Third principle of Islamic Finance: Maysir. Understand the meaning with examples
Maysir: where easy money comes with negative effects
Everyone loves quick money, isn’t it? Therefore, in the West, casino and lottery businesses are quite profitable because everyone wants to try their luck and spend life in luxurious. But, it’s human nature that we want to have more and more and becomes greedy and selfish.
It is the opposite when we talk about Islamic finance. Islamic laws are not formulated by humans that cannot be altered anytime for convinces. These principles are according to the Sharia guidelines to set equal standards and promote ethical values and norms.
We have discussed the prohibition of Interest and permissibility of light Gharar in Islamic contracts. Another element which is forbidden, it is called Maysir: gambling. In this blog, we will discuss how maysir is practiced in stock, insurance and future contract and reasons why Islam doesn’t support it?
What are Qimar and Maysir?
When we try to find the similarities and differences between Islamic and conventional styles of banking and finance, we need to get complete insight to learn the benefits of halal trading. Therefore, it is always suggested to not only concentrate on some of the mainstream topics like Riba but also dig into other aspects that are prohibited as per Islamic laws.
In this part of the blog, we will discuss games of chance. The other thing which is quite identical to maysir is called Qimar. Here, we will explain the definition of both terms.
First, we will define Maysir: it includes all kinds of gambling where money slip toward us, without any hard work and there is no chance of any risk or loss.
One of the examples is the lottery scheme where a different participant in an arrangement contributes their money with the hope to win something with a mere chance without any productivity and minimum entry price.
As the Quran states it like the grave of sins and also mentioned in Hadith: disclosure, that
They ask you about wine and gambling. Say: 'In them both lies grave sin, though some benefit, to mankind. But their sin is graver than their benefit.'
Now moving on to the Qimar: It is kind of maysir or we can say it another kind of Maysir. It is Arabic word that means wealth by way of a wager. An example is the casino games where we can win or lose with no real effort.
Another way to explain Qimar is betting, where one will get all the profit or the benefits on the deficit of another party. Most of the scholars call this type; a Zero-Sum game where one will get all the advantages without caring about others.
In conventional finance, this element is commonly practiced in some of the market derivatives like swap, option and futures contracts. We are familiar with most of them as all these contracts are used in import and export trade finance.
Why Islam not in favor of it?
Just like Rib and Gharar there are negative outcomes of this action in trade. Below are some damaging points of debate:
1- It doesn’t promote the act of charity and brotherhood in the society
2- It distracts moral values and ethical norms.
3- The main focus on individual goals and benefits.
4- No sharing of loss and no hard work involved, reward is only earned on a mere chance
5- One person gets all the profit on the loss of another person.
Different examples
In today’s world, there are plenty of examples where people are addicted to games of luck. Now, these games are turned into profitable ventures, some of the examples are explained below:
Maysir in Conventional Insurance
Insurance policies can be used to cover the loss that may or may not occur in the future. This service is not gambling but the conventional structure has made it similar to betting.
For instance, policyholders have to pay lifetime premiums on the probability of damage that is never certain. It is a total loss if we keep on paying the cost of insurance and there is no consideration or benefit in return.
On the other hand, if any harm occurs, the claim amount might be higher than the premium actually paid. In that case, even against one installment of the cover, the insured company will have to pay the total amount of the compensation.
Takaful that transfer loss and promotes acts of donation
Opposite to it is the Takaful; Islamic insurance. Here Maysir is excluded through the act of charity. Where the participants contribute to a common pool of funds and guarantees to help others by way of tabarru: help others who need the most. This voluntary act will promote sympathy for one and other.
Maysir in stocks
We heard it quite often that someone gets rich overnight because he has shares in stocks. Again, it is easy money that comes with no real effort. Conversely, if in share prices drop due to speculation, we can lose all our life-time savings in one single day.
There are following factors which are subject to speculation and prohibited in the stock trading:
2. The element of betting: It is no doubt that stock market effects due to gossip and rumors. There are buying and selling on stocks based on the company financial health but market sentiments
3. Taking Advantage: Professional brokers take advantage of the un-professional speculators, who are not aware of the market changes.
The lottery Ticket and horse betting
These are other common examples where someone wins or fails based on uncertainty. Other than investing a small amount of the subscription, no one knows where the money is coming from.
It is obvious, once we can win comfortably, we want to do it again and become addicted to this. With all these downbeats, it is hard to add values towards social welfare and individual growth.
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