‘Gambling runs deep in American culture': Nithin Kamath slams misleading India–US trading comparisons

Time of India

a day ago

Zerodha
co-founder
Nithin Kamath
has pushed back against recent comparisons between India and the United States over
options trading volumes
, calling such parallels both flawed and misleading. In a detailed social media post, Kamath emphasised that India's markets are far less leveraged and significantly less mature than those in the US. He went further, describing America as a 'gambling society,' stating, 'Gambling runs deep in American culture. From the stock market to sports, casinos, events, lotteries, prediction markets, and crypto, you can bet on anything.' His comments have sparked debate among investors and market analysts, many of whom agree that comparing raw trading volumes alone fails to capture deeper structural and cultural differences.
Nithin Kamath says Indian markets are less leveraged than US counterparts
Kamath's core argument centres on leverage, a key metric that determines how much capital is actually at risk. While India may now be the largest market in the world in terms of options contracts traded, he explained that these trades are often low in premium value, meaning less money is involved per contract.
In contrast, US markets operate with far greater sums of capital per trade. Kamath pointed out that India's margin funding market is still under 10 billion dollars, whereas the United States recently surpassed one trillion dollars. This stark difference, he noted, highlights the risk of making surface-level comparisons without looking at the underlying leverage or capital exposure.
India's financial markets are still maturing
According to Kamath, India's financial markets are roughly 15 to 20 years behind the United States in terms of
market maturity
and structural development. He pointed to the limited penetration of mechanisms such as margin trading, stock lending, and short selling in India, compared to their extensive use in the US.
He further argued that India's options trading ecosystem is still predominantly retail-driven, meaning individual investors are placing smaller, more frequent bets with relatively lower capital exposure. On the other hand, US options markets are largely institutional, where trades are fewer in number but far more substantial in terms of value and leverage.
US culture encourages speculation across sectors
Kamath didn't stop at structural financial differences. He also criticised the broader culture of speculation embedded in American society. Calling the US a 'gambling society,' he cited a recent $210 million wager on whether Ukrainian President Volodymyr Zelensky would wear a suit at the NATO summit as an example of extreme speculative behaviour.
He argued that gambling in the US goes far beyond casinos. It spans across the stock market, sports betting, prediction markets, lotteries, and cryptocurrency platforms. 'You can bet on anything,' he remarked, suggesting that this widespread acceptance of speculative behaviour shapes the American approach to investing and risk in general.
Simple volume comparisons are misleading
Kamath strongly criticised what he described as a misleading narrative that India is dangerously overleveraged simply because of the sheer volume of options contracts being traded. He argued that this view fails to consider the nuances of how leverage works and ignores the capital involved in each transaction.
'Just counting contracts without understanding the structure is misleading,' he wrote. According to him, metrics like total market exposure, margin usage, and premium values offer a much clearer picture of actual risk levels than raw trading volume ever could.
Support from investor community
Kamath's statements found resonance within the investor and trader community. Many users echoed his views online, pointing out that structural and cultural factors are crucial in understanding any market's behaviour.
One user remarked, 'Comparing India to the US in leverage is like bringing a water pistol to a wildfire,' highlighting the vast difference in scale. Another added, 'India's market is retail-led, and the US is dominated by institutions. Their leverage capacities aren't even in the same ballpark.' Others praised Kamath for calling out misleading narratives and presenting a more balanced view of India's evolving financial landscape.
A call for nuanced understanding
In conclusion, Kamath urged analysts, commentators, and financial media to exercise greater nuance when comparing India's financial markets to those in the US. He argued that surface-level metrics like contract volume do not adequately reflect real risk exposure, especially in a country where financial infrastructure is still developing.
By drawing attention to the differences in leverage, market maturity, investor profile, and cultural attitudes toward speculation, Kamath's intervention has sparked an important conversation. His critique not only challenges oversimplified narratives but also offers a clearer, more contextual understanding of how emerging markets like India should be evaluated.
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