Sports Betting Has Been Legalised Everywhere and the Research Shows Every Dollar Bet Is a Dollar Not Invested
Americans wagered $165.2 billion on sports in 2025, up from $4.6 billion in 2018. The average bettor lost $430 for the year. Peer-reviewed research across 230,000 households found that every dollar deposited into a sports betting app produces approximately a dollar reduction in savings and investment. The effects concentrate in the households that can least afford it.
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Last verified: 2026-07-22
The number nobody shows you at the point of the bet
You open a sportsbook app on a Saturday morning. You have $50 to put on the afternoon's games. You make the deposit. You place the bets. The games happen. Most of your bets lose. You are down $43 for the day, which feels like a reasonably contained entertainment expense for an afternoon of sports.
What the app does not show you is that $43, deposited into an index fund instead of a sportsbook, would be worth $163 in 20 years assuming a 7% annual return. Across a year of similar Saturdays, the $430 average annual loss documented by Motley Fool's 2026 analysis of sportsbook data becomes $1,630 in lost retirement value for every year you bet instead of invest. Across a 30-year career, it is money that would have become a meaningful portion of a retirement account — not through any speculative investment decision, just by not betting and putting the same money in an index fund.
No betting app has ever shown anyone that number at the moment of making a deposit. No regulation requires them to.
The 35-fold increase in seven years
The Supreme Court struck down the federal ban on sports betting in May 2018. States began legalising quickly. By 2025, sports betting was legal in 38 states and Washington DC. Americans wagered $165.2 billion on sports in 2025. In 2018 they wagered $4.6 billion. That is a 35-fold increase in seven years.
The sportsbooks' business model is straightforward and mathematically favourable. They retained 9.74% of every dollar wagered in 2025, generating $16.1 billion in gross revenue. That retention rate means the average bettor loses 9.74 cents for every dollar wagered across a full year of betting. Motley Fool's calculations based on SportsHandle.com data put the average annual loss per bettor at approximately $430.
The industry has posted a record annual handle every year since 2018. The user base is not shrinking, and the bettors who stay are betting more. NBER research across 230,000 households found that conditional on continuing to bet, households increase their quarterly deposits over time, reaching up to 8 times their initial deposit by the third year. The recreational bettor who started with $20 per game is statistically likely to be betting $160 per game three years later.
What the research found inside 230,000 households
The National Bureau of Economic Research published working paper 33108 in 2025, authored by researchers from Northwestern University, the University of Kansas, and Brigham Young University. The paper used bank and credit card transaction data from 230,000 households and a staggered difference-in-differences framework, using state-by-state legalisation dates as a natural experiment to estimate the causal effect of sports betting on household finances.
The headline finding: $1 deposited into a sports betting app leads to approximately $1 reduction in net financial investments. The increase in betting does not displace other forms of gambling, nor does it come from reducing consumption. It specifically crowds out saving and investment. The mechanism appears to be that betting and investing draw from the same mental account — the portion of income categorised as discretionary financial activity — and betting increasingly wins that competition as it becomes more accessible and socially normalised.
The effects were not evenly distributed. They concentrated in financially constrained households. For households with limited savings and disposable income, the legalization of sports betting produced measurable increases in credit card debt, decreases in available credit, and increased frequency of overdrafts. The population that can least afford to redirect money from savings to betting is the population where the financial impact of betting is most severe.
31% think it is an investment
NerdWallet's 2025 Sports Betting and Gambling Survey found that 31% of sports bettors view gambling as a form of investment. This is not a fringe misunderstanding. It is the stated view of nearly a third of active bettors. The misclassification matters because it leads to the most financially harmful behaviour: allocating money from a mental investment account to an activity with a negative expected return, while believing the allocation is wealth-building.
The expected value of a sports bet is always negative when calculated across a large enough number of bets. Sportsbooks retain approximately 9.74% of every dollar wagered. A bettor who bets for long enough will lose 9.74 cents on every dollar regardless of skill, research, or system. This is structurally different from a diversified index fund, which has produced positive real returns across every 30-year period in US market history and whose expected value is positive by design.
Kiplinger's 2026 coverage of this dynamic is direct: every year, whether it is March Madness, the Super Bowl, or election season, prediction markets and sports betting apps light up with the same promise — place a smart bet, make a quick return, feel like you are investing. The events change, but the pitch stays the same. The 31% who have accepted this pitch are making decisions under a framework that systematically overestimates their expected return and underestimates the opportunity cost.
The opportunity cost that compounds in silence
The financial harm from sports betting is not only the losses. It is the investment that did not happen. A bettor who loses $430 this year does not only lose $430. They lose the compounding return on $430 invested for the remainder of their working career. At age 30, that $430 is worth roughly $3,250 at retirement at historical market returns. At age 25, it is worth more. The compounding gap between betting and investing widens every year the pattern continues.
No tool currently exists that shows a bettor this number at the moment they make a deposit. Budgeting apps can flag that betting is a spending category. They do not model the retirement savings displacement. Financial literacy content explains the difference between betting and investing. It does not appear on the screen when a user opens a sportsbook app on Saturday morning. The information that would be most useful for changing behaviour is structurally absent from the moment when the decision is being made.
The 17% of American adults already in or considering sports betting and prediction markets, per the Northwestern Mutual 2026 Planning and Progress Study, represent a mainstream financial behaviour that is occurring largely without the personalised, real-time opportunity cost information that might produce different decisions. The average person who bets $430 this year is not doing so because they calculated the compounding retirement impact and decided it was worth it. They are doing so because nobody showed them the calculation.
The Recreational Bettor Who Thinks They Break Even
Bets regularly on weekends, wins some and loses some, and believes they roughly break even over time. Has never calculated their annual net position. If they did, the NBER research suggests they would find a net loss in the range of the average $430 per year, money that was experienced as entertainment but that represents a compounding opportunity cost. The $430 invested annually in an index fund at a 7% average return becomes $43,000 over 30 years. No betting app has ever shown them that number.
The Young Adult Entering the Workforce
Started betting legally once it was available in their state. Views it as a way to make their sports watching more exciting and occasionally profitable. Is in the early years of a career when compound interest works most powerfully in their favour. The NBER data shows betting deposits increase over time, up to 8 times the initial amount for continuing bettors. The betting habit that started as $20 per week in year one becomes a meaningfully larger displacement of retirement savings in years three and five.
The Financially Constrained Household
Has limited disposable income and access to credit. The NBER research is explicit that effects concentrate in exactly this segment: as betting increases, credit card debt rises, available credit falls, and overdraft frequency goes up. Financially constrained households experience the most severe form of the crowding-out effect, not because they bet more than affluent households but because the money they bet is more consequential to their financial stability and retirement trajectory.
The 31% Who View Gambling as Investing
Roughly a third of sports bettors explicitly think of gambling as a form of investment. This framing leads to the most dangerous financial behaviour: allocating money that should be going into retirement accounts or index funds to sportsbooks instead, with the expectation of a financial return. The expected value of a sports bet is always negative — sportsbooks retain 9.74% of every dollar wagered. The expected value of a diversified index fund over a 30-year horizon is positive. The misclassification of a negative expected value activity as an investment is the specific cognitive error producing the most significant long-term financial harm.
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Responsible gambling disclosures on betting apps
All major sportsbooks include responsible gambling messaging, spend limits, and self-exclusion options. These tools exist for people who recognise they have a problem. They do not address the far larger population of recreational bettors who do not identify as problem gamblers but whose betting spend is displacing meaningful retirement savings without their awareness. The NBER finding that $1 of betting equals $1 less invested applies across the full bettor population, not just the subset with clinical gambling problems.
Financial planning and budgeting apps
Tools like YNAB, Mint, and Copilot track spending across categories and can flag betting as a spending category. They do not model the opportunity cost of that spending versus investment. Seeing that you spent $430 on sports betting last year produces a different psychological response than seeing what $430 invested annually for 30 years at a 7% return would be worth at retirement. The opportunity cost frame is the information that would change behaviour and it does not exist in any budgeting tool.
Financial literacy education
Content explaining the difference between betting and investing is widely available and well-produced. Kiplinger, Motley Fool, and NerdWallet all publish clear, accurate comparisons. Financial literacy content reaches people who are already thinking about personal finance. It does not reach people at the moment they are about to make a deposit into a sportsbook. Intervention at the point of decision is the gap that educational content cannot fill.
Sports betting odds and return calculators
Tools that calculate the implied probability of a bet or the expected value of specific wagers exist and are used by sophisticated bettors. They work within the frame of betting — helping bettors make better bets. They do not reframe the activity as a savings displacement, which is the relevant frame for understanding its long-term financial impact. Improving the quality of betting decisions does not address the finding that any betting at all reduces household investment by approximately the same dollar amount.
Employer financial wellness programmes
Many employers offer financial wellness resources including retirement planning tools and access to financial advisers. These programmes address retirement savings decisions at the employer level but are not integrated with the apps and platforms where competing spending decisions are being made in real time. The employer wellness programme and the sportsbook app occupy separate mental spaces for most employees, even when the spending decisions in one directly affect the outcomes the other is trying to improve.
- 🔍NBER Working Paper 33108 search: "sports betting savings crowding out investment NBER 230000 households"
The primary academic source. Peer-reviewed research across 230,000 households finding $1 of betting reduces net investment by $1, with effects concentrated in financially constrained households. Published 2025. The methodology using staggered state legalisation as a natural experiment makes this the most credible causal evidence available on the household financial impact of sports betting.
- 🔍Motley Fool sports betting vs investing search: "Americans wagered 165 billion sports 2025 average loss $430"
Published May 2026. The primary source for the $165.2 billion handle, $430 average annual loss, and 9.74% sportsbook retention rate. Includes the historical comparison showing the 35x increase since 2018 legalisation. The most current and comprehensive publicly available financial analysis of the US sports betting market.
- 🔍NerdWallet 2025 sports betting survey search: "sports bettors view gambling as investment 31% debt 14% 2025"
Survey data on bettor attitudes published January 2026. The 31% who view gambling as investing and the 14% who have gone into debt are the two most consequential findings for understanding the financial harm mechanism. Survey of active sports bettors with cited methodology.
- 🔍Kiplinger prediction markets investing comparison search: "sports betting not investing 17% American adults 2026 Northwestern Mutual"
Published March 31, 2026. Contains the Northwestern Mutual 2026 Planning and Progress Study finding that 17% of American adults are already in or considering sports betting and prediction markets. The most current mainstream financial publication coverage of the retirement savings displacement problem.
- 🔍Edelman Financial Engines sports betting impact search: "sports betting opportunity cost retirement savings emergency fund"
From a registered investment adviser with 1.3 million clients. Frames the opportunity cost problem explicitly: money diverted to sports betting might otherwise go toward emergency savings, college funds, or retirement accounts. This opportunity cost represents a hidden financial impact that many bettors fail to consider. Confirms the financial planning community's view of the problem.
- 🔍Google Trends search: "sports betting vs investing, sports betting retirement, gambling savings impact"
Look at search volume growth for sports betting and finance-adjacent queries since 2018 legalisation and the acceleration in 2024 and 2025 as the NBER research enters mainstream coverage. The growth in how much do I lose sports betting type queries reflects the post-legalisation generation of bettors beginning to examine their cumulative financial position.
- 1.Could an app that shows a bettor their real-time compounding opportunity cost — the future value of their cumulative betting losses if invested instead — change behaviour at the point of the bet rather than after the fact, and what would adoption look like given that sportsbooks are unlikely to build this themselves?
- 2.31% of sports bettors view gambling as an investment. Is the intervention a financial literacy problem requiring education, a product design problem requiring a different user interface at the moment of deposit, or a regulatory problem requiring disclosure of expected value at the point of betting the way pharmaceutical companies disclose side effects?
- 3.The NBER research shows effects concentrate in financially constrained households. Should the policy response to sports betting's retirement savings impact be targeted at this specific population rather than at bettors generally, and what intervention would reach them effectively given that they are the least likely to be enrolled in employer financial wellness programmes?
- 4.Sportsbooks currently disclose that gambling involves risk and that bettors should only bet what they can afford to lose. What if regulation required them to show the 30-year compound value of each deposit amount if invested in a diversified index fund instead? Would this change the decision for the 31% who currently view gambling as investing?
- 5.The opportunity cost of sports betting versus long-term investing becomes most dramatic when expressed over a 30-year working career. Is there a product that tracks a bettor's lifetime betting losses and shows their real-time retirement savings displacement — not as a judgment but as a personalised financial insight — and would it find a market among the people it would most benefit?
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