MAYSIR AND GHARAR

GAMBLING
AND

MAYSIR

CONTENTS

1 Prohibition Of Gharar
2 Types Of Gharar
3 Prohibition Of Gambling (Maysir)
4 Ethics And Its Application

Definition Of Gharar

The Arabic word Gharar is a fairly broad concept that literally means deceit, risk,
fraud, uncertainty or hazard that might lead to destruction or loss. Hanafi scholars have
defined Gharar as “something which its consequence is undetermined.” While Shafi’i
scholars have described it as “something which in its manner and its consequence is
hidden”. According to Al-Sarakshi, “anything that the end result is hidden or the risk is
equally uncommon, whether it exists or not.” Therefore, Gharar in Islam refers to any
transaction of probable objects whose existence or description are not certain, due to lack
of information and knowledge of the ultimate outcome of the contract or the nature and quality

of the subject matter of it.

Types Of Gharar

Gharar is divided into two types, and

. Examples of Gharar fahish in contracts are plenty as shown

by the Al-Hadith and normally is associated with the reasons why Gharar sales

are prohibited.

On the other hand, Gharar yasir which means small in amount or trivial is the

uncertainty that is always present in all contracts and conducts, thus its

existence is tolerated. All scholars agree that every transaction have some

amount of Gharar in it but they start to differ when referring to the amount of

Gharar contained in each.

There is no specific evidence from the Quran which connotes Gharar, however,

Allah (s.w.t) mention “Eat not your property among yourselves unjustly by

falsehood and deception, except it be a trade amongst you by mutual consent

(Al-Bakarah, 2:188; AlNisa, 4:29). The Quran has categorically prohibited

gambling (Al-Bakarah, 2:219 and AlMaidah, 5:93). Many scohalrs arguethat

Gharar is one of the branches of gambling (Rahman, 2010; p.71). In addition to

that tradition of our beloved Prophet (s.a.w.) on many occasions forbade many

transactions which included Gharar. For example, the Prophet (s.a.w.) has

forbidden the purchase of the unborn animal in the mother’s womb, the sale of

the milk in the udder without measurement, the purchase of spoils of war prior

to distribution, the purchase of charities prior to their receipt, and the purchase

of thecatch of a diver.

Gharar occurs in all sorts of transactions where the
subject matter, the price or the two, are not determined and
fixed in advance. Speculative activities in capital market,
derivatives instruments and short-selling contracts are bright
examples of Gharar in modern finance. Moreover, Gharar in
practice relates potentially to issues such as pricing, delivery,
quantity and quality of assets that are transactional-based and
would affect the degree or quality of consent of the parties to a
contract.

For example, one cannot buy an ‘option’ at a certain
price to have the right to purchase its underlying shares, as an
‘option’ is not ascertainable and is thus uncertain. An option is
just a right. It is not an asset whose specifications are clear and
attainable. In conventional insurance, the premium paid by
policyholders and the indemnity provided by the insurer upon a
claim are equally uncertain, thus making conventional insurance
non-compliant from an Islamic legal perspective.

Types Of Gharar

GHARAR Also known as serious major gharar GHARAR This type of gharar is tolerated
FAHISH and it’s not acceptable because it’s YASIR and will not invalidate a contract.
contain high amount of uncertainty
(MAJOR (MINOR It can be found in almost all
GHARAR) This gharar is not tolerate and may GHARAR) contact but this gharar did not
result in contract voidability damage the aqad

Excessive gharar may ignore or provide Therefore this Gharar Yasir is
lack information about the price of goods, allowed in business transaction
the unit of currency in which price to be
paid. There is a general agree for these EXAMPLE :
prohibitions.
i) Buying a pen inside a box
An example :
ii) Buying a fruit without cutting
i) the sale of unborn animal (while off the skin see inside
it’s still in its mother’s womb)
iii) Hotel charge customers same
ii) the buyer would receives a price with different kind of
dead animal for the money paid customers
to the seller

MAYSIR

DEFINITION

Gambing or Maysir or also known as Qimar is involved in contracts where the ownership of a good
depends on the occurrence of a predetermined, uncertain event in the future and any activity

which involves betting whereby the winner will take the entire bet and the loser will lose his bet.
Such as lotteries, lotto, casino-type games and betting on the outcomes of animal races. Together,
these share a desire for obtaining return through deliberate risk-taking. Both games of chance and

gambling are banned by Sharia.

Surah Al Maidah, verses 90 :

“ O you who believe! Intoxicants ( all kinds of alcoholic drinks ), gambling, Al-Ansab,
and Al-Azlam ( arrows for seeking luck or decision ) are an abomination of Satan
handiwork. So avoid (strictly all) that (abomination ) in order that you may be
successful.”

Surah Al Baqara , verse 219 :

They ask you ( O Muhammad SAW ) concerning alcoholic drink and
gambling. Say: “In them is a great sin, and (some) benefit for men,
but the sin of them is greater than their benefit.” And they ask you
what they ought to spend. Say :That which is beyond your needs.”
Thus Allah makes clear to you His Laws in order that you may give

thought.”

ETHICS AND ITS APPLICATION IN
ISLAMIC FINANCE

The underlying principle guiding Shari’ah is that ‘God orders the good because
it secures the welfare of the community and forbids evil because it is evil and because it is against the public good’
(Abdel-Wahab 1962-63: 122). As Shari’ah entails all the teachings of Islam, it is understood to include both Islamic
morals and laws. The implication is that Islamic law and morality are expected to contribute positively to the welfare

and public good (maslahah). For the purposes of this paper, however, we use three domains of norms discussed
above: morals related to individuals (and society), ethics belonging to groups including organizations, and laws

governed and implemented by entities with legal and regulatory authority.

INTRODUCTION

The essence of Islamic worldview is tawheed which means oneness and
sovereignty of God (Allah). Though tawheed means unity of God and creation, it

has implications related to all aspects of life including economics and finance.
The concept of tawheed also implies that God is the only source of value and

norms. Thus, all discussions on law and morality ensue from this concept
(Kamali 2008, p.17). Islam, being a complete code of life provides rules and
norms for economic activities and transactions. Islamic economics and finance
will reflect the Islamic worldview and as such, is driven by Islamic laws and

morals related to economic transactions.

The Quran also uses a whole array of terms to describe the concept of goodness;

- Adl (equilibrium and justice) - Khayr (goodness)
- Haqq (truth and right) - Birr (righteousness)
- Ma’ruf (known and approved) - Qist (equity)

E In Islam, the ethical norms and moral codes are governed by the verses of the Quran is “You are the best of
T peoples, evolved for mankind, enjoining what is right, forbidding what is wrong and believing in Allah” (Qur’an
H 3:110 Surah Al ‘Imran). The Prophet (S.A.W) said, “I have been sent for the purpose of perfecting good morals”.

Islam allows complete freedom to enter halal enterprises and businesses as a form of livelihood. It is not only

I concerned with the purposes of human life but also caters for the welfare of man in Hereafter.
C
S A person is entitled to pursue his business enterprises provided

they are within the limits the set by the Shariah, which has

prohibited all activities that cause harm to traders or consumers.

Thus the ethical value are very important with regard to Islamic

tenets are relevant to the consideration of ethics within Islamic

finance.

i. TRADE THROUGH MUTUAL CONSENT

Joint agreement between both parties is a The Holy Al Quran says “ O you who consume one
necessary condition for the validity of a business another’s wealth believe, do not wrongfully; rather,
transaction. Therefore, it is held that sale under let there be trade by mutual consent; and do not kill

compulsion is not acceptable in Islam. For a one another, for Allah is merciful to you”. (4:29)
business transaction to be valid, Islam prohibits from this verse, two conditions for the validity of
transactions in which one of the parties is coerced
transaction can be derived. The first is mutual
and it treats such transactions as illegal. consent of the contracting paties. Secondly, there

must an exchange of wealth.

• [In the light of Surah an-Nisa Ayah 29 and 30]
The words “unless it be a trade with your mutual consent” in ayah 29 lay down two conditions for the
validity of a transaction through which the property of another person may lawfully be acquired. Firstly, it
must be a transaction of trade that requires an exchange of properties. Therefore, the transactions of
gambling, speculation, and usury or the transactions of sale where the commodity does not exist are
forbidden and are not valid in Shariah because these transactions cannot be termed as trade, even
though they are affected in the name of trade.

ii. KEENNESS TO REAP HALAL EARNINGS

Islam requires that business transaction be halal. Any wrongly acquistion of property is prohibited. The
Prophet Muhammad S.A.W, was asked, “What is the best earning?”, he replied, “A man’s work with his hands,

and every legitimate sale”. The evidence from Al Quran and Sunnah make it clear that a Muslim must earn
through legitimate means. Illegitimate means in business transactions such as riba, gambling, gharar and any
bubious matter must be avoided. The Islamic Financial Services Act 2012 emphasizes this matter in Section
28 (1), which states that an institution shall at all times ensure that its aims and operations, business, affairs

and activities are in compliance with the Shariah. It is the responsibility of the Shariah Committee (SC) to
determine that the aims and operations of its institution are Shariah compliant. If a financial institution

breaches this provision, it will incur a penalty.

Islamic banking ‘s leniency towards defaulter has been
abused as it is tricky to distinguish between borrowers
and those defaulter who wilfully choose not to pay. This
is how Islamic banking give leniency to the defaulter:

SOLUTION Imposition late payment charge Debt: Wa'd instruments
to islamic banking according for used to deal with defaulter
and also applied in Al-Ijarah
two concept that is Thumma Al-Bai financing.
Gharamah(fines and penalties)
also Tawidh (compensation)

This is the view about principle of compensation on debtor that we need to know.
According to Mustafa Al –Zarqa ; the bank should inflict compention up to the debtors that is have a purpose to delayed

payment of debt but need to follow a specific condition to show the debtor that its capable or not to pay the debt.
Other view from Nejatullah is bank also should take a compensation however the outcome that we get and need to exiled

into special tube .It is because to avoid the riba.The debtor cannot make an initial agreement with the bank.
From Taqi Urhmani. In Murabahah financing, Bank just take a real compensation rate without any increase in
payment amount to avoiding the inconvenience of making money.

iv. Honouring and Fulfilling contracts

1 Make their standard procedure to explain the Shariah principle
that underlie each other product

2 Information can be often been found on their respectives websites
or marketing pamplets

3 Obligation of the institution to explicitly brief the
purchaser and customers

To avoid huge setback in International Arbitration,The government need to
follow a crucial caveats before executing any International contract. The government
need to read, fully comprehend to all our obligation in the proposed contract.

Another method, government need to give an attention to the dispute
resolution clauses because to understand the legally binding nature arbitration.Lastly,
not honouring International contract tarnishes the country’s image.

v. Dealing with legitimate items

As explained that Islam is a very different in terms of business activities. However, Islam forbids any form
of sale and use of stolen goods, snatch and the like, as it is part of a form of relief from sin and hostility, which is
demanded for good and for fear. Islamic finance principles is dealing with good and halal items. Debt cannot be
sold: consequently, the financier bears some of the risk associated with the transaction and thus is motivated to
perform a careful evaluation of risk and reduce the unnecessary expansion of the value and volume of transactions.

Islamic banks only allowed to deal in permissible products and services, which must be halal (legitimate) in
accordance with Islamic principles. There are limitations that each institution needs to follow.
The guidelines given by authorities such as Bank Negara Malaysia or Securities Commission Malaysia

should be followed alongside the essence of Shariah, which outlaws unethical behavior. These guiding restrictions
prohibit excessive uncertainty in activities, fraud and exploitation of others ignorance of market conditions-unethical

activities that affect the legitimacy of contracts.
For example, aa 1995 resolution of the Securities Commission states that gamblinng is one of the main criteria

causing a listed company's securities to be execued from the list of Shariah- compliant securities.

Freedom From Excessive Uncertainty

01 02 Lack of Clarity on Price or
Obligation
All forms of contract and The Prophet Muhammad
transactions must be free from (peace be upon him) has Gharar can be simplified as an
excessive Gharar. This implies that explicitly prohibited gharar in uncertainty which caused due
contracting under conditions of various ahadith (sayings). The to lack of clarity regarding the
famous companion Abu subject matter or the price or
excessive uncertainty is not Hurayrah narrated that Prophet the obligations of the parties.
permissible. Islamic scholars have Muhammad ‫ ﷺ‬has prohibited In other words, gharar means
gharar in all business and sale a lack of clarity and ambiguity
identified the conditions and transactions. It’s also reported
highlighted situations that involve in hadith books that Prophet in the basic elements of a
Muhammad ‫ ﷺ‬has forbidden contract.
excessive uncertainty and two types of contracts namely
consequently, disallow contract. There are various forms of
al-mulamasah and al- gharar. For instance, the
munabadha. delivery of one item is not in
the control of the relevant
party or the payment of price

is unknown.

Reference Source

• https://blossomfinance.com/press/prohibition-
of-excessive-uncertainty-gharar-5-of-28

• http://repo.uum.edu.my/18860/1/Wae_gharar.pdf

• https://pureislamicfinance.wordpress.com/isla
mic-finance/maysir-gambling-and-other-
games-of-chance/

• https://www.investment-and-
finance.net/islamic-finance/g/ghobn-
fahish.html

• https://tribune.com.pk/story/1522195/honourin
g-contracts/?amp=1

• http://www.isfin.net/sites/isfin.com/files/the_pr
ohibition_of_gharar.pdf

THANK YOU