Football is right around the corner. What’s also right around the corner is the flood of sports betting ads that accompany a football game. You’ll get about four every single commercial break, with the occasional Home Depot or Dr. Pepper ad to break up the monotony.
Sports betting has permeated our culture to the point that many young people view it as a viable alternative to investing. Yes, you read that right.
According to a recent survey from Bloomberg, more than half of Gen Z investors (born between 1997 and 2007) said they have redirected money originally earmarked for investing into sports betting. More than a quarter said they treat sports betting as part of their long-term financial plan.
Even setting aside Gen Z, still a quarter of respondents from all generations said they’ve used investment funds to bet on sports.
Here’s an excerpt from the article:
“Robert Kosciuk, a 32 year-old from Huntington, New York, has a Robinhood account for stock trading but this year has put more energy into betting. He says he applies the logic of investing to sports betting. He approaches it with caution rather than emotion, does research before placing bets and he only wagers $100 at a time.
He understands that he’s gambling. ‘I think I’m just smarter about it,’ he said. ‘I’m not just doing it as a hobby.’
This year, he’s made roughly $2,500 on bets.
‘I booked a whole vacation thanks to the Carolina Hurricanes this year, which sounds insane to say out loud,’ Kosciuk said.”
There’s a lot to unpack there.
I don’t think it needs to be said, but I’ll say it just in case: Gambling on sports is definitely not a viable financial strategy. You will most certainly lose money in the end. If you’re betting on sports with any other purpose than pure recreational entertainment and with anything other than small amounts of money that you can afford to lose, I’d strongly recommend you reconsider your approach.
Now, I still think most people would agree that sports betting isn’t a way to reliably make money. But what’s interesting is I see the way a lot of those same people trade stocks and pretend that it’s different.
Another study from Bloomberg found that gambling and trading stocks had the same psychological effect on young men. The study showed that 66% of young men who gamble on a daily basis reported feeling like a failure. Almost identical to the 64% of daily stock traders who reported the same feelings of failure:
Many of these new investing apps structure their platform the same way betting apps do.
Robinhood didn’t accidentally make its interface look like a slot machine in its early days. The confetti, the dopamine hits, the frictionless one-tap trades — these were features, not bugs. The platforms make money on volume. Volume requires engagement. Engagement requires emotion.
The vast majority of active traders underperform a simple index fund. Most lose money. The ones who do beat the market in a given year often give it back the next.
The rationale some have given for this type of speculative behavior is that many feel stuck financially. A Northwestern Mutual study found that 80% of Gen Z respondents who were drawn to speculative investments said it was partly because they “feel economically left behind.”
So when someone sees a TikTok of a 24-year-old who turned $5,000 into $80,000 by day-trading meme stocks, or a guy who hit a 12-leg parlay for $40,000 — that feels like the answer. That feels like the shortcut.
But what those videos don’t show you are the thousands of people who lost money that week trying the same thing. You see the wins because winners post. Losers go quiet.
Ironically, a solution to feeling financially helpless is investing. Real investing. Which is the opposite of the immediate gratification that comes from sports betting or day trading. It’s deliberately boring. It rewards the people who can tune out the noise, sit on their hands, and let time do the heavy lifting.
The U.S. stock market is up over 13% so far this year. It’s up over 20% the past year. And up nearly 75% over the past five years.
Now maybe 13% doesn’t seem super exciting compared to the prospect of doubling your money with one bet or one trade. But if you’re consistent, that 13% compounds over time to real, meaningful wealth.
If you started investing just $500/month into the S&P 500 in the year 2000 and kept that same $500 going every month, you’d have a $1 million investment portfolio today.
I don’t know too many people with a million dollars who feel helpless or stuck.
Thanks for reading!
Jake Elm, CFP® is a financial advisor at Dentist Advisors. Jake a graduate of Utah Valley University’s nationally ranked Personal Financial Planning program. As a financial advisor at Dentist Advisors, he provides dentists with fiduciary guidance related to investments, debt, savings, taxes, and insurance. Learn more about Jake.