Longman Dictionary of Contemporary English
The Collaborative International Dictionary
Bucket shop \Buck"et shop`\ An office or a place where facilities are given for betting small sums on current prices of stocks, petroleum, etc.
Wiktionary
n. 1 (context finance pejorative obsolete English) A stockbroker which takes small orders from clients and takes them on its own account rather than actually transmitting them to the market. Prevalent in the US 1870s to 1920s; often setup as shop-fronts in the 1920s. 2 (context pejorative finance English) A stockbroker which sells stock to clients when it has an undisclosed relationship with that company or its owners. 3 (context travel dated English) a travel agency selling discounted airfares, usually in defiance of existing minimum fare arrangements. Now usually refers to any small cheap agency. 4 (context legal English) a legal services firm selling heavily discounted legal services and documents made in large volume from boilerplate text and clauses, sometimes as a white labelled loss leader
WordNet
n. an unethical or overly aggressive brokerage firm
(formerly) a cheap saloon selling liquor by the bucket
Wikipedia
Bucket shop usually refers to a particular type of fraudulent business.
The term is used as a pejorative colloquialism to refer to different kinds of businesses, indicating that the speaker believes it is a fraud or scam. In this sense it might be used as a name for stock market, unregulated credit default swaps, or for heraldry scams.
In heraldry, bucket shop refers to a business working with heraldic fraud. A similar meaning is used on the stock market, where bucket shop is a defined term under the criminal law of many states in the United States that make it a crime to operate a bucket shop, see bucket shop (stock market).
The term is also used of airline ticket consolidators, though in this case there is no implication of fraud.
As defined by the U.S. Supreme Court, a bucket shop is "[a]n establishment, nominally for the transaction of a stock exchange business, or business of similar character, but really for the registration of bets, or wagers, usually for small amounts, on the rise or fall of the prices of stocks, grain, oil, etc., there being no transfer or delivery of the stock or commodities nominally dealt in." People often mistakenly interchange the words bucket shop and boiler room, but there is actually a significant difference. A boiler room has been defined as a place where high-pressure salespeople use banks of telephones to call lists of potential investors (known as "sucker lists") in order to peddle speculative, even fraudulent, securities. However, with a bucket shop, it could be better thought of as a place where people go to make "side bets" – similar to a bookie.
"Bucket shop" is a defined term under the criminal law of many states in the United States that make it a crime to operate a bucket shop. Typically the criminal law definition refers to an operation in which the customer is sold what is supposed to be a derivative interest in a security or commodity future, but there is no transaction made on any exchange. The transaction goes "in the bucket" and is never executed. Without an actual underlying transaction, the customer is betting against the bucket shop operator, not participating in the market. Alternatively, the bucket shop operator "literally 'plays the bank,' as in a gambling house, against the customer." Operating a bucket shop in the United States would also likely involve violations of several provisions of federal securities or commodity futures laws.
A person who engages in the practice is referred to as a bucketeer and the practice is sometimes referred to as bucketeering.