Gen Z Sports Betting as Investment: Financial Implications

A significant number of Gen Z adults are treating sports betting as an investment strategy. Financial experts caution that gambling winnings do not contribute to future Social Security benefits. A Betterment Retail Investor Survey conducted between March 27 and April 3, 2026, found that more than half of Gen Z respondents (52%) used investment dollars for sports betting at least once in the past year. Within this group, 14% redirected their investments to sports betting multiple times a month.

The survey showed that 31% of millennials had redirected investment dollars towards sports betting at least once in the past year, compared to 10% of Gen X and 4% of baby boomers. Although successful bettors may owe taxes on their winnings, these gains generally do not count toward the earnings history used for calculating Social Security retirement benefits.

“What worries me is what the betting money replaced,” said Michael Ryan, founder of MichaelRyanMoney.com. “If it was money that would have gone into a Roth IRA, 401(k), brokerage account, or even an emergency fund, the loss isn’t just today’s bet. It’s potentially 30 or 40 years of compounding that never happens.”

Experts highlight that this shift happens amid an uncertain retirement landscape for young Americans. Social Security benefits are typically based on a worker’s lifetime earnings record. As a result, individuals who spend years generating income through activities that do not qualify as covered earnings risk lower retirement checks later.

Gen Z has embraced online sports betting following its legalization across the United States. Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, noted that dollars not invested in your twenties do not simply disappear today. Missing out on 40 or 50 years of potential growth is significant, given research connecting expanded online betting with lower investment and greater debt.

The IRS requires recreational gamblers to report gambling winnings as taxable income, including sports-betting gains. However, the SSA tracks a different category of earnings. Social Security benefits are based on covered wages from employment and net earnings from self-employment subject to payroll taxes. Recreational gambling winnings generally do not fit these categories. Bettors may owe federal income taxes on large jackpots but receive no boost to their Social Security earnings record.

“Sports betting itself isn’t going to bankrupt Social Security, but gambling winnings generally don’t build a worker’s Social Security earnings record,” Beene stated. “A generation entering retirement with inadequate private savings would become even more dependent on a program already facing serious funding challenges.”

What Would $100,000 in Winnings Look Like?

If someone earned $100,000 from sports betting in a single year, none of it would count toward their Social Security retirement benefits. In contrast, a $100,000 salary from a traditional job would be included in Social Security’s benefit formula. Since Social Security calculates benefits using a worker’s 35 highest years of covered earnings, adding a $100,000 earning year could increase retirement benefits by approximately $36 to $76 per month, depending on the worker’s earnings history.

Experts suggest Gen Z could feel this hit significantly. Kevin Thompson, CEO of 9i Capital Group, noted Gen Z faces structural unemployment and a high cost of living. This situation leads them to seek fast gains and take higher risks. The downside is potentially having less Social Security income to rely on, exacerbated by concerns Social Security may not exist for them when they retire.

When Betting Becomes a Business

There is an exception to these rules. Professional gamblers may report gambling activity as self-employment income. The IRS allows professional gamblers operating as a trade or business to file Schedule C, and the SSA may recognize those earnings as self-employment income subject to Social Security taxes.

In this case, gambling income could generate Social Security credits and future retirement benefits. Qualification depends on how frequently they bet and the records kept. Thompson suggested more people might start businesses combining W-2 wages with business distributions if Gen Z continues to believe Social Security won’t be around.

Financial advisers emphasize that Social Security was designed for traditional employment and payroll tax contributions. Sports betting might produce occasional windfalls, but it does not replace the value of steady covered earnings for building retirement security.

What Happens Next

With sports betting becoming more mainstream, retirement experts are focusing on how younger Americans earn and view money. Gen Z workers should understand that while winning a large sports bet can enhance a bank account today, it is unlikely to increase a future Social Security check.

“Social Security was never supposed to do the whole job. If younger people reach retirement with less private savings because gambling got mentally filed under ‘investing,’ Social Security doesn’t get weaker,” Ryan said. “They become more dependent on it.”