Heraclitus once said, “War is the father of all things”. This is of course not true. At least not if you have a look at the history of risk management. In his bestseller Against The Gods: The Remarkable Story of Risk, Peter Bernstein clearly shows how many concepts of modern-day risk management are rooted in compulsively gambling aristocrats who wanted to win with the help of statistics. At least the history of probability calculus cannot be told without mentioning gambling.
As an example, let us look at the history of the Italian polymath Gerolamo Cardano (1501 to 1576). In his book, Liber de Ludo Aleae – in English usually translated as On Casting the Die – he discusses the theory of discrete random processes. Along with mathematics, Liber de Ludo Aleae also talks about modern concepts such as the willingness to take risk and psychological aspects of gambling such as the fear of casting the die and compulsive gambling. Other ageless concepts also investigate the question of the optimal way of putting the thus gained knowledge to effective (cheating) use.
This was also one of the reasons why Cardano was not interested in making his knowledge accessible to the public, and as a result his book was only published posthumously in 1663. Cardano himself made a living from gambling. In an ironic twist of fate, he tried too much of his own medicine, fell prey to compulsive gambling, and lost his livelihood and his reputation.
Today we can use these statistical findings, to calculate precisely that in gambling, the bank ultimately always wins. Knowing this keeps many people from gambling in the first place. To this extent, gambling has had a positive side.