Bucket shop (stock market)

Common card · No. 360129

A bucket shop is a business that allows gambling based on the prices of stocks or commodities. A 1906 U.S. Supreme Court ruling defined a bucket shop as "an establishment, nominally for the transaction of a stock exchange business, or business of similar character, but really for the registration of bets, or wagers, usually for small amounts, on the rise or fall of the prices of stocks, grain, oil, etc., there being no transfer or delivery of the stock or commodities nominally dealt in". A person who engages in the practice is referred to as a bucketeer and the practice is sometimes referred to as bucketeering. Bucket shops were found in many large American cities from the mid-1800s but the practice was eventually ruled illegal and largely disappeared by the 1920s. Edward Chancellor describes bucket shops as an early form of unregulated finance options, given that people invested on anticipated future price movements without holding the underlying asset similar to how modern futures operate.

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