Why Does Gen Z Gamble So Much? Is Sports Betting Replacing Investing?

Today, we'll be discussing why Gen Z gamble so much and is sports betting actually replacing investing? Hello and welcome to Money Talks. My name is Ken Wink from Summit Financial Consulting here in Southeastern Michigan. If you'd like more info about what you hear during our show today, please give us a call at 586-226-2100 or you can visit us on the web summitfc.net. We'd sure appreciate it if you'd check out the podcast page. You can listen to old shows and also subscribe on all the podcast sites. So today we're discussing how a lot of people, but especially potentially Gen Z, is is gambling a lot, especially on sports betting apps. So a recent report that I found said that 66% of Gen Z gambles on sports in some way. In some cases, they're actually choosing to gamble instead of investing. So 52% of Gen Zers said that they gambled with money that was supposed to be set aside for retirement. And 26% of Gen Z says that they're actually including gambling as a direct part of their retirement plan. So we're talking about a generation that grew up with sports betting apps on their phones, and there was influencers online talking about betting. And, you know, whenever you're watching a sports broadcast, there's always the betting odds in the lower right hand corner there. Obviously, you can see your friends and other celebrities on social media sort of celebrating those wins. So now we're seeing evidence that all that, for some young adults, gambling is not just entertainment. Before we jump in, I want to introduce my co-host, Tony Shore. Tony, I know that you love to invest, but if I remember correctly, you actually don't like to gamble at all, right?

Oh, that is 100% correct. I am not a gambler. Thanks for having me on the show today, Ken. I'm excited about this topic because it does fascinate me, and I view it as a serious problem, so I'm interested to hear your take and what we're going to talk about today, but I do not gamble at all. I don't play the lottery. I never have. I've never bought a lottery ticket in my life. I've been to Vegas for work trips and for fun to see concerts or shows quite a bit in the last probably 10, 15, 20 years. I've been there a few times. Didn't even put a coin in the slot machine.

That is impressive.

I just don't do it. I love the food and the shows in Vegas and concerts, went to the Sphere. But that's where I choose to spend my money or on merch or shopping where I can take something home. I don't gamble because I know the house always wins. And people say, oh, no, I've went to Vegas and came back with extra money. Those people are either A, lying, or B, they got lucky on a trip. I happen to know that the companies that you eventually lose. I mean, if these online sports apps, if people were able to use it as an investing tool and make money, the sports app wouldn't exist. They're going to be the ones making the money, not you. If you were making money off of it, they wouldn't be able to exist. But because one person makes money off the lottery... Everybody else pays for that. And you say, no, my buddy over there made money on it. That means you probably won't because of the odds. Right. Yeah. So, yeah, the odds, the odds are not good. No, they're not. And if they were good, those companies would go out of business and it wouldn't be a huge industry that it's become. Right.

Am I right on that or what do you think? Yeah. Absolutely. And I sort of want to start by saying that I don't think Gen Z is necessarily bad with money. I personally, it is so much fun watching a Lions game. And then I'll get in with my buddies that I'm watching the game with, you know, each chip in 20 bucks. And if this player, this player and this player all get touchdowns, you know, are sure. we win a big windfall. So like it can be just entertainment. Um, and, and I don't want to pick on just Gen Z, like baby boomers have made their financial mistakes too. Sure. You know, overall they were not the best savers for retirement. Like their parents went through the great depression and were maybe overly cautious. So then the baby boomers were sort of an equal and opposite reaction in the other direction, maybe living life a little bit more to the fullest. Um, Don't get me started on Gen X and the millennials. In a lot of cases, they're not saving anything for their kids' college. In some cases, barely saving for their retirement. You know, they're spending $10,000 a year on travel sports and dance. But, you know, and I... Almost got booed off Jack's baseball team last week because I was talking in the stands to someone and I was like, yeah, a lot of the kids on this team are probably never going to be able to buy a house when they get older because they're going to be absolutely overwhelmed with that because their parents are paying for travel sports instead of. Putting money in college.

Yeah. Although that's a popular take with the parents there at the game, Ken.

You're not making any friends over there. I did not. It was almost the last game, and I'd been holding it in the whole season. But, like, the entire team is a travel baseball team, and then they just threw Jack on it. So we just played, like, rec league for our local city here, and we were just a little bit bummed because all the parents and all the kids, like – treated us like we weren't in the club because we weren't on this travel team.

Oh, sure. Yeah, that's the problem. Peer pressure and the finance of it. That's another show we should do. And I think we have touched on that. You've talked about that before. How much do you spend on your kids' sports versus how much are you putting away for college or your own retirement? But when it comes to gambling, I do have to make an admission. When I was in my 20s, And I first left the farm in Minnesota and moved to Southern California, south of LA, and did radio promotions for labels and did radio work down there. We would, after work on a Friday, it's like five o'clock, let's drive to Vegas. And so we'd drive all night to Vegas and we'd get there and I'd sit at a blackjack table and I'd go to the $2 table or the $5 table. And I'd start with, I'd say, I'm going to spend $50. And then I would play, sometimes I'd be able to play all night for $50. You know what I mean? If I kept getting lucky. But I'd play until I had nothing left, and then I'd go, because I like playing blackjack. So I did gamble at one point. But, you know, now that it's $10 a hand minimum, I think it's good luck finding a $10 table at the big casino. Those are $20. That's just too, you know, I can't afford to throw away that kind of money.

Yeah.

You know, at $20 a hand, knowing that the house always wins, it's like... Even if you win once, ouch. And are you going to have the discipline to, you know, if you do win, do you take your winnings and walk away? That's our biggest tip, right? Like if you do get a big win, take that money and go put it into something decent. Run. Take the money and run. So let's yeah. What's your first point?

So just a few things like sort of sympathizing with Gen Z, like they grew up in a very different financial environment than you or I did. Like they watched home prices explode. You know, it's really hard to buy a house right now. The prices are so high. They watched college get ridiculously expensive. They've watched inflation eat away at the cost of everyday life. Maybe their parents are worrying about retirement. So the way that they're looking at things, just being financially successful might seem difficult. So when you're 22 years old and we're trying to tell these people, hey, if you put $500 a month into your retirement account for 40 years, someday you're going to be a millionaire. And, you know, on paper, it sounds really responsible, but 40 years is a long time for a 22 year old. Yeah. It's hard to think that far in advance. Whereas a sports betting app says, hey, if you put $50 in right now, you could have $150 in your pocket before the game's even over. Very different situation psychologically. And I think we got to make sure that we understand this phenomenon and don't paint anybody in a negative light necessarily. But before I jump into... why I think this is, I just wanted to share five really, really quick tips for anyone trying to be responsible financially. So if you're Gen Z and you're watching this, these are my five quick, quick tips. Number one, make sure you have an emergency fund before you're spending money on gambling. Number two, make sure that you are taking full advantage of your employer's match through work, getting all that free money. Three, start investing for real before you're spending money on gambling. Four, make sure you pay off all high interest debt, especially credit card debt. You know, we just want to get all of these sort of higher level, really important financial goals out of the way before you feel comfortable spending money on bad things. And, you know, for some people, it's just a little bit of entertainment. You know, if you want to spend twenty dollars on a betting on a game the way that I do. Obviously, I do it. I don't think it's that big of a deal. You want to go to a concert every once in a while, fine. You want to get a new pair of shoes every once in a while, fine. I'm not trying to say that entertainment is the enemy of finance. It should just come after your financial foundation is already established, not instead of it. And that's why I really wanted to lead with those tips is we got to get the most important basics out of the way before we're sort of spending it all on entertainment. So the foundation comes before the entertainment, Tony. That's what I wanted to start with.

I think you make a great point there. But Ken, here's my input on this just really quick before you move on. When you say, hey, you're a young adult, there's no harm betting $20 on a football game. That doesn't mean you have a gambling problem. I agree with that. But here's where you're a very different person than a lot of people because you have great discipline when it comes to finances. Obviously, it's why you do what you do. You're very disciplined. And you're saying, hey, I look at it as entertainment like I did when I was playing blackjack. Entertainment is one thing. If you're going to Vegas to have fun and you want to play a few hands of blackjack or some slots to have fun, the problem is not everybody has – as entertainment, if you can view gambling as I'm doing this for fun, not to make money, that's a fine line. And where I see a lot of my – my son is 26, and he's done some of this, but he's seen friends that have – Just they have no money. They're broke, and they can't afford rent because they get sucked in. And it's a fine line between I'm doing it for entertainment, and I have X amount I'm going to spend, and when that's gone, it's gone, to I'm doing it to make money. And that's a fine line. And people might convince themselves they're doing it for entertainment at first. But if they have a big win early on, then they're like, hey, this is great. I can make money doing this. And it's to me and I know I sound like the old guy yelling at kids to get off my lawn or whatever. Or the old anti-drug messages of the 80s. But it is a slippery slope for some people that don't have the discipline. And it's almost worse when you get a taste of success right away. I have a nephew. that did this when he was in college. He got into it, gambling and going to casinos and online betting. And it became a problem because he had a few, his first time to a casino, he walked out with like, he made like $2,000. Wow. That's what he said, up. that much. Now, I don't know how much he spent to get there, but he said he was up positive, netted $2,000. But then he became addicted to gambling, and his parents had to bail him out, and he had to go through some counseling, and now he doesn't gamble at all, which is good. But see, it's a slippery slope, right? Isn't that a fine line? I think gambling for entertainment is fine. You know, I make bets with friends. I have friends that are Packers fans. And I like to make wagers with them just for fun. And I usually end up losing, but that's okay. If you can do that and not make it a regular thing, a daily occurrence, that's one thing, right?

Yeah. Yeah. I think that's an absolutely fantastic point because yeah, addiction versus entertainment versus using it as an investment strategy. Those are all completely different things. So I guess if you're not in a situation where you are specifically budgeting money for entertainment, then you need a budget because you shouldn't be just shooting from the hip when it comes to, am I going to get to stop working someday? Are my kids going to be able to go to college someday? Like these are really important things and it shouldn't be left to chance.

Yeah. Am I going to have the money to take, when I have grandkids, take them to Disney World? Wouldn't you rather do that and create experiences than sit in a casino and gamble that money away, in my opinion, or online on an app? I'd rather give that money to my kids and grandkids than I would one of these sports betting apps.

I just had a client come in yesterday that they're planning a cruise with all of their kids and grandkids. They're picking up the tab for everything. The cruise, the flights, everything, you know, they've, they've been good savers and that was not a light at the end of the, or that was a light at the end of the tunnel. You know, it wasn't a train coming at them, like, you know, saving all this money, being disciplined. Eventually you're in a situation where you can do unbelievable things to bring your family together and, Yeah. So, yeah, having a long term plan is very important.

But all that said, it's fun. I get it. You know, I get these apps where like you can bet on, you know, will will the kicker make the first field goal? You know, or, you know, I mean, you know, betting on is he going to make this kick or, you know, is this team going to score two touchdowns? You know, it's if you're really into a sport, that's fun. I'm into football, so that's fun. But.

Yeah, well, there's there's five reasons why I think Gen Z has sort of gotten into this situation. OK, so number one is I think they grew up in an instant gratification economy. You know, if you want food, you just hit the app. It's delivered. You want to watch a movie. You don't have to leave the house. You can just start streaming it immediately. You know, want to buy something? Click, click online. It's on the way. You need information. You're not going to grab the encyclopedia. You just Google it. Want to laugh at something online? There's TikTok. So pretty much everything happens instantly. Investing is completely different, right? You got to wait, wait, wait, wait for compound growth, wait for dividends, wait for the earnings to grow, wait for the economy to expand. Like we're talking decades, right? So that's just the complete opposite of sports betting within minutes. So sometimes that immediate feedback is just a lot more attractive to them.

Patience is a virtue for which I can hardly wait.

Yeah.

My mom always said. Yeah. Yeah. But waiting is tough for this generation because everything's right there. That's a great point. Everything's right there in the palm of your hand. You and I didn't grow up that way.

No.

At least I didn't. You're a bit younger. You probably had cell phone growing up.

Oh, man. I did not have a cell phone until I was in my 20s. Oh, okay. Yeah. I'm pretty close to you, Tony. Yeah.

All right. What's the next reason?

Just sports betting doesn't feel like gambling. You know, if you say I'm going to the casino tonight to gamble. Yeah. You immediately recognize that as gambling.

Casino equals gambling. Yeah.

Yeah. But if you say, hey, I'm putting 20 bucks on the Lions this Sunday. I mean, that just sounds like you're a good fan, you know. Right. You're going to be watching the game anyway, and you have fun rooting with your friends. The bet can almost become part of the experience when you do it like that. So I think they're not thinking of it as gambling. They're thinking of it as enhancing the game day experience. True.

And it can feel that way. It's like fantasy football. It gives you a reason to get more into the games than you even were before. Absolutely.

Yeah. Yeah. So I feel like the more it just feels like a normal thing, the less maybe you take a step back and say, should I evaluate this financial decision? You know, it's just sort of the aura of the whole event, I guess. Yeah.

Yeah, it depends if you have the money. I think if you set aside, I'm going to spend, but a lot of people, if it's every week that there are football games and you're betting on multiple games, that can get quite, that would be a lot of money to put into a Roth. And by the time you're 65, you'd have millions of dollars. And when you're in your 20s, like my daughter's contributing $200 a month into a Roth by the time she's 65. She'll have well over a million dollars in there. And that's a conservative estimate on growth.

I was just talking to Lydia in my office here. So Lydia is my sister-in-law and she's the head of sort of new business in our office. So I have two kids, Charlotte and Jack. She has two kids, Ava and Marcello. And Ava actually works here now, too. She's helping us out. So we're lots of family working here. But my point was we're starting Roth IRAs for all four kids right now. Awesome. We're like, you know, let's get it going. Awesome. I would love to share this stat every single show if I could. If a child saves $1,000 a year, just between the ages of 16 to 22. And that's a year, not a month. $1,000 a year between the ages of 16 and 22. And let's just say, theoretically, they stopped saving for retirement at that point. Odds are that's going to be worth a half a million dollars. Like you only invest six thousand dollars, a thousand dollars a year for six years, but it grows to half a million dollars at age 65. So it's just you can't make up for lost time. So, yes, chipping away at this with one hundred dollars a weekend. Yeah, you're going to miss out on a thousand dollars worth of investing as a 20 something. And you could be costing yourself a huge chunk of your retirement.

Yeah. But again, it's instant gratification. Are you going to have the discipline to wait until you retire to get $500,000, or are you going to spend it on gambling now and maybe make $100,000 back here, $100,000 back there, $1,000 back here? It's rough. It's tough. I think it's a fallacy that you're ever going to come out ahead gambling. I mean, I do, too, because otherwise they wouldn't exist.

They may be one percent, you know, maybe one percent actually makes it gambling successfully because they have some kind of a computer based edge. But, yeah, if you're just shooting from the hip, from your gut, the odds of you beating the casino are very low.

Yeah. Yep. And when we say casino, we mean the online sports app. Yes. That is a casino, whether you want to admit it or not. That's the thing. If we called it a casino, it would lose some of its allure and charm. Yeah. Yeah.

Well, that's actually my third point is the smartphone changed everything. Sure. You know, and older generations don't necessarily understand this, but, you know, it used to be if you wanted to gamble, you had to go to the casino. Now the casino is right in your pocket. You know, you don't have to plan a trip. You don't have to go to the casino. You don't have to go to the ATM. You don't have to leave your couch now. You know, you can just watch TV and be betting. So just because everything's digital, it sometimes doesn't feel like you're spending real money. And that's that's a dangerous combination.

Yeah. Oh, that's true. And you referred to that earlier, but everything in the palm of your hand right there, it's amazing. You have multiple casinos in your hand, and every app is a casino. And it's billions and billions of dollars in profit a year. How do you think they're making that profit? That's your money that they're getting. Yeah. Yeah. So what's the next reason that you think especially Gen Z is gambling?

I think social media makes winning more visible. So like you don't see when people are losing, like they don't usually post on social media or tell their friends when they lose. But sometimes you see when they win, you know, hey, I turned five fifty bucks into twelve hundred dollars and there's screenshots of the winning bet. And they'll talk at parties about this incredible parlay that they hit. But you're only seeing the wins. You're not seeing the $50, the $100, the $500 that they lost. Nobody posts those highlight reels of people losing money. So it just sometimes makes gambling look more profitable than it really is.

Oh, of course. And you don't know how much they gambled to get to that bet. How much before did they have to gamble and lose? How much have they lost before they won? That's the thing. And nobody ever posts, hey, here's a picture of me sleeping in my parents' basement. I had to move back in because I couldn't pay rent. That's not going to be a post on social media. No.

No, it's not.

Never see that post, but it's happening all the time because people get addicted to sports betting or online gambling.

Yeah. Yeah. So the last one is that some young people may see gambling as an investment. And obviously, to me as a financial advisor, that's the most concerning part. Yeah. You know, we've been saying this the whole show. I'm gambling twenty dollars for entertainment is a lot different than saying I'm going to make money betting on sports. Yes.

The mindset is wow. Yeah. Completely different.

Yeah. Yeah. As soon as you start to turn gambling into a legitimate wealth building strategy, that's obviously when things can get dangerous because investing and gambling are not the same thing. When you buy a diversified stock portfolio, you're investing in businesses that typically have profits and the businesses are run by smart people. They're going to generate revenue. They're going to make products. They're going to reinvest. They're going to grow. And over long periods of time, it works out for just about everybody. Sports betting does not work that way. You are not creating an asset. You are not part owner of a company. You're not earning a dividend. You're placing a bet. And there's no investment.

You have no investment or ownership in anything.

Right. Yeah. Like you've been saying, it favors the house. You are getting into a mathematically losing situation every time you place a bet. The less bets you place, the better. If you go into a casino and win, turn around and walk out the door or go eat, the longer you play, the more likely the house is going to win because the odds are in their favor.

Yep. Exactly. And they're betting on that. Yeah. so to speak. Yeah, absolutely. They're betting that you're going to get excited and stay there long enough to lose. Yeah, that's for sure.

So, yeah, in summary for today, you know, I don't think that Gen Z is avoiding investing. I think that they're just trying to find a faster way to get to where they want to go, because it is a rough economy for a lot of people and it is more expensive to go to college and it is more expensive to buy a house. So sometimes I think people start to feel a little bit helpless. So I'm here today to say, hang in there. Dollar cost average, save money every single week, every single month, whatever you can afford, whether it's every paycheck or every month. Eventually, if you do this, there's a good chance you'll reach your financial goals and dreams. If anyone would like to sit down with us and talk to us about how much you can invest on a weekly or monthly basis and how much that will add up to, most likely when you do go to retire or when you go to buy a house or when you want to pay for a portion of your kid's college. We'd be happy to help crunch those numbers for you. You can give us a call anytime at 586-226-2100 or visit our website, summitfc.net. If you have a gambling problem, call one of those gambling hotlines. Don't gamble away your future and ruin the rest of your life just in search of the big win.

All right, Ken, great show, great topic, a hot topic. How can our viewers out there get a hold of you if they want to set up that consultation or have questions or want to get a financial plan together for their future?

Yeah, we'd love to put a financial plan together for you for no out-of-pocket cost. It would just cost you some time. Phone number is 586-226-2100, and our website is summitfc.net.

All right. And that does it for today's episode of Money Talks with Summit Financial Consulting, LLC, and our host, the man with the plan, Ken Wink. Thank you for joining us for Money Talks. Don't head into retirement without a strategy that addresses both income and taxes. For more information, please contact Ken Wink at Summit Financial, working with people you trust. Call 586-226-2100 or visit summitfc.net. Join us again soon for another episode of Money Talks.