Sports betting has become quite popular in the United States since the Supreme Court lifted the federal ban on sports betting in 2018. More than a quarter of Americans (27%) and more than half of men ages 18 to 49 (52%) said they had an active online sportsbook account, according to a February Siena poll.
Many young sports bettors are making what financial experts say are particularly risky bets. In other words, their sports predictions can help them raise money in the future. A Betterment survey of 1,000 investors found that more than half (52%) of Gen Z investors (born between 1997 and 2007) have diverted money they would have invested into sports betting.
“The concern isn’t that young people enjoy sports or place bets from time to time,” said Andrew Lendonall, head of financial wellness at wealth management firm Wealthspire. “The concern is that gambling starts to compete with money aimed at long-term wealth building, and that entertainment begins to masquerade as an investment strategy.”
The youngest adult generation tends to have good investment habits, starting investing earlier and diversifying their assets at a higher rate than older generations. While there are responsible sports bettors out there, young investors need to understand the risks and costs of combining wagers with long-term financial planning.
Trade long-term strategies for short-term profits
According to Betterment, about a quarter of Gen Z investors believe sports betting should be considered as part of a long-term financial strategy. Stephen Wang, 24, founder of investment app Dove, said it’s probably because some young sports bettors believe they have the know-how to consistently win.
“When I’m talking to friends, they say, ‘Oh, I know about this football team, so I could probably make some money[on betting],'” he says. “They go into the bet thinking they’re really going to win, but all the statistics show that that’s usually not true.”
To understand why, it’s important to understand the basics of how bookmakers set their odds. Sportsbooks have an advantage over bettors on any bet because they incorporate commissions known as vig into their pricing. For example, a bet that ostensibly has a 50/50 outcome typically requires you to risk $110 to win $100. Multiply this by millions of bets and it’s not hard to see how the deck is stacked against gamblers. If you receive $100 for every win and pay $110 for every loss, you will go bankrupt if you win 50% of the time.
Over the past 100 years, the stock market’s annual weighted return has averaged about 10%, according to research by Hendrik Bessenbinder, a professor at Arizona State University’s Carey School of Business. Assuming the market maintains this trajectory, your $10,000 investment could grow to more than $452,000 in 40 years. In sports betting, a win can result in an immediate profit of 100% or more, but over the long term, the expected profit is generally much lower, and in fact, it is almost always a net loss.
Gambling can lead to financial problems even if you are not diverting your money to investments. Legalized sports betting has been matched by increased delinquency and bankruptcy rates, according to a report from the New York Federal Reserve. A quarter of sports bettors say they’ve missed a payout because of a bet, and 30% say they’ve incurred debt because of a bet, a 2025 U.S. News & World Report survey found.
Spending money that would be invested for the future can make these problems even worse.
“Decision-making problems”
Gen Z has virtually unlimited access to information that can help them build a better financial future. For example, social media is full of personal money advice. But all too often, good advice from certified professionals and trained professionals is confused with content from uninformed or intentionally deceptive creators.
“Young people don’t have an information problem; they have a problem with information quality, trust, and decision-making,” Lendnall said. That could lead younger consumers to prefer quick, exciting money transfers over boring but generally sound ones, he said.
While scrolling through TikTok, you might come across a video by a financial educator that emphasizes the benefits of investing in a diversified portfolio early and growing your money over decades thanks to compound interest and the historic upward trajectory of the U.S. stock market. However, the following video could be a creator or an ad promoting the idea that you can use an online sportsbook to turn $100 into $1,000 during a soccer game.
Michael Pratt, an expert in neuroscience and psychology who teaches at the Wharton School at the University of Pennsylvania, said sports betting not only appears to be a shortcut to wealth, but it can also give individuals “the illusion of control.” Bettors may think that knowledge of the sport will help them make more money in the game than by researching the market or researching the Federal Reserve System.
“I know more about (sports) than I do about stocks or index funds, which I don’t know much about,” Pratt said sports bettors might think.
Entertainment vs Investment
Sports betting can be fun, and a small percentage of gamblers even make money. But it’s important for bettors to understand the difference between betting for fun and viewing their wagers as an investment, Lendonall said.
So it’s wise to think of the money you bet as money you can afford to lose, says Rednall. If you don’t have an emergency fund or active retirement account, it’s best to hold off on gambling until you have that foundation in place, he says. Also, since balances grow with compound interest, it’s wise to prioritize paying down high-interest credit card debt.
“The real test is, ‘Can I afford this? What am I willing to give up to make this (bet)? And am I using money that should be in debt, emergency savings, or long-term savings?’ That’s the really important distinction,” says Lendnall.
