Gen Z Sports Betting Is Quietly Replacing Real Investing

Two of the biggest names in retail finance are warning that gen z sports betting is quietly replacing actual investing. In August, the investing app Betterment released its fourth annual retail investor survey and found that two-thirds of Gen Z investors participate in sports betting, while fifty-two percent said they had redirected money originally meant for traditional investments toward betting at least once in the past year.

Twenty-six percent of Gen Z respondents went further, describing sports betting as a deliberate part of their long-term financial strategy. That view was far rarer in older generations: about one in seven millennials agreed, and the share fell off sharply among Gen X and boomers, according to Betterment. In other words, gen z sports betting is not just a pastime for this group. It is the plan.

Gen z sports betting spread to thirty states after the Supreme Court let states legalize it in 2018, and in early 2025 prediction markets began offering sports-related event contracts in places where sportsbooks are not legal. Platforms such as Kalshi describe those contracts as financial derivatives rather than wagers, while operators like DraftKings and FanDuel call their own products entertainment. With betting apps sitting next to brokerage apps on the same phones, Dan Egan, Betterment's head of behavioral finance, said the comparison fails on the basics: betting does not grow with the economy, does not reward patience, and does not offer the kind of returns a person can hold and ignore. He called it the exact opposite of an asset.

Bank data shows the money rarely comes back

To test whether gen z sports betting can function as an investment, the Bank of America Institute dug into real account data. In a Sept. 1 report tracking deposits into and withdrawals from online betting platforms, the institute found that customers typically get back less than seventy-five cents for every dollar they send to sportsbooks and prediction markets. Gen Z had the best recovery ratio of any generation, at roughly eighty-two cents on the dollar, and still finished well short of breaking even.

Gen z sports betting is concentrated almost entirely among the young. Gen Z accounted for forty-eight percent of online betting activity in July, with millennials making up two-fifths. First-time users in June and July ran more than triple the January level, driven by the World Cup and growing interest in prediction markets. The institute's own survey found that one in five respondents considered sports betting a form of investment, with Gen Z twice as likely as the average respondent to say so.

The cost of gen z sports betting shows up in household bank balances. In 2026, the median deposit account balance of households that bet online was fifty-nine percent of the balance held by households that did not. A 2025 survey by U.S. News & World Report found that a quarter of sports bettors had missed paying a bill because of their wagering, and the Federal Reserve Bank of New York linked the rapid spread of legalized sports betting to rising delinquency rates and bankruptcies in the states that adopted it earliest.

The other half of Gen Z is buying ETFs

Not every young investor is part of the gen z sports betting wave. A Charles Schwab sentiment report published in late summer found that sixty-five percent of Gen Z clients planned to add money to their investment portfolios, with ETFs the most popular choice, MarketWatch reported. Robinhood said its younger clients favor ETFs as early building blocks for their portfolios, a sign of healthy caution at the start of a financial journey.

James Kostulias, Schwab's head of trading services, said younger investors look a little more cautious, cynical, and skeptical than older generations did at the same age, a shift he tied to coming of age through market shocks and rising living costs. The same risk appetite behind gen z sports betting has shown up in crypto, where Wall Street's latest bitcoin forecasts keep giving young traders a reason to chase momentum, and where traders are sorting through new state rules on which crypto moves get taxed.

Why the sportsbook feels like an investment

Economists and financial commentators have linked the gen z sports betting boom to economic pessimism: when homeownership and other milestones feel out of reach, a wager can feel more attainable than a decades-long plan. Cynthia Grant of Birches Health, which treats online gambling addiction, said it has become less common for a young sports fan to have no betting account at all. The social feed fills with wins and stays quiet about losses, which makes the losing math easy to miss.

For now, the surveys describe two Gen Z cohorts at once. One treats gen z sports betting as wealth-building and, by the bank's math, is likely to get back less than it puts in. The other is stacking ETFs. The difference is not how much risk each group takes. It is whether the money is expected to do any work.