Betting on Today or Investing in Tomorrow?

Key Points

• Widespread legalization of online gambling and easily accessible smart phone apps make it easier than ever to bet on sports.

• Persistently high prices and a challenging job market make many young people feel like they are falling behind financially and need to take more risks to catch up.

• Studies indicate that young military members are more prone to problem gambling than most other groups.

• Gambling is generally a short-term effort to win money; investing is a long-term process aimed at building wealth and pursuing financial security.

• Adopting a ‘pay yourself first’ approach and setting limits on money and time spent betting online may help create balance.

Over the last several years, online sports betting has exploded in popularity. What was once limited to casinos and weekend trips to Las Vegas is now available 24 hours a day on smartphones, tablets and laptops. With just a few taps, users can place wagers on professional sports, college games, player statistics – even live, in-game action. According to the American Gaming Association, Americans legally wagered a record $167 billion on sports in 2025, generating almost $17 billion in revenue for sportsbooks, which are simply businesses that accept wagers on the outcomes of sporting and entertainment events.

For many young adults – including active-duty service members – betting has become a normal part of sports culture. Major sportsbooks have extensive, high-value partnerships with all of the major sports leagues. Odds and betting lines are discussed during broadcasts, integrated into social media, and promoted through nonstop advertising campaigns featuring athletes, celebrities and influencers. And for some, sports betting has become an active part of their social life, with friends competing in betting pools or discussing their wagers in group chats or on social media. Whether someone actively participates or simply follows sports, it is almost impossible to avoid exposure to the betting world.

How did we get here?

As recently as a decade ago, league commissioners were talking about gambling as a potential threat to the integrity of their sports. Then, in 2018, the U.S. Supreme Court’s ruling in the case of Murphy v. National Collegiate Athletic Association struck down a 1992 federal law – the Professional and Amateur Sports Protection Act (PASPA) – that had barred betting on sports in most states. That decision cleared the way for individual states to legalize, regulate and approve both in-person and online sports betting within their own borders. With hundreds of millions of dollars in potential tax revenue at stake, things moved quickly. To date, 39 states plus the District of Columbia have legalized some form of sports betting, with 30 offering legal, regulated online betting. A recent MarketWatch article reported that, since the pivotal Supreme Court decision, $668,606,360,342 (that’s more than two-thirds of a TRILLION dollars!) has been wagered at legal U.S. sportsbooks – and states have collected more than $12 billion in taxes. Now, nobody’s talking about the hazards of gambling or the integrity of the game – there’s too much money at stake.

What’s the downside of online betting?

So, if tax revenues are up, sports leagues are thriving, fans are being entertained, and private companies are making money hand over fist…what’s the downside? From the standpoint of a company focused on helping people build wealth, it’s the fact that many young Americans are directing significant amounts of their disposable income toward short-term betting instead of long-term wealth building.

Discouragingly, according to a detailed recent study¹, the increase in gambling spending is not coming at the expense of other entertainment expenditures – like eating out, going to concerts, or taking weekend trips – but at the expense of saving and investing. In fact, for every dollar directed toward sports betting, the survey found, investment in stocks, mutual funds, and other investments fell by just over two dollars.

Some of this shift in priorities can no doubt be explained by the massive marketing push behind online betting and the related peer pressure to join in the fun, but there seems to be another significant factor at play here. The high cost of everything these days is making many young people feel like they are falling behind financially and need to take more risks to try to catch up. A recent survey conducted by the Harris Poll for Northwestern Mutual bears this out. When asked if they agree with the statement, “I invest, or may invest, in high-risk or speculative investments because I feel financially behind,” 80% of Gen Z respondents answered affirmatively.

How is online sports betting impacting the military community?

Though online betting is becoming more commonplace at every level of society, there is considerable evidence that it is a particularly prevalent and destructive trend in the military community. A study funded by Kindbridge Research Institute (KRI) and co-led by the University of Nevada, Las Vegas (UNLV) and Bowling Green State University found that problem gambling rates are as much as 3.5 times higher among active military personnel than for the general population. Young male service members (ages 18-29) are at the highest risk for developing gambling problems due to a combination of work-related stress, a culture that encourages risk-taking, and a high degree of comfort and familiarity with mobile apps. Many military professionals thrive in environments that reward preparation, decision-making, confidence, and calculated risk, so they may be particularly drawn to the competitive and analytical aspects of sports betting, which can make it feel less like gambling and more like a strategic pursuit.

There are a couple of additional factors that may be contributing to this perfect storm. Young single service members may have more disposable income than their civilian peers because of generous benefits like the Basic Allowance for Housing (BAH) and the Basic Allowance for Subsistence (BAS), which is meant to offset the cost of food. And then there’s the very real issue of addiction and how people deal with it. Dr. Nathan Smith, the executive director of KRI, points out that, “Active-duty military seek help for problem gambling at significantly lower rates than the civilian population. The reasons for this are likely complex, but a major factor may be that active-duty military can face consequences in their career, including discharge, if they report a gambling problem to military medical staff.”

The Psychology of Gambling

Certain psychological tendencies associated with gambling can undermine rational decision making and lead to destructive behaviors. Here are a few examples of behaviors associated with those tendencies.

The Illusion of Control
Online sports betting can create a powerful illusion that outcomes are predictable and controllable, especially for individuals who closely follow teams, statistics, and player performance. This belief often leads bettors to overestimate their edge, placing more frequent or larger wagers under the assumption that skill outweighs chance.

Chasing Losses
One of the most common and destructive psychological patterns in gambling is the urge to recover losses quickly. After a losing bet, individuals may feel compelled to place additional wagers to “get back to even,” often taking on greater risk in the process. In contrast to long-term investing, which emphasizes patience and resilience, this behavior reinforces short-term thinking and undermines financial stability.

Dopamine-Driven Decision Making
Sports betting platforms are designed to be engaging and fast-paced, delivering immediate feedback and intermittent rewards that trigger dopamine releases in the brain. This creates a cycle of anticipation and excitement that can become habit-forming, encouraging repeated engagement regardless of outcomes.

The Crux of the Issue: Gambling is not an investment strategy

We’ve examined the growing phenomenon of online sports betting, the staggering amount of money being wagered, and the segments of the population who seem to be most engaged in and thus most affected by this addictive pastime. Now, let’s consider what is probably the most dangerous misconception surrounding it – the idea that gambling is a form of investing.

The young, mostly male audience that is squarely in the bullseye of those glitzy marketing campaigns and influencer efforts is being inundated with the message that the two activities are essentially the same. It’s easy to see how that perception has taken root, but it is critical to understand the very real and important differences.

The bottom line is that purposeful investing is a strategy for building wealth over time. Gambling, on the other hand, is an activity mathematically designed to ensure that, in the aggregate, “the house” will win and bettors will not. And judging from the results of a sprawling study of more than 700,000 online gamblers in 32 states conducted over five years through 2023 by the University of California at San Diego Rady School of Management, it’s working exactly as intended. Researchers found that fewer than 5% of those online sports gamblers withdrew more money from their gambling apps than they deposited.

Evidence like this strongly supports the position that gambling is an activity designed for entertainment that comes with both short- and long-term costs. In the short term, the cost may be losing a bet or losing more bets than you win. In the long term, the cost is not only those lost bets, but what the outcome might have been if you had chosen instead to take a position of ownership in a growing business – or in the case of a diversified portfolio, many growing businesses – by investing that money. And for service members working hard to build stability, support their families, and create future financial independence, it’s important to understand that tradeoff.

Bet for fun, save and invest for your future

We’ve delved extensively into the risks associated with gambling because we believe it’s important to be aware of them. But let’s be clear: there’s nothing inherently wrong with online sports betting. For many service members, it can be a fun way to unwind and enjoy a bit of friendly competition that provides a break from the discipline and structure that are part of military life. The key is keeping it in perspective: fun, controlled and separate from the pursuit of your long-term goals.

Here are some ideas that can help you strike a balance between having fun now and preparing for future financial security:

• Treat betting as entertainment — not a reliable source of income or an effective way to build wealth.
• Set limits on the amount of time and money you spend on betting and stick to them.
• Carefully track your results so you’re aware of the real cost of betting – most people overestimate their gambling success!
• Pay yourself first by investing in the TSP and having the money you invest for goals other than retirement automatically deducted from your paycheck.
• Consider working with a financial advisor to develop a comprehensive plan for pursuing what is important to you.

Building wealth isn’t about luck. It’s about discipline and intentional choices over time. If you’re ready to begin preparing for the future you envision, we’re ready to help.

The information in this article is provided for informational purposes only and is based on known and unknown risks, assumptions, uncertainties and other factors. The information is not appropriate for the purposes of making a decision to carry out a transaction or trade nor does it provide any form of investment advice, or make any recommendations regarding particular financial instruments, investments, or products. Actual results, performance, or achievements may differ materially from any future results, performance, or achievements expressed or implied herein. Investing in securities has an inherent risk and your investments may lose value. Always seek the advice of a competent financial advisor who will evaluate and make recommendations based on your specific financial situation.

Diversification, asset allocation and portfolio rebalancing do not guarantee a profit or protect against a loss in a declining market. They are methods used to help manage risk. Investment returns and principal value will fluctuate and your investment, when redeemed, may be worth more or less than its original cost. Sales charges and taxes may apply.

Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP® in the United States to Certified Financial Planner Board of Standards, Inc., which authorizes individuals who successfully complete the organization’s initial and ongoing certification requirements to use the certification marks.

¹National Bureau of Economic Research: “Gambling Away Stability: Sports Betting’s Impact on Vulnerable Households,” 2024