Sports wagering has become a central fixture in the lives of Generation Z, prompting growing alarm among financial advisors and mental health professionals regarding the sector’s impact on young adults’ economic stability and psychological well-being. Recent data indicates that gambling on athletic outcomes is no longer a niche activity but a mainstream habit for younger demographics.
A Betterment survey released in August revealed that 66% of Gen Z retail investors engage in sports betting. Additionally, a September report from the Bank of America Institute indicated that Gen Z accounted for nearly half of all online betting activity in July, surpassing millennials during the peak of the 2026 FIFA World Cup.
“It is more unusual for someone not to have, for example, a Kalshi account, DraftKings … than it is” to possess such an account, noted Cynthia Grant, vice president of clinical services at Birches Health, which specializes in online therapy for gambling addiction. “It’s part of the experience of watching sports now,” she added.
The rapid expansion follows a 2018 U.S. Supreme Court decision that permitted states to legalize sports betting, leading to regulation in 30 states. The landscape shifted further in early 2025 with the introduction of sports-related event contracts on prediction markets. These platforms, which classify their products as financial derivatives rather than wagers, expanded access to states where traditional sports betting remains illegal and to users under the age of 21.
Financial experts caution that the average participant on both sportsbooks and prediction markets operates at a loss. Attempting to recover these losses often deepens financial distress, placing heavier losers at greater risk for adverse mental health outcomes.
The Investment Illusion
A key concern is the conflation of gambling with investing. The Bank of America Institute found that Gen Z respondents were twice as likely as the general population to view sports betting as a form of investment. In Betterment’s survey, 52% of Gen Z participants admitted to diverting funds intended for investment into sports betting, while 26% considered wagering a component of their long-term financial strategy.
Dan Egan, director of behavioral finance and investing at Betterment, attributed this perception partly to the presentation of betting options alongside traditional investment tools on the same applications. He emphasized the danger of this association, noting that sports betting lacks the characteristics of a sound investment.
“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 said. “It’s the exact opposite.”
Bank of America data also showed that the median deposit account balance for households utilizing online betting was 59% of those who do not bet. Despite the statistical likelihood of loss, motivation remains high. An August BadCredit survey found that 44% of respondents began trading on prediction markets in hopes of generating extra income.
“People tend to tell other people how much money they’ve made,” said Erica Sandberg, a consumer finance expert at BadCredit. “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 and Academic Impact
Mental health professionals stress that while addiction develops differently for each individual, warning signs include functional impairment. Grant explained that when gambling begins to interfere with work, school, and social interactions, it signals a developing problem.
Amaura Kemmerer, representing the mental health provider UWill, noted that biological factors driving risk-taking behavior make young people particularly susceptible. Even casual betting has been linked to negative academic consequences among college students.
Both Kemmerer and Grant argued that college campuses are critical venues for intervention, suggesting that counseling services should address gambling with the same seriousness applied to other addictions.
Industry Safeguards and Expert Caution
Betting platforms have implemented various measures to mitigate harm. Regulated sportsbooks and prediction exchanges utilize age verification, and companies like FanDuel and DraftKings allow users to set self-imposed limits. FanDuel additionally enforces monthly deposit caps for users under 26. Polymarket recently announced optional self-imposed limits and a partnership with Birches Health to provide mental health resources, while Kalshi directs younger users to risk-management programs and has donated $2 million to the National Council on Problem Gambling.
Despite these efforts, experts maintain that distinction is vital. Egan advised that while betting can enhance entertainment value, users must clearly recognize it as a leisure expense rather than an investment vehicle.
For those struggling with gambling, the National Council on Problem Gambling offers a hotline at 1-800-522-4700.
My academic performance tanked last semester after I got into it. Glad experts are finally sounding the alarm.
The prediction market loophole is wild. Regulators need to catch up before this explodes further on campuses.
Does anyone actually know a Gen Z friend who isn’t on DraftKings? It feels ubiquitous, not niche at all.
Calling it ‘investing’ is the most dangerous lie they tell. At least stocks have dividends. Betting just has the house edge.
I thought only older generations gambled? This normalization is genuinely alarming for my younger siblings.