It is well-documented that Generation Z, defined as individuals born between 1997 and 2012, is increasingly engaging with online sports betting and, more recently, prediction markets. However, a recent survey conducted by Betterment suggests that these trends are leading to significant financial repercussions for this age group.
The 2026 Retail Investor Survey conducted by Betterment, which is now in its fourth year, reveals that 26% of Gen Z individuals consider sports betting as an intentional component of their long-term financial strategy. Alarmingly, 52% have diverted funds initially earmarked for brokerage or retirement accounts into sports betting. This observation aligns with findings from various studies indicating that regardless of age group, many sports bettors compromise traditional investment for their betting pursuits. The proportion of Gen Zers viewing sports betting as a viable alternative to conventional investing is notably greater than that of older generations.
“Roughly one in eight (12%) investors claim to incorporate sports betting into their long-term investment strategy. This figure rises significantly among younger demographics: 26% of Gen Z and 14% of Millennials vs. 6% of Gen X and 1% of Boomers,” noted Betterment.
While Betterment does not specify a cause for the prevalent tendency among young individuals to perceive betting as a substitute for traditional investing, several experts suggest that factors such as the wealth gap, the perception that achieving financial milestones like homeownership is unattainable, and the prevalent “you only live once” (YOLO) mentality may contribute.
Betterment’s CEO Advocates for Industry Responsibility
Prominent asset management firms such as Charles Schwab and Vanguard have openly criticized both prediction markets and sports betting. However, Sarah Levy, CEO of Betterment, contends that the financial services sector bears an increased responsibility to clarify the distinctions between investing and gambling.
“When a prediction market or a sportsbook starts to resonate as a retirement strategy, we face a serious issue,” Levy commented. “These offerings promote a mindset fixated on quick gains rather than fostering long-term growth. Younger investors deserve access to resources that align with their reality, yet the industry must also delineate the line between following a trend and establishing enduring wealth.”
This perspective may hold merit. There was a period during which sportsbook operators found it challenging to attract Gen Z clientele, but that situation has shifted. Betterment reports that only 34% of Generation Z abstains from any form of sports wagering, contrasting sharply with 63% of the general investing population who do not engage in sports betting.
Exacerbating the concerns for Generation Z, a noteworthy 52% of individuals who reallocate funds that would typically go into investment accounts for betting purposes do so multiple times each month, as stated by Betterment.
Impacts Beyond Financial Loss
As highlighted by Dan Egan, Betterment’s vice president of behavioral investing, the primary risk associated with the convergence of betting and investing transcends mere financial loss; it also involves “the dilution of a coherent financial strategy.”
Another critical factor is opportunity cost. For instance, a bettor dedicating $1,000 each month towards betting could easily drop that amount to $500 for wagering while allocating the remaining $500 to an S&P 500 index fund. Over a 20-year period, these monthly investments could accumulate to approximately $246,000, assuming a 7% annual return, which is considerably lower than the index’s historical average of 10% annual returns.