For young investors, the line between investing and gambling has never been easier to blur.
You can place a bet or make a trade on the same device, and almost instantaneously know exactly where you stand.
A recent survey from financial services firm Betterment inspired a flurry of headlines about how 26% of Gen Z investors view sports betting as a legitimate part of their long-term financial strategy.
Even more alarming, 52% of Gen Z investors told Betterment that they’d redirected money intended for long-term investments toward sports betting.
The survey included just 250 Gen Z respondents, so its findings only go so far. But that doesn’t mean it isn’t pointing to a real phenomenon, said Daniel Crosby, a psychologist who helps financial advisors understand how psychology affects financial decision-making.
“There’s clearly a larger issue here,” he said, even if he wasn’t sure if 26% of people under 29 even have a “long-term financial strategy.”
Since it was legalized in 2018, US sports betting has grown from $6.6 billion to nearly $167 billion in 2025, according to the American Gaming Association. The same time period has also seen the rise of retail investors taking increasingly risky trades as access to esoteric financial instruments becomes as easy as opening your smartphone.
The confusion for the Gen Z investor who’s been raised with both is that “they run on the same machinery,” said Crosby, who is the chief behavioral officer at wealth tech company Orion Advisor Solutions.
“What unites sports betting apps, options, crypto, and meme stocks isn’t their legal wrapper but the reward structure underneath: rapid feedback, variable outcomes, and a scoreboard you can check any moment,” Crosby said. “The product changes from a same-game parlay to a call option on a meme stock; the behavioral reward is remarkably similar.”
This is no accident, and the migration between gambling and trading was “accelerated by the apps themselves,” said Crosby. Robinhood’s design choices, including confetti animations and scratch-off stock rewards, have earned criticism from the House Financial Services Committee and a $7.5 million fine from the Massachusetts securities regulator.
And while it’s important to “address the design, not just the discipline,” he said, Crosby gave some tips to help investors identify if they’re crossing the line from investing to gambling.
Harm reduction
First, it’s important to define the terms. An investor asks what an asset is worth, a trader asks when to buy and sell an asset, and a speculator asks which direction an asset is going to go next, Crosby said.
“A bettor asks only what happens next; that’s a question stripped of any reference to underlying value,” he said.
If you’re worried, don’t focus on dollar amounts, which can be “poor predictors,” said Crosby.
The most “reliable” sign that someone is moving from investing to gambling, or toward problem gambling, is that they are escalating the size, frequency, or intensity of their trades, Crosby said.
“Loss chasing,” or following a loss “with an urge to make the position bigger rather than smaller,” is one of “the better predictors of eventual serious harm,” he said.
The shift is gradual and rarely surfaces through someone admitting they have a problem, but instead through “rationalizations,” said Crosby, such as these:
- “It’s only 5% of my portfolio” (the position may be immaterial; the behavioral pattern isn’t)
- “I know what I’m doing”
- “It’s entertainment”
- “I can afford to lose it”
- “I’m investing in what I understand” — borrowing Fidelity Investments legend Peter Lynch’s strategy of “invest in what you know” to justify what is, on closer inspection, a hunch.
Crosby also gave two “self-checks” that someone can use to evaluate their own behavior: “Am I making the position bigger after a loss? Can I defend this on what it’s worth, not what it might do next week?”
The single most impactful change one can make is to change how often they gamble.
“Checking frequency measurably warps risk perception — someone seeing green or red daily experiences the same volatility very differently than someone checking quarterly, and is likelier to treat short-term noise as long-term meaning,” Crosby said.
It’s also important to normalize that gambling has a pull, instead of shaming it. After all, in “different arenas” sports stars like Pete Rose, Michael Jordan, and Phil Mickelson all felt the ‘same pull,” he said
“The thrill is the anticipation, not the win or loss; the moment before the outcome is revealed is often more exciting than the outcome itself,” he said.
Even I, the author of this article, a very occasional sportsbook user, casual sports fan, and extremely boring index investor, felt the escalation firsthand when I was reporting a story this summer about how to gamble responsibly during the World Cup. Curiosity led to one, then two, then more bets, and by the end of the Cup, I was placing multiple bets on each match, even dipping my toes into same-game parlays and other higher-stakes plays.
Luckily, I stuck to my budget, and of the $100 I deposited during the Cup, $56.21 remains. (Don’t ask me how high it got, please). I haven’t touched it since the Cup ended, but MLB Playoffs are coming up soon, and I might be feeling that pull again.
Do you invest and gamble? Do you have a story to tell, or an informed opinion on the overlap between investing, trading, and gambling? Reach out to Alex via encrypted messaging app Signal at @alexnicoll.01 using a non-work phone, email at anicoll@businessinsider.com or alexonicoll@protonmail.com, or Twitter DM at @nicollsanddimes.
