For as long as there have been sports (we’re talking since the first Olympics in ancient Greece), people have been putting wagers on the results. Throughout history, different cultures have popularized the concept of sports betting, from horse racing to boxing and everything in between.
In the U.S., gambling and betting are often synonymous with the glitz and glamor of the Vegas Strip or the elegance and showmanship of the Kentucky Derby. The recent rise of mobile apps and online sports betting platforms, however, makes gambling large amounts of money from the comfort of your own home easier and more accessible than ever (depending on what state you live in).
While you may be familiar with the emotional and financial toll gambling can take when things get out of hand, did you know that sports betting can impact your outlook toward investing as well?
Let’s take a closer look at how sports betting has evolved in recent years, what it can do to your financial wellness, and how investors may be further influenced.
What’s happening in the world of sports betting?
In 1992, the Professional and Amateur Sports Protection Act (PASPA) was passed, which barred all state-authorized sports gambling — the main exception was Nevada, where people could continue wagering on the results of single sports games.1 This meant that for nearly 26 years, Nevada was the only state granted the widespread freedom to offer various forms of sports betting.
In 2018, however, the Supreme Court overturned the ruling, giving individual states the right to decide if they wanted to legalize it as well.
As of May 2024, 38 states have opted to make sports betting legal both in-person and online — enabling around 57% of adults (151 million people) to participate in legal sports betting.2,3
Concerns over online sports betting
According to the New York Times, making sports betting available online has enabled the “fastest expansion of legalized gambling in American history.”4
As a result, some states are taking measures to mitigate the harmful effects of gambling (which we’ll get into a bit more below). The state of New York, for example, proposed rulings that would prohibit sports betting advertisements on college campuses. As a result, all New York colleges and universities have ended or backed out of contracts with sports betting corporations, who otherwise would have been allowed to market their apps and platforms to students on campus.5
In September 2024, a new bill called The SAFE Bet Act was introduced to Congress, which is designed to address the concerns surrounding sports betting and problem gambling.
The new bill includes a number of protective measures such as:6
- Prohibiting sports betting operators from accepting more than five deposits from a customer in a 24-hour period.
- Confirming a customer’s ability to afford certain deposit amounts, such as $1,000+ in a 24-hour period or $10,000+ in a month.
- Banning prop bets on the performance of college or amateur athletes (for example, betting on how many passing yards a quarterback would earn during a single game).
- Prohibiting sports betting operators from using artificial intelligence to track a customer’s gambling habits or create gambling products that include highly specific “micro bets.”
- Forbidding credit card usage on online gambling accounts.
- Banning in-game advertisements.
Keep in mind this bill has only recently been introduced, and there’s no guarantee it will be passed into law (or certain concessions and negotiations won’t be made beforehand). However, it does bring to light some of the concerns the federal government has regarding the recent rise in sports gambling — to the point it’s being called a “public health crisis.”6
The financial impact of gambling and sports betting
In 2023, people bet a record-breaking $199.84 billion on sports, which was up more than 27% from the year prior. At the same time, a recent 2024 report found that the odds of someone filing for bankruptcy in a state with legal online sports betting increased by as much as 30%.6
There’s no mincing words here — sports betting and other forms of gambling can create serious financial consequences.
For those who overextend their financial resources for the sake of betting and gambling, the impact can lead to an increase in debt and a lack of savings or long-term planning.
This can come in the form of:
- Accruing high-interest debt by maxing out credit cards or obtaining personal loans with high interest rates and predatory repayment terms.
- Forgetting to pay or neglecting to keep financial obligations like the mortgage, car loans, utilities, health insurance, etc.
- A lack of independence and an over-reliance on friends and family.
- Issues with holding down a job for any extended period of time.
- Borrowing from your retirement plan or other long-term savings accounts.
Does sports betting impact everyone to the same degree?
While the examples above may reflect the most extreme side of the spectrum of financial consequences, even those who participate to a lesser extent should take note of the potential long-term consequences.
The impact of sports betting on each individual household varies based on a few key factors.
First, if online sports betting has simply replaced your other forms of gambling (lottery tickets or slot machines, for example) or other entertainment costs, then the direct impact may be minimal. This isn’t to say any existing gambling habits may not be problematic, but rather that the recent rise of sports betting may not be further harming your immediate financial situation.
However, evidence suggests the long-term financial impacts may be severe if the money going towards sports betting is being redirected from other areas of your family’s financial life (namely, your investments, savings, and debt repayment).7
How sports betting impacts your mindset toward investing
People who partake in sports betting may start to blend the concepts of gambling and investing in their minds — thinking of them as one and the same.7 As a result, they may be less inclined to develop and execute a long-term investment strategy based on fundamental and commonly accepted investment principles, like proper diversification, balancing risk and reward, maintaining a buy-and-hold strategy through market turmoil, and more.
Not to mention, sports betting is a fast-paced, high-stakes activity that can be exciting and exhilarating for people to participate in. A traditional passive long-term investment strategy may feel downright boring (and therefore, unappealing) by comparison. Because of this, people who regularly participate in sports betting and gambling may struggle with making more impulsive, short-sighted decisions about their investments — because that’s what they’re comfortable doing when placing bets and risking money.
Over time, you may become more comfortable partaking in high-risk, high-reward investments that don’t align with your long-term needs or account for factors like your risk tolerance, unique long-term goals, and tax consequences.
Your portfolio may thank you for passing on sports betting
Whether you’ve tried sports betting in the past or you’re curious to see what it’s like, it may be worth revisiting your financial goals — and deciding if that money is better used elsewhere to support (not detract from) your financial needs.
Even if you’re a casual bettor, the act of placing exciting high-risk bets can create long-term consequences for your portfolio, such as hindering your ability to stick to your investment strategy. Consider thinking twice before downloading an app or visiting a sports betting operation online.
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