‘We Have a Problem’: 26% of Gen Z Views Sports Betting as Long-Term Financial Investment

Gen Z’s affection for sports betting and prediction markets is no secret, but a new survey from Betterment reveals a troubling trend: a quarter of young adults now treat sports wagers as a core part of their long-term financial strategy.

Betterment’s fourth annual Retail Investor Survey reveals that 26% of Gen Zers view sports wagering as “a deliberate part of their long-term financial strategy.” Even more striking, 52% of young respondents admit to siphoning money meant for brokerage or retirement accounts straight into sports betting.

The latter point jibes with other studies’ findings confirming that regardless of age range, some sports bettors sacrifice traditional investing to fund their wagering habits. The percentage of Gen Zers viewing sports wagering as a suitable alternative to standard investing is far higher than it is in other age groups.

Betterment doesn’t assign blame regarding why so many young people view betting as a replacement for traditional investing, but some experts believe it boils down to the wealth gap, belief that financial milestones, such as homeownership, are out of reach and the “you only live once” (YOLO) mentality.

Betterment CEO Says Industry Needs to Step Up

Well-known asset managers, including Charles Schwab and Vanguard, have been overt in their criticism of prediction markets and sports betting, but Betterment CEO Sarah Levy believes the financial services industry can do more to prevent the blurring of the lines between investing and wagering.

She may be onto something. There was a time when sportsbook operators were struggling to attract Gen Z clients, but that’s now a bygone era. Betterment points out that just 34% of Gen Z don’t participate in some form of sports wagering. Conversely, 63% of investors at large aren’t sports bettors.

Compounding Gen Z’s woes is the fact that of the 52% that redirect cash that would otherwise go to investment accounts to betting, 14% do so multiple times a month, according to Betterment.

Not Just Lost Money

As Dan Egan, Vice President of Behavioral Investing at Betterment, notes, the true risk of blurring the line between betting and investing isn’t just lost capital—it’s “the erosion of a coherent financial strategy.”

The opportunity cost is staggering.

If a bettor diverting $1,000 a month to sportsbooks redirected just half that amount—$500—into an S&P 500 index fund, those monthly contributions could grow to roughly $246,000 after 20 years (assuming a conservative 7% annual return, well below the index’s historical 10% average).