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The Effects of Legalized Gambling on your Retirement Plans

For decades, people fought to legalize sports gambling in the U.S. The advent of fantasy sport leagues helped to pave the way for this fight to become a reality. Today, sports gambling is legally recognized in 21 states around the country; and is a multi-billion dollar industry that continues to grow annually. As sports gambling becomes legalized in additional states and more entrenched into American culture, people are more willing to take a chance at hitting it big…eventually.

With the popularity of sports gambling on the rise, it begs the question of whether or not people are also gambling with their retirement accounts and investments. One may conclude that investing is the same as gambling – you set aside money in hopes that one day you’ll get a huge return on the money you invested. Plus, there’s no guarantee you’ll hit it big (let alone get your initial investment back!) So what’s the difference? Let’s unpack some differences between investing and gambling.

  • Gambling is more short-term in nature while investing is more long-term.
  • With investing, there is typically an underlying asset to invest while gambling is more speculative, betting on a favorable outcome with no asset attached.
  • Gambling is a short-term bet one hopes to cash in on by having favorable odds. Investing is building wealth over a longer period of time.
  • Gambling is playing the odds of you winning against the odds of someone else winning instead. Investing is a bet on yourself winning with no one to oppose you.
  • In gambling, there’s no such thing as compounding winnings. Investing is harnessing compounding interest.
  • Although they both involve a level of tolerable risk, investing can be more calculated and measured.

Legal sports gambling is carving out its place into American culture. As it becomes more commonplace in sports and widespread across the country, it may become more of a temptation for even the average sports fan to participate. And while the thrill of chasing the odds of winning it big may be very exciting, when it comes to investing, it’s best to keep a long-term perspective in mind.

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