Americans aren't allowed to make certain investments unless they earn $200,000 annually or they're worth more than $1 million — but they are free to gamble.
Gambling is increasingly legal in the United States. New casinos keep popping up in places outside of Las Vegas, and professional sports leagues that used to oppose sports betting are now embracing it. Except for certain age restrictions, gambling is open to the general public, despite its dubious social benefits. Startup investing however is not.
Neither is investing in a venture capital fund or a fund that invests in collectible art. These activities are limited to so-called “accredited investors.” The American government would rather people risk money playing casino games they are likely to lose than to invest in a startup that might succeed.
Accredited investor laws restrict many kinds of investing to so-called “sophisticated investors.” But they don’t measure sophistication by knowledge or experience — there is no test to take. They measure it by wealth. In the eyes of the government, being sophisticated means having an annual income of at least $200,000 — five times what the median American makes — or a net worth greater than $1 million.
