Maysir

Maysir is the Arabic term for gambling or games of chance, and in Islamic law refers to acquiring wealth by chance, at the expense of another party, rather than through trade, labor or the productive use of capital. The Qur'an prohibits it, and the prohibition is one of the core principles of Islamic finance, alongside the bans on interest, or riba, and on excessive uncertainty, or gharar. Jurists also use the related term qimar, which some treat as a synonym and others as the wider category of any wager. In practice, maysir is a key test applied to speculative financial products.

A transaction involves maysir when the parties stake money or property on an uncertain outcome so that one gains exactly what the other loses, with no exchange of real value. The outcome turns on luck rather than on the performance of a business or asset.

The Qur'an addresses gambling together with intoxicants. Surah al-Baqarah (2:219) states that in both there is great sin and some benefit for people, but that the sin is greater than the benefit. Surah al-Ma'idah (5:90 to 91) goes further, describing intoxicants, gambling, idolatrous altars and divining arrows as abominations and warning that they sow enmity and divert people from remembrance of God. Classical jurists read these verses as a definitive prohibition.

The word maysir originally referred to a pre-Islamic Arabian game in which participants drew arrows to determine shares of a slaughtered camel, with losers paying for the animal. The term came to cover all forms of wagering.

Scholars explain the prohibition in terms of its effects. Gambling transfers wealth without creating any, encourages idleness, can ruin families, and breeds hostility between winners and losers. In the framework of the maqasid al-Sharia, the objectives of Islamic law, maysir harms the protection of property and, through addiction, of intellect and family. Islamic commercial law instead favors gain that comes from bearing genuine business risk in productive activity, as in partnership and trade.

Maysir and gharar overlap but are distinct. Gharar is uncertainty or ambiguity in a contract's terms, subject matter or delivery, such as selling a fish not yet caught; a contract with excessive gharar is defective even if no one intended to gamble. Maysir is the deliberate staking of wealth on chance. Many prohibited arrangements involve both: a contract whose payoff depends entirely on an uncertain event has gharar in its terms and maysir in its purpose. Ordinary commercial risk, such as the risk that a business makes a loss, is accepted and is not considered maysir.

Insurance

Many scholars have held that conventional commercial insurance contains maysir and gharar, because the policyholder pays premiums and may receive far more or nothing depending on chance. In 1985 the International Islamic Fiqh Academy ruled commercial insurance impermissible and endorsed cooperative insurance. The Islamic alternative, takaful, is structured as mutual assistance: participants make contributions as donations, or tabarru', to a common fund that compensates members who suffer losses.

Derivatives and speculation

Conventional options and futures, and especially leveraged products such as perpetual futures, are widely regarded by Sharia scholars as problematic when used for pure speculation, because a party can profit from price movements without any intention of acquiring the underlying asset. Hedging is viewed more favorably, and Islamic finance has developed alternatives built on promises, or wa'd, and on asset-based contracts, though their acceptability is debated. Short selling and contracts for difference are generally rejected.

Lotteries, prizes and digital assets

Lotteries and prize draws funded by participants' stakes are classic maysir. Prizes funded by a third party, such as a sponsor, are generally permitted, since the participants risk nothing. Prize-linked savings schemes and promotional rewards are scrutinized on this basis. Scholarly opinion on trading cryptocurrency varies: some regard holding certain assets as permissible, while many consider high-frequency speculative trading or leveraged crypto products to involve maysir.

Islamic financial institutions rely on a Sharia supervisory board to screen products for maysir. Equity screening methodologies used by Sharia-compliant funds exclude companies whose main business is gambling, along with alcohol and conventional finance. Where small amounts of income from prohibited activities cannot be avoided, it is removed through income purification, usually by donating it to charity. Scholars may issue a fatwa on new products, and views can differ between jurisdictions and schools of law.