do so. We here I refer to who ever that exist in the economic system.
But, One other question comes accross my mind - in this multi-races and multi-religious nations, can all of us committed towards the new system (Islamic system)?
In the article, derivatives instruments is also claimed to be not permissible due to non-halal elements involved. However, from my point of view, if the person involves in the derivatives market is hedger, who is hedge against losses he might suffer in future due to unpredicted event, it can not be considered as haram trading because he owned the underlying assets. Furthermore, he is doing business with his own efforts and knowledge. He just seeks for some protection which insurance company does not cover. If it is haram, can we say that trading shares is also haram? In derivatives market, mainly there are three types of players; hedgers, arbitrageurs and speculators. If the players involve in derivatives market is arbitrageurs or speculators, then the activity is no more permissible, because arbitrageurs and speculators are normally taking advantages from the market by means of seeking profits. The same thing implies in trading shares, if speculation involves, I don’t think that we can claim it as halal.
However, this is only my view and I think it needs a deep and further study because as a Muslim and perhaps one day get involves with business, I think I need a mechanism or an instruments to help me reduce risks. With only conventional instruments widely offered, which is claimed not permissible in Islam, can I effectively compete with those “conventional” businessmen?

4:09 AM  
Blogger Bilal Mohd Parid (G0428469) said...

The prohibition of gambling in Islam is understandable. Due to bad implication caused by gambling towards the wealth of person, it is prohibited. It is also mentioned in Al-Quran that gambling create dispute and hatred among human and preventing them from remembering Allah s.w.t. (Al-Maidah : 91)
It is difficult to realize the element of gambling when it is mixed with other element of contract. It is clear that lottery is prohibited in Islam because of clear features of gambling there. However it is difficult to recognize it in Insurance, forward, features and option trading.
With regard to pure chance in gambling it is not clear in option, forward and features market. This is because these are specialized investment products that require specialized investor skills. In other words it need know-how element. Moreover the main participant in this market is the institutional investor. Therefore it will involve large amount of fund and it is unlikely no know-how element involved.
Hedging purpose is considered as the main objective of derivative market and it is acceptable for investor protection from the volatile movements of the price. However in terms of arbitrage and speculation activity it is close to gambling activity because of profit-making purpose.
In terms of insurance, the uncertainty about the future and inability to control the outcome is considered as gambling. There is no dispute among scholars about the classical insurance because it is based on ‘Ta’awun’ or cooperation basis and no profit making involved. The issue emerges with the emerging of profit-making insurance. Majority of the scholars prohibit the current profit-making insurance because of the element of gambling, riba and gharar.

Bilal Mohd Parid
G0428469

3:42 AM  
Blogger sueraya said...

I believe that gambling have negative impact on the overall society. The question of pure chance involves in the gambling activities need not be denied. In order to indulge in gambling, a person needs not knowledge or effort to earn win or lose.

But what about the case of involving in stocks or bonds which we know that it requires deep knowledge about the market? Since these market involves riba' we able to distinguish them in the category of haram means.

What about the elements of pure chance? it is not based on pure chance, therefore we cannot categorized them in the maisir means. Having said that, it is not to condemn or point fingers on others, but we should equipped with the do's and the don’ts especially in the financial markets instruments by the Shariah boards.

There should be clear and transparent guidelines for us to avoid the ambiguities and ignorance.

While it is true that gambling as the choice for those who live in the desperation and recklessness. However, who are the people that suppose to monitor this phenomenon? Why they are so many people involves in gambling? I believe that these questions must have an answer in order to solve the problem before it is too late.

Sueraya
G0513108

12:57 AM  
Blogger octa said...

It is interesting to join and include in giving a comment in this topic. So far I have read so many comments from previously. In my personal opinion if we talk about gambling so we will talk about gharar also. Meaning is in the context of gambling it self provide gharar (uncertainty) more then the certain. Since the prophet said: it is better if you are not doing something that you feel doubtful (uncertain). From this hadith we can say that if we are not sure of something, so we don not have to do it. In gambling it self the part of uncertainty is much-much bigger then the certainty. Now is raise some questions what if there is a person willing to join a tournament then he must pay for the registration, is it a gambling? And what about if there are a person and then he goes to some place and make gambling there. From these questions above there is a similarity between both of persons. The similarity is both of them were coming to win their game, so which one is the gambling (haram) and which one is not (halal). Now, let me discuss it one by one. First person is willing to join the tournament and his using all his skill and knowledge to win the prize (amount of money). At the same time the second person goes to gambling place and makes a gambling (maisir) with a few skill and knowledge to win the prize (in this case the person does not know how much prize(money) that he will get or sometime they get nothing). From these samples above we can conclude the point about the dissimilarity between the following tournament and gambling. In other words in tournament we knew already how much we will get otherwise in gambling is not.
The samples above are only small samples and only few from the others. Looking forward from those samples we can learn more and more until we find the right answer.
Anyway like sheikh Ahmad Deedat said: pornography and gambling are like a drugs, once you get in touch and the more you want it.
Wassalam
octa enriqco alamsyah
G0411933

2:40 AM  
Blogger noor anum sarah bt johar ariffin said...

Islam is a religion which regulates and directs life in all its departments. Indeed, a true Islamic society is based upon honesty, justice and fraternity, and is absolutely intolerant of dishonesty in all its various forms. Islam prohibits transactions similar (in nature) to gambling.
The Arabic equivalent to gambling is Maisir which literarily means "getting something too easily", "getting a profit without working for it". The literal meaning of the term explains the principle on account of which gambling is prohibited in Islam. Any monetary gain which cornes too easily, so much so that one does not have to work for it, is unlawful.
The most familiar form of gambling among the Arabs in the days of the Holy Prophet (may peace be upon him) was gambling by casting of lots by means of arrows drawn from a bag. Some were blank and those who drew them got nothing. Others indicated prizes-big or small ones. Whether one got anything or nothing depended on pure luck. unless there was fraud on the part of someone concerned. The principle on which objection to gambling is based is that you gain what you have not earned, or lose on a mere chance. Dice, lottery, prize bonds and betting on horse races are to be held within the definition of gambling.
Shariah principle number four (in financial transactions) is the prohibition of gambling (maisir). For example, earning via game of chance. To protect property, the Shariah enjoining man to work (khayr) for a living while prohibiting wealth creation by way of interest (riba), fraud (tarfief), and gambling (maisir).
Islamic principles of investment in stocks require companies to produce goods and services that are free from the elements prohibited by the Quran. Gambling (maisir) is prohibited in Islam. It is a speculative (aleatory contracts) in which obligations and benefits accruing to participating parties are not fully defined at the time when the contract became effective leading to either winning or losing arising from mere chance instead of work and effort.
Thus, honesty in commercial dealings is more strictly enjoined by Islam than by any other religion. That is the reason why perfect honesty in business and truthfulness in trade are much emphasized by the Holy Prophet(may peace be upon him).

NOOR ANUM SARAH BT JOHAR ARIFFIN
G0513862

10:32 AM  
Blogger siti rubiah said...

Though the above posted comments have almost said it all, hope my two cents still worth something. To me, fast-earned money won’t get a person anywhere. Well perhaps, for a short period of time it will get him/her somewhere, to a place full of excitement and bliss that he/she has myopically imagine to be eternal. Thus I solemnly agree with the author’s saying that earning money by virtue of pure chance can mean two things i.e. life under desperation & life under recklessness.

From Islamic point of view, in order to gain wealth, efforts must be put in. Along the process of creating or earning wealth, a Muslim must ensure that the income is from halal source so as to receive barakah. It is the pursuit of barakah that most practicing Muslims would aspire to do, and obviously, the pursuit of barakah is more than just acquiring the maximum amount of wealth one can amass.

Yet people are always willing to risk their money in the hope of winning a larger sum. So much so that gambling has unfortunately become an acceptable practice in a society, even among the Muslims due to its wide scale promotion by the media. And what worrisome is that gambling now can be in many forms, for instance in a form of short messaging system – sms. Now with ever-increasing headlines such as “Solve This Puzzle & Win Luxury Cars” or “Spot and Win” by various major newspapers, I wonder, do these constitute gambling or permissible practice? Can we consider them to be lawful as we put an effort in solving the puzzle or spot the picture? The sms contest last time raised critics by many, how about this crossword puzzle mania then? Some organizers fix huge prizes for the winners due to which the poor public think that the fees is only a small amount (buying the newspaper & pay for the stamps, of course) and will not bring no harm and therefore enter trying to win a substantial amount.

Good to ponder on one hadith narrated by Abu Zar and Al-Hakim, the Prophet s.a.w. said: “Indeed Ruhul Qudus (Jibril) whisper to me that the soul will not die before it is completed with its rizq. Thus, you have to be faithful to Allah and improve your sources of income. When the rizq is yet to come, don’t ever you chase them in a way that is forbidden by Allah for whatever Allah can only be achieved through being obedient to him”.

Wallahu'alam

G0423340

10:30 PM  
Blogger Edib Smolo said...

Assalamu alaykum wrt. wbt.

After all of these comments given on the issue of gambling, there is nothing much left to be said.

Anyway, I would like to add some comments. Firstly, there is no doubt that the gambling is prohibited in Islam since we have clear evidences in al-Qur’an as well as in the sunnah. Secondly, we know very well that Islam as religion is complete, and we cannot say that it has nothing to say about insurance, forward trading, futures and options, and etc. Obviously al-Qur’an and the Sunnah of the Prophet p.b.u.h. do not say anything directly related to the matter. As the time passes the evolution in the financial system has occurred and new issues have been raised. Now it is upon the ‘ulema to decide what and which transaction (i.e. instrument in the financial system) is halal and which is not.

We also know that there should not be any harm to anyone (“La dharare wa la dhhirara”- Usul al-Fiqh maxim). So any transaction should be based on win-win situation and not on win-lose principle. The gambling is the best example of the latest, therefore it should be avoided. Now, if a transaction is causing one party to gain at the expense of the other that this should be avoided in Islam. I believe that this should be the guiding principle in the case of the three above mentioned transaction (i.e. insurance, forward trading, and futures and options)

Wassalam!

Edib Smolo
G0417671

10:35 AM  
Blogger kamruzzaman said...

Stock futures and options can indeed be seen as a form of gambling. He speculates whether that stock will increase or decrease based on the condition of the company who’s stock he is buying, whether the company is run by a good CEO or some event like a merger is going to occur that will affect the status of the company. This is precisely like checking out a horse to see how many races it has won, how old it is, whether it has well built muscles or not?

Then following on this train of thought when Islamic banks make investments using money from the depositors is it Islamic. As far as I understand Islamic banks don’t buy shares in companies or invest as a venture with other companies. In fact they heavily invest in bonds and stocks and hope that it makes a profit. Of course apparently the company in which the Islamic Banks invest in have to be free from manufacturing or giving unislamic services. So if investment through stocks is equal to gambling are Islamic banks truly Islamic? I would understand if Islamic banks actually bought massive shares in a company to the point that it has a say in the company but as of yet I have yet to hear of an Islamic bank taking over another company.

Md.Kamruzzaman
G0418759

8:45 AM  
Blogger nira said...

Islam has no reservation for Muslims investing in the stock market even though the outcome is uncertain and dependent on so many other factors that can either be anticipated or planned for. Investing in the stock market requires research, hard work and skill; hence the element of speculation is reduced significantly. It isn't a game of chance therefore it isn't gambling therefore it is permissible in Islam (as long as investment is made in counters / companies providing halal products and services).
A knowledgeable investor will combine his research, hard work, and skill in his investment. However, the least knowledgeable investor who knows nothing about investment or stock market shall deem the investment in stock market as an incredible game of chance - investing his money in a company just because everyone else does, or just because he thinks the bio-tech or oil & gas are hot. This is a mere pure speculation!
Does that make the stock market haram for the least knowledgeable investor who doesn't put in the hard work to know which are the proper stocks to invest in? The issue of man satisfying both shari’ and tabi’ requirements in its day-to-day life comes in the picture. The sari’ dimension has always been the main focus in determining whether a stock counter is halal or not. However, 1 aspect that has always been neglected is the fulfillment of the tabi’ dimension.
Investing in a stock market without sufficient knowledge in the art of investment may lead to capital losses to the investor. It is as if you are alone and unarmed and you confronted a full armed battalion of kafir. Your intention is to protect Islam and you want to battle them through the act of fiisabilillah. However being unarmed and unprepared, does your act entitled you to be a shahid or a suicide in the event of your death (i.e. killed by the full fledge battalion)?
Making investment without proper knowledge is considered as risking your capital. This is in equivalent of an act of gambling (maisir) as man is the appointed caliph on this earth; hence, it is our duty to protect al-mal as we are the trustee of God. Wallahulam.

6:28 PM  
Blogger nira said...

Islam has no reservation for Muslims investing in the stock market even though the outcome is uncertain and dependent on so many other factors that can either be anticipated or planned for. Investing in the stock market requires research, hard work and skill; hence the element of speculation is reduced significantly. It isn't a game of chance therefore it isn't gambling therefore it is permissible in Islam (as long as investment is made in counters / companies providing halal products and services).
A knowledgeable investor will combine his research, hard work, and skill in his investment. However, the least knowledgeable investor who knows nothing about investment or stock market shall deem the investment in stock market as an incredible game of chance - investing his money in a company just because everyone else does, or just because he thinks the bio-tech or oil & gas are hot. This is a mere pure speculation!
Does that make the stock market haram for the least knowledgeable investor who doesn't put in the hard work to know which are the proper stocks to invest in? The issue of man satisfying both shari’ and tabi’ requirements in its day-to-day life comes in the picture. The sari’ dimension has always been the main focus in determining whether a stock counter is halal or not. However, 1 aspect that has always been neglected is the fulfillment of the tabi’ dimension.
Investing in a stock market without sufficient knowledge in the art of investment may lead to capital losses to the investor. It is as if you are alone and unarmed and you confronted a full armed battalion of kafir. Your intention is to protect Islam and you want to battle them through the act of fiisabilillah. However being unarmed and unprepared, does your act entitled you to be a shahid or a suicide in the event of your death (i.e. killed by the full fledge battalion)?
Making investment without proper knowledge is considered as risking your capital. This is in equivalent of an act of gambling (maisir) as man is the appointed caliph on this earth; hence, it is our duty to protect al-mal as we are the trustee of God. Wallahulam.

6:29 PM  
Blogger Md.khademul Islam said...

We should earned money in right way not from gambling. This is because of gambling is prohibited in Islam. In another way around we can say that any activity will be gambling if it relates with pure chance. Pure chance is gambling because we can not control it. If we invest our money in business this is not gambling because we can use skill and effort to make profit or control the risk. But what will happen in stock market ? This is justifiable term. Share market is very volatile If we buy share and sell it to the market price in order to get profit, in this way, I think this is not gambling because we can fulfill the buying and selling contract. But if we buy the share in order to make the high price in artificial way this is gambling which was happened in Dhaka stock exchange market in Bangladesh in 1998.The practical situation was at first somebody bought the most of the share in order to make artificial crisis then price go up then they sold the share in high price. In this situation, general people who does not have so much knowledge about business they bought the share. This situation continued around two months. When share market was high the gamblers sold the all shares After this share market fall dramatically and many people lost their money who bought share in higher price. This kind of activity of stock market must be gambling.

What about insurance company? Malaysian insurance company insured the pure risk. Pure risk means one kinds of risk which we never control such as death, flood, accident etc any times can come. Speculative risk in gambling means the chance of gain very rare but most of the chance is getting loss. Malaysian conventional insurance company does not insure speculative risk only insures the pure risk there for this company is also not gambling.

What we think when price of the goods will be expired? I think in this case gambling will come usually because company cannot control the price of expiry dates. As a result, retail seller will put the price by his own self . In this way, they will earn more profit but it will harmful for customer. They will not get correct price. In thissituation, gambling will play merely.

Md.Khademul Islam,G0429917

10:40 PM  
Blogger PromoGifts Ellada said...

Gambling is "QIMAR", not "maisir".

10:08 PM  
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