> At no point in this pipeline does Mike's capital touch productive enterprise.

This is an interesting economic/philosophical angle. What is the logical conclusion of this? What happens as a higher fraction of people deploy their capital in zero-sum games? Is "deployment" even the right framing? A bet doesn't necessarily "tie up" capital in the same way as a real investment (you could place your bet moments before it's settled). Buying crypto does tie up capital, sort of, although in theory you could invest crypto-denominated assets into something productive.

My capital is in real estate and (mostly US tech) company equity. Is society actually better off because I put my capital there instead of letting it sit in a bank account or crypto wallet?