Mon, Aug 31, 2026|Sean Michael Cummings

Sports Betting Is Not an Investment Strategy

It took just eight years for sports betting to grow from a $400 million niche to a $17 billion industry...

And according to a recent survey from financial-advisory firm Betterment, about 1 in 8 investors consider sports gambling part of their long-term investment strategy.

But that doubles to more than 1 in 4 among Gen Z investors.

That's not the only troubling statistic in the report, either.

More than half of Gen Z investors have diverted cash from their investing accounts to sports-betting accounts in the past year. And only 1 in 3 Gen Zers completely refrain from sports gambling.

As a form of recreation, sports gambling may be perfectly legitimate. But the folks who treat it as an investing strategy are bound for disappointment. Let me explain...

Don't Mistake a Good Time for a Good Investment

In the long term, sports gambling can do serious damage to your finances.

That's because sports gambling has a net negative expected return. This is a fancy way of saying "the house always wins."

The opposite is true in the investing world. Over the long term, stock markets have a net positive expected return. In other words, history says that, over time, you are likely to get a return on your investment in stocks.

Pushing cash out of stocks and into sports betting is a classic category error – a logical mistake where we assign something a trait it doesn't have. Gambling on sports is not a legitimate investment.

The investors acting as if it were are mistaking a wealth-destroying strategy for a wealth-building one.

Worse yet, sports gambling is extremely sticky...

A recent Brigham Young University white paper studied some of the effects of sports gambling since 2018, when the U.S. Supreme Court struck down the federal ban on betting.

The paper's title, "Gambling Away Stability," reflects its conclusions...

One of the big upshots of the paper is how easy it is to get addicted. In the span of the study, 7.4% of households participated in sports betting. But only about 1 in 5 households were able to walk away after making their first deposit.

Take a look...

Just over 20% of bettors made only one deposit. An even smaller percentage made only two. About 30% of bettors made between three and nine deposits over the study's eight-year span.

But the largest group made 10 deposits or more. This shows that the most statistically common path after starting to bet on sports... is to keep doing it.

Here's where the story gets really scary. The report also looked at the size of bets as folks continued to gamble.

The chart below shows how the average size of deposits changed over time relative to a household's first deposit. Take a look...

As you can see, bettors tend to make larger and larger deposits as time goes on. Three years after the first bet, the average household deposit was nearly 8 times higher.

If you're thinking about moving cash out of stocks and into sports gambling, please look at the two charts above again.

Sports gambling is addictive. It's almost always costly. And more young investors than ever are funneling cash into this losing proposition.

This may be a bullish trend for casino stocks and sportsbooks. But for investors, sports gambling is a sure way to reduce your future wealth.

And to the sports gamblers out there: Remember to keep your "fun money" separate from your investing dollars.

Sports gambling and investing are not comparable when it comes to long-term growth. Anyone who says they are is trying to sell you something.

Good investing,

Sean Michael Cummings

Sports Betting Is Not an Investment Strategy

Don't Mistake a Good Time for a Good Investment

Further Reading