More than half of Gen Z adults ages 18 to 29 put money they had intended to invest for retirement into sports betting over the past year, according to a recent survey by the investing and financial advice app Betterment. And quite a few — 14% — said they're doing so several times a month. "When a prediction market or sportsbook starts to feel like a retirement strategy, we have a problem," Betterment CEO Sarah Levy told Yahoo Finance.
"These products are not designed to help them build toward the next decade of wealth, " she said. "The industry has a responsibility to be clear about the difference between participating in a trend and building lasting wealth." About 26% of Gen Z investors said they treat sports betting as a "deliberate, ongoing part of their long-term financial strategy," according to the survey. That's compared with roughly 14% of millennials, 6% of Gen X, and 1% of baby boomers.
More than 3 in 10 Gen Z adults said they completely avoid sports betting as an investment strategy. For those who do dabble, about a quarter said they considered it "fun money." Young investors need guardrails to separate their "speculative interests from their long-term wealth building, making sure they don't inadvertently jeopardize their future for a current thrill, " said Dan Egan, Betterment's vice president of behavioral investing. Read more: How sports betting taxes work and what you might owe The allure of sports betting has come under scrutiny in other reports this year.
Gen Z and millennials make up the largest share of Americans who are investing in or considering investing in high-risk, speculative assets such as cryptocurrencies, prediction markets, sports betting, options, and meme stocks, according to a Northwestern Mutual study published in March. In that report, nearly one-third of investors between 18 and 29 said they were putting money, or pondering doing so, into crypto, sports betting, or prediction markets. That's roughly on par with the views expressed by millennials but far above boomers.
Young adults right now face a bleak job market and soaring housing costs, often paired with the pressure to start paying off student debt. Overall, three-quarters of US adults drawn to high-risk assets said it's because they feel "financially behind," according to the Northwestern Mutual report. Only about half said they feel financially secure and consider themselves "disciplined" financial planners.
Eight in 10 Gen Z investors said they believe these riskier vehicles can get them to where they want to be more quickly than traditional methods. Among millennials feeling behind, two-thirds felt that way. "Time is our most powerful asset in finance, and aggressive bets can erode that advantage faster than you can recover," Ashley Russo, wealth management adviser at Northwestern Mutual, told Yahoo Finance.
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