Gen Z sees sports betting as an investment

Why try to figure out how an earnings report will affect a stock when you can figure out how an injury report will affect a sports team? That’s the attitude that some—including a wide swath of Gen Z—are taking when it comes to how to grow their money.

One in five Americans view wagering on sports as an investment tool, and for Gen Z, it’s two in five, according to a recent Bank of America survey.

And they’re acting on those feelings: A Betterment survey of 1,000 investors found that 52% of Gen Zers redirected money intended for investing into sports betting instead. All this is despite the odds and history screaming to do the opposite:

• There’s a fee built into the odds of wagers called a vig. The vig is how sportsbooks ensure they make money, and it turns bets with a 50/50 outcome into one where bettors must put down $110 to win $100, which means even if you win 50% of those bets, you will still lose money long term.
• Meanwhile, the stock market has delivered an average annual weighted return of 10% over the past century, according to research from a professor at Arizona State University’s Carey School of Business.

But what if Gen Z is picking winners? They’re not! Almost no one is! That’s why sportsbooks are billion-dollar businesses, and you’re asking your mom for $20 to load into your FanDuel account. That BofA survey found Gen Z is the most successful sports betting generation by recovering 80 cents for every dollar wagered (that’s still fancy bank-speak for losing).

There’s likely to be more: Football season, which began on the pro and college levels a couple of weeks ago, typically drives more users to place bets. Last season saw a 22% increase in first-time users year-over-year, per BofA.—DL