Wanna Bet?

Greg Gnall
4 min readJan 31, 2021


While a pandemic that seems as if it will never end marches on, just about all of us have seen our lives turned upside down. Early on, working from home offered a respite, sparing us from unbearable commutes, freeing us from the pressures of keeping up our physical and sartorial appearances and fostering a more efficient and distraction-free way of working. But it soon turned into a different kind of pressure resulting in longer work days and the tyranny of the computer, with its constant Zoom calls squeezed between the second job for many of managing an unwieldy online educational process for our kids amid a constant fear that we would be viewed as slackers by our childless relatively unburdened co-workers: catching up on unseen episodes of The Wire while staying in our pajamas and drinking wine with every meal (well, maybe not breakfast, yet).

Some of us took advantage of our forced isolation by learning Japanese online, honing our knitting skills or visiting the Louvre through virtual tours. Our country’s sports mania took a hit when almost every professional and college sport shut down until slowly seeping back with cardboard cutouts of fans in the stands and pretend crowd noise on TV that failed to muffle the x-rated response of a professional golfer missing a key putt or an Italian soccer player feigning injury while uttering a home-country version of an [expletive deleted]. And, of course, in the end, the virus couldn’t stop the annual American Highest of High Holy Days, Super Bowl Sunday, on which SB LV will be played in Tampa next week with (yes, again) Tom Brady, quarterbacking the home town Bucs (what?) against Patrick Mahomes and the Chiefs.

But one truly American passion could not be denied by Covid, the country’s devotion to gambling. Undeterred by the absence of the major sports, we even turned to betting on mediocre Russian ping pong matches, which has become the unlikely source of millions of dollars in action in legal betting parlors. The current fervor in the financial markets for special purpose acquisition companies (SPACs), otherwise known as blank-check companies, combined with gambling fever, was exemplified by the reverse merger of DraftKings, a legal betting operation, into a SPAC and becoming the beneficiary of one of the year’s hottest IPOs.

But we can’t truly fathom the gambling phenomenon without considering the astounding effect of the recent trading in GameStop, a video game retailer, which has ridden the frenzy created by the unfettered buy signals on Reddit’s WallStreetBets forum to new heights while making millionaires of a renegade band of traders and nearly killing the “shorts,” large hedge funds who sell stocks they don’t own in the hope that they will tank, locking in large profits when they buy it back.

The incoming SEC Chairman (likely Gary Gensler) will have to immediately deal with the GameStop mania and whether the activity amounts to market manipulation. Without getting into legal niceties, the trading seems like the opposite of a classic “pump and dump” scheme through which early buyers drive up the price by touting a worthless stock to unwitting buyers and sell before the suckers can get out on the way down. The GameStoppers are true believers who preach buying and holding under the delusion that the price of GameStop will rise forever. They think they are betting on the Harlem Globetrotters against their perennial patsies, the Washington Generals.

The press and the politicians are playing the activity in GameStop as a David vs. Goliath story, with the Little Guys experiencing a rare win against the Big Guys (Wall Street) and viewed as a populist cause by the unlikeliest couple, Alexandra Ocasio-Cortez (the Notorious AOC) and Ted (Stop the Steal) Cruz. The renegade stockbroker Robinhood is a surprising villain, first providing commission-free trading to the unclean masses, then restricting trading in GameStop (and other WallStreetBets favorites) when regulatory constraints set in and DTCC, the primary clearinghouse for the U.S. stock market, called for Robinhood to post significantly higher margin (security) to guard against a default due to the massive volume of their trading activities. (In the interest of full disclosure, I once served on the Credit Committee of an affiliate of DTCC).

While Robinhood, which pioneered commission-free trading and encourages teenagers and grandmothers to engage in boundless speculation, deserves much blame for enabling the trading frenzy, it is odd that they are taking the hit for imposing restrictions on it. Many of the populists justifiably criticized the bailout of the banks after the 2008 financial crisis, but the role of the clearinghouses in protecting against major defaults among its participants is a significant deterrent to the potential need for such possible rescues in the future. Instead, in this instance, Robinhood should be commended for actually complying with its regulatory obligations for once (although they didn’t have much choice).

But, in the final analysis, there is one market axiom that rings true: “what goes up, must go down.” The implementation of the trading restrictions resulted in a significant hit to the phantom fortunes based on investments in GameStop, but easing the restrictions somewhat reversed that trend. Inevitably, the shares of GameStop, a dying concept when most video games can be directly downloaded, will reflect economic reality, as eventually happened to tulip mania in 1637. But, then again, maybe we should stand up for the right of every man, woman and child in America to lose their shirts in the market. For, as famously stated by English economist/philosopher John Maynard Keynes: “[i]n the long run, we are all dead.”