By Michael Allison, CFA
Risky Business
Gambling, Investing, and the Importance of Understanding the Difference
In the 1983 movie Risky Business, a teenage Tom Cruise watches his dad’s Porsche roll off a pier into Lake Michigan, then spends the rest of the film scrambling to cover the loss. Young people taking big swings with money they can’t afford to lose is an old story.
This week’s chart shows it’s now a $17 billion a year industry.
That’s gross gaming revenue from legal U.S. sports betting: dollars wagered minus bettors’ winnings. Put plainly, it’s the money the sportsbooks extracted from the U.S. economy. It grew from $0.9 billion in 2019 to $17.0 billion in 2025, about 19 times bigger in six years. Add up the bars and it’s roughly $56 billion since 2019.
In 2025, Americans wagered $166.9 billion. The house kept about 10 cents of every dollar.
So who’s paying? Mostly the young. Pew found that 31% of adults under 30 bet on sports in the past year (36% of young men), versus 12% of those 65 and older. A Siena/St. Bonaventure poll from February found that 52% of men aged 18 to 49 have an active online sportsbook account. The skew is real, and it’s steep.
Gambling and investing both involve taking risk. The resemblance mostly ends there.
Gambling results in a binary outcome: you win or you lose. When the final whistle blows, your stake is either multiplied or gone. Investing doesn’t work that way. Owning a business (or an index of 500 of them) gives you a claim on earnings that keep coming, and there’s no final whistle.
And the math runs in opposite directions. Sports betting is negative-sum: the platforms’ $17 billion is the bettors’ collective loss. Investing on the whole, though not in every investor’s case, has been a net positive over time. Investors benefit from a growing economy and growing corporate earnings, which drive investment returns. Plenty of individual investors lose money, but the pie keeps getting bigger.
There is one place where the line blurs. Zero-days-to-expiration (0DTE) options expire the same day they’re traded, and held to the close they behave a lot like a sports bet: they either pay off or expire worthless. There’s no long run to bail you out. In July 2026, 0DTE contracts hit a record 66.2% of S&P 500 index (SPX) option volume. A September study by OptionMetrics estimates retail traders account for 30% to 35% of it.
I use options every day, to hedge and to generate income. A same-day lottery ticket on the index is a different animal.
Here’s the irony that bugs me. Younger investors are exactly the people who should be taking more risk. They have decades to recover from market drawdowns and let compounding do the heavy lifting. Time is the one edge they have over the rest of us, and the sportsbook spends it for them.
Some quick math. Say a 25-year-old moves $50 a week from parlays into a broad index fund. At a hypothetical 7% annual return, that’s about $519,000 at age 65. The same $50 a week at the sportsbook, for most a losing proposition, compounds in the other direction.
Joel Goodsen got into Princeton anyway. Most bettors won’t get that lucky.
Investing adds to the accumulation of wealth. Gambling extracts it.
Sources: American Gaming Association via CDC Gaming Reports, “Commercial gaming revenue was new record $78.7 billion in 2025”; Pew Research Center, “Americans increasingly see legal sports betting as a bad thing for society and sports” (Oct. 2, 2025); Siena Research Institute / St. Bonaventure University, American Sports Fan Survey 2026, Release 2; Cboe, “Cboe Global Markets Reports Trading Volume for July 2026” (Aug. 5, 2026); OptionMetrics, “How Much of 0-DTE Is Really Retail? Evidence from SPX and SPY Options” (Sept. 28, 2026); Statista, “America’s Sports Betting Boom.”
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