Gen Z Is Betting Instead of Investing

The number everyone is quoting

MarketWatch reported on August 13 that more than half of Gen Z had redirected money intended for investing toward sports betting in the past year. The figure comes from Betterment's 2026 retail investor survey, and the generational spread is striking:

She's right about the problem. But before building anything on that 52%, it's worth being honest about where it comes from.

Why we don't lead with it

The survey was fielded March 27 to April 3, 2026, through a panel from the research firm Sago. Sample: 1,000 US retail investors split across four generations, so roughly 250 Gen Z respondents.

Several things are missing. The actual question was never published. "Redirected money away from investing and toward sports betting" is a paraphrase, and the underlying question could have asked whether you've ever placed a bet with money you'd otherwise have invested, which a single $20 bet would satisfy, or whether you regularly divert investment contributions, which is a different behavior entirely. We don't know which, because the instrument isn't public.

Also missing: the age ranges used to define each generation, the margin of error, and any topline or crosstab data. It's an opt-in online panel rather than a probability sample.

And Betterment is a robo-advisor. A company whose business is investing published a survey concluding that people should invest more and bet less. That doesn't make the finding false. It does mean it's marketing research, and it should be labeled that way.

To Betterment's credit, they disclosed the panel vendor, the sample size, and the field dates, which is more than most brand surveys do.

One thing does survive the methodology problems: the gradient. 52, 31, 10, 4 across four groups, with the same ordering repeated in the second question, is a large and consistent pattern. Individual percentages from a sample this size are soft. A clean monotonic slope across four independent cohorts is harder to produce by noise. The shape is probably real even if the precise numbers aren't.

The evidence that actually holds up

Here's the part most coverage skipped, and it's considerably more alarming than the survey.

In NBER Working Paper 33108, Scott R. Baker (Northwestern Kellogg), Justin Balthrop (University of Kansas), Mark J. Johnson, Jason D. Kotter and Kevin Pisciotta (BYU Marriott) used transaction-level financial data covering 230,171 households, about 4.9 million household-quarter observations, and compared what happened as 26 states legalized online sports betting between 2018 and 2023.

They found that after legalization, household net deposits into brokerage and investment accounts fell by roughly 14%.

Then they went further. Using an instrumental-variables approach, they estimated the causal trade-off directly: for every $1 deposited into sports betting, net investment falls by just under $1. Close to dollar for dollar.

The most important detail is what betting didn't displace. It didn't reduce lottery play. It didn't reduce online poker. It only marginally reduced crypto deposits. The money came almost entirely out of positive-expected-value investments. People didn't shift from one form of gambling to another. They shifted out of building wealth.

The damage concentrated where you'd expect. Among financially constrained households, credit card balances rose by about $368 relative to less-constrained households, roughly an 8% increase. Those households used more of their available credit, paid less down, and overdrafted more often.

What it did to credit

A second team looked at a different dataset and found the consequences downstream.

Brett Hollenbeck (UCLA Anderson) with Poet Larsen and Davide Proserpio (USC Marshall) used the University of California Consumer Credit Panel, credit-bureau records on roughly 7 million consumers, across the 38 states that legalized between 2018 and 2023.

Average credit scores fell about 0.8 points in states with any legal sports gambling. In states that legalized online betting specifically, the decline was about 2.75 points, roughly three and a half times larger. They also documented increases in bankruptcy filings, debt sent to collections, debt-consolidation borrowing, and auto-loan delinquencies.

A few points of credit score sounds small until you remember it's an average across everyone in the state, including the large majority who never placed a bet. The people who did bet absorbed considerably more than the average.

What these studies do and don't prove

Worth being precise, because it would be easy to overstate.

These papers do not validate Betterment's 52%. They never measured Gen Z specifically, and they can't tell you what share of any generation redirected money. That breakdown exists only in the brand survey.

What they establish is different and, for our purposes, more useful: at population scale, using real transaction and credit data rather than self-report, legalized sports betting causally reduces household investment and damages household financial health. The mechanism Betterment gestured at is real. The specific number they attached to it is not something we can stand behind.

For prevalence, the most reliable figure comes from Pew Research Center, which surveyed 9,916 US adults in mid-2025 with a margin of error of 1.3 points: 31% of adults under 30 placed a sports bet in the past year, the highest of any age group. Online betting among under-30s reached 17%, up from 7% in 2022. That's a real generational shift, measured properly.

The part that matters clinically

Now the reason this belongs on a recovery site rather than a finance site.

The dangerous number isn't the 52%. It's the 26% who describe sports betting as part of a long-term financial strategy. Twenty-six times the Boomer rate.

Redirecting money to betting is a spending decision. Believing betting is a wealth-building instrument is a category error, and it has a specific consequence we see in the people who eventually reach out.

If you think you're investing, then losses aren't a symptom. They're performance. A losing month means you need better research, better discipline, a better model. So you study more. You size your bets more carefully. You look for the edge. Every instinct that would tell a person "this is out of control" instead tells them "you're not good enough at this yet."

Nobody looks for a treatment program for being bad at trading.

That's how the framing delays help. Gambling disorder already takes years to recognize, because unlike alcohol there's nothing on your breath. Add a belief that the activity is a legitimate financial strategy and you remove the last internal signal that something is wrong.

The products encourage the confusion. As financial adviser Clifford Cornell of Bone Fide Wealth put it to MarketWatch, describing prediction markets: "They're literally showing you candlestick charts. They're making it seem like you're trading a financial instrument."

That's not accidental. It's the interface doing exactly what it was designed to do. It's also the same blurred line that led two states to cut ties with the National Council on Problem Gambling over a prediction-market partnership this summer.

Even the operators won't defend the investment framing. A DraftKings representative told MarketWatch that sports betting "is not something we'd recommend viewing as an investment." FanDuel's senior vice president of public policy, Cory Fox, wrote that the company encourages people to "budget for sports betting as an entertainment product right alongside concert tickets, movies and Twitch subscriptions."

When the sportsbooks are telling you it isn't an investment, and a quarter of young adults think it is, the gap between those two positions is where people get hurt.

If this is you

A few practical distinctions worth holding onto.

Investing is positive-sum. Betting is not. As Cullen Roche of Discipline Funds told MarketWatch: "Gambling is inherently a negative-sum game in a closed system. Bettors compete for a fixed pot where the odds are stacked against you, and fees are enormous because the house takes its rake off the top." The stock market, by contrast, is "a positive-sum game where fees are low and the total pot consistently expands." You can lose money in both. Only one of them is designed so that participants collectively must.

Watch the language you use with yourself. If you catch yourself describing bets as positions, or a losing week as a drawdown, notice that. The vocabulary of finance applied to gambling isn't a neutral choice; it's the thing that makes it feel like a plan.

If you want to send the money somewhere real, send it somewhere boring. The whole argument of this piece is that betting isn't a financial plan. The unglamorous version of a financial plan is a retirement account, a rate you understand, and a horizon measured in decades. All Financial Freedom publishes plain-language explainers on that kind of planning and offers a free retirement guide. Disclosure: All Financial Freedom is owned by a member of our founder's family. We get nothing for the mention and they had no involvement in this article. We're linking it because "put it somewhere boring" is easier advice to give than to act on, and a starting point helps.

The tell isn't whether you're up or down. It's whether you can stop. Chasing losses, betting more to feel the same thing, and lying about how much you're doing are diagnostic criteria for gambling disorder, regardless of what you call the activity or how sophisticated the interface looks.

If any of that landed, our help resources are here. It's a recognized condition with treatments that work, and it isn't a verdict on how smart you are with money.

Sources

• More than half of Gen Z redirected money away from investing and toward sports betting over the past year, Joseph Adinolfi, MarketWatch, August 13, 2026
• Betterment's 2026 Retail Investor Survey, PR Newswire, August 12, 2026
• Gambling Away Stability: Sports Betting's Impact on Vulnerable Households, Baker, Balthrop, Johnson, Kotter and Pisciotta, NBER Working Paper 33108, November 2024
• The Financial Consequences of Legalized Sports Gambling, Hollenbeck (UCLA Anderson), Larsen and Proserpio (USC Marshall), working paper, April 2025
• Americans increasingly see legal sports betting as a bad thing for society and sports, Pew Research Center, October 2, 2025
• Sports betting is pulling Gen Z dollars away from investing, Betterment finds, InvestmentNews, August 2026