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- A recent Betterment Retail Investor Survey cited by Newsweek found that 52% of Gen Z respondents have used designated investment money for sports betting over the past year, raising concerns about the long-term retirement impact of substituting structured savings with recreational gambling.
- Financial experts are warning younger bettors that while casual sports betting gains are taxable by the IRS, those winnings do not count toward the earnings record used to calculate Social Security retirement benefits, meaning bettors could be sacrificing decades of compounding interest without building their future federal safety net.
A growing number of Gen Z adults are using investment money for sports betting, but recreational gambling winnings generally do not count toward the earnings record used to calculate Social Security retirement benefits, according to a Newsweek report published Oct. 3.
That matters because gambling gains can be taxable while still doing little to build future retirement benefits. The article points to a gap between how some younger adults may view betting and how the tax and retirement systems actually treat the money—prompting financial advisors and industry advocates to emphasize responsible gaming habits and long-term asset protection..
Survey data shows Gen Z using investing dollars for betting
Newsweek cited a Betterment Retail Investor Survey of 1,000 investors conducted from March 27 to April 3, 2026. In that survey, 52 percent of Gen Z respondents said they had used investment dollars for sports betting at least once in the past year.
Among Gen Z respondents who redirected investment dollars to sports betting, 14 percent said they did so multiple times a month. The same survey found that 31 percent of millennials, 10 percent of Gen X, and 4 percent of baby boomers had done the same at least once in the past year.
Michael Ryan told Newsweek, “What worries me is what the betting money replaced.” He added that if the money otherwise would have gone into a Roth IRA, 401(k), brokerage account, or emergency fund, “the loss isn’t just today’s bet. It’s potentially 30 or 40 years of compounding that never happens.”
Why gambling wins are treated differently from wages
The article says the IRS requires recreational gamblers to report gambling winnings as taxable income, including sports-betting gains. But Social Security benefits are based on covered wages from employment and net earnings from self-employment that are subject to payroll taxes.
That means recreational gambling winnings usually do not help build the earnings history used for retirement benefits. Newsweek used an example in which a $100,000 year of sports-betting winnings would not count toward Social Security, while a $100,000 salary from a traditional job would.
Social Security uses a worker’s 35 highest years of covered earnings to calculate benefits. The article says adding a $100,000 earning year could raise retirement benefits by about $36 to $76 per month, depending on the worker’s earnings history.
Alex Beene told Newsweek that sports betting itself is not the direct problem for the program’s finances, but that “gambling winnings generally don’t build a worker’s Social Security earnings record, and a generation entering retirement with inadequate private savings would become even more dependent on a program already facing serious funding challenges.”
Limited exception for professional gamblers
Newsweek noted one exception: people who qualify as professional gamblers may be able to report gambling activity as business income. The IRS allows professional gamblers to file Schedule C, and the Social Security Administration may recognize those earnings as self-employment income subject to Social Security taxes.
Kevin Thompson told Newsweek that Gen Z faces “structural unemployment and a high cost of living,” which can push people toward “fast gains and take on higher risks.” For most casual bettors, though, the practical takeaway is simpler: taxable sports-betting wins usually are not the same as wages when it comes to building future Social Security benefits.
Source: As reported by newsweek.com.
