Good point. The flip side is that allowing anyone to transact in options makes the pricing far more efficient.

Regulating participants to only those who have a purpose and meaningful reasons, would mean higher bid-ask spreads, less liquidity and less turnover, which then means those markets would probably cease to exist. Gamblers in these special markets are a net-positive, non-gamblers are happy to give some gamblers a payday or some drink money, since it allows non-gamblers to focus on their main activity, instead of doing their activity and gamble that everything turns out fine.

Of course they're happy to have the gamblers! Almost by definition the gamblers are subsidizing their risk management strategies!

> So I could decide that I think your house is likely to burn down, so I buy insurance on it.

which makes the insurance premium grow higher, reflecting the information that such a house has a high risk of burning down.

It doesn't matter that the buyer of the insurance has no material connection to the house. I can't see why such "gambling" shouldn't be allowed to happen, provided that there's enough regulation and monitoring so that you cannot then go and burn down someone's house to collect the insurance!