Sports betting has surged among Gen Z, with a significant percentage viewing it as an investment rather than gambling, despite average user losses. Financial and mental health experts are raising alarms about the increasing prevalence of sports betting and its potential negative impacts on young adults.
Experts highlight that those who lose the most are at a greater risk for developing gambling problems, with clinicians anecdotally reporting an increase in such issues among young people. The accessibility of online sportsbooks and prediction markets has further fueled this trend.
- Younger generations are increasingly engaging in sports betting, with some viewing these wagers as investments, despite average user losses.
- Experts warn that the escalating risk of gambling problems among young people is a growing concern, linked to significant financial losses.
- Financial and mental health professionals are expressing unease about the widespread adoption of sports betting by Gen Z, citing potential negative impacts.
The landscape of wagering has dramatically shifted in the 2020s, with online sportsbooks and the emergence of prediction markets making sports betting a prevalent activity for Generation Z. Recent surveys highlight the significant engagement of this demographic in sports betting.
A Betterment survey released in August indicated that a striking 66% of Gen Z investors participate in sports betting. Further underscoring this trend, a September report from the Bank of America Institute revealed that Gen Z accounted for nearly 50% of all online betting activity in July, a period that coincided with the peak of the 2026 FIFA World Cup. This surge marks the first time Gen Z has outnumbered millennials in online betting.
Cynthia Grant, vice president of clinical services at Birches Health, a provider of online therapy for gambling addiction recovery, notes the ubiquity of these platforms: "It is more unusual for someone not to have, for example, a Kalshi account, DraftKings … than it is" to not have one. She adds, "It's part of the experience of watching sports now."
The explosion in sports betting can be traced back to a 2018 U.S. Supreme Court decision that permitted state-authorized sportsbooks, which have since expanded to 30 states. The introduction of sports-related event contracts on prediction markets, platforms that position themselves as facilitating financial trades rather than wagers, further broadened access in early 2025. This expansion has reached additional states without legalized sportsbooks and individuals under the age of 21.
The widespread proliferation of sports betting has raised significant concerns among financial and mental health experts. They warn that the average user on both sportsbooks and prediction markets incurs financial losses, and the attempt to recoup these losses can lead users into deeper financial distress. Consequently, individuals experiencing the most significant losses are at a heightened risk for adverse mental health outcomes.
Gambling Perceived as Investment
The Bank of America Institute survey revealed that Gen Z is twice as likely as the general respondent pool to view sports betting as a form of investment. This perception is even more pronounced when considering prediction markets alone, where Gen Z respondents showed a higher propensity to see them as an investment tool compared to the overall group.
In Betterment's survey, a substantial 52% of Gen Z respondents admitted to reallocating funds originally intended for investments to sports betting. Furthermore, an additional 26% viewed wagering as an integral component of their long-term financial strategy.
Representatives from sports betting platforms like DraftKings and FanDuel typically frame their offerings as entertainment rather than investments. Prediction market platforms, on the other hand, categorize their event contracts as financial derivatives, irrespective of the underlying category.
Dan Egan, director of behavioral finance and investing at Betterment, points out that the increasing integration of sports betting features alongside traditional investment options within the same applications or devices is a key driver of this perceived association.
Egan expresses concern over this conflation, highlighting the significant, active management required for sports wagers, which stands in stark contrast to the passive approach typically associated with long-term investments.
"It's not an asset that grows with the economy, that kind of gets better as time goes on, that has a positive expected return, and that you can kind of sit back and not have to do anything with," Egan explained. "It's the exact opposite."
Bank of America's findings also indicated that households engaging in online betting had a median deposit account balance that was 59% lower than those who did not participate in online betting.
An August survey conducted by BadCredit found that 44% of respondents began trading on prediction market platforms with the primary goal of generating extra income. This is notable given that the majority of users on both sportsbooks and prediction markets ultimately lose money.
Erica Sandberg, a consumer finance expert at BadCredit, commented on the social dynamics: "People tend to tell other people how much money they've made. If you've got people around you who are saying, 'I just made $300 in five minutes on this platform,' you're gonna hear about it. You will not hear that they lost $800 last month."
Mental Health Concerns Rise
The development of a sports betting addiction, and the point at which professional treatment becomes necessary, is a personalized journey. However, Grant points out several common warning signs.
"It creeps into the way that they're functioning in the world, how they interact with their peers, how they interact with family," she stated. "They lose time on work, they lose time in school. So when you start to see what we call clinically, 'functional impairment,' that things are interfering with the way that they're trying to navigate the world, that's when we really start to look at how this is developing into being a problem."
Amaura Kemmerer from UWill, a mental health and wellness provider supporting over four million students globally, suggests that the heightened risk-taking appetite associated with adolescent biological development may contribute to young people's propensity to engage in sports wagers.
Negative consequences often manifest long before clinical intervention is sought.
Kemmerer highlights that even casual participants, those "doing it occasionally … are still having predictable negative effects on academics," noting the particular impact on Gen Z college students.
Consequently, both Kemmerer and Grant advocate for college campuses as ideal environments to address the detrimental effects of gambling, recommending that campus counseling services approach it with the same seriousness as other addiction types.
Betting platforms have implemented measures to mitigate potential risks. All regulated sportsbooks and prediction market exchanges employ age verification protocols. Platforms like FanDuel and DraftKings allow users to set self-imposed limits on deposits or time spent. FanDuel also enforces monthly deposit caps for users under the age of 26.
Polymarket recently announced the availability of optional self-imposed limits and a partnership with Birches Health to provide users with access to mental health resources. Kalshi offers similar self-imposed limits and directs users aged 18 to 21 to risk-management programs after their initial trades. In May, Kalshi donated $2 million to the National Council on Problem Gambling.
"We've prioritized making Kalshi the safest venue for people to trade on," stated spokesperson Elisabeth Diana.
While experts acknowledge that not all forms of sports betting are inherently harmful, they stress the importance of clarity regarding motivation and frequency, particularly for young individuals.
Egan offers a balanced perspective: "Lots of people do it to make things more interesting. It makes the game more exciting. You just have to figure out how to say this is entertainment."
For those struggling with a gambling addiction, the National Council on Problem Gambling hotline is available at: 1-800-522-4700.
Disclosure: CNBC and Kalshi have a commercial relationship that includes customer acquisition and a minority investment.
