Gen Z is Gambling
When the line gets blurred.
Over the last few weeks, I have seen tons of coverage on the rise of Gen Z’s gambling habits. Specifically, around the fact that Gen Z is viewing gambling as part of their long-term financial strategy and even moving invested funds to a gambling platform.
Eric Balchunas covered it here and the stats are kind of eye-popping. Now, I have a few thoughts on the topic.
Funny enough, I had the pleasure of speaking with MarketWatch and Barron’s on this topic.
The first thing that leads me to believe that young people are convincing themselves that they might be investing but actually gambling is the language many prediction markets are using.
These prediction market ads are everywhere. And they don’t want you to gamble… they want you to “buy contracts on the outcome.” AKA gamble.
Yet they use words like “trade” and “contract” that give the user this feeling that they are participating in some financially complex market. When at the end of the day, buying the Knicks at $.50 or taking the Knicks moneyline at +100 is the exact same thing.
Masking a gamble with this language is, in my opinion, quite dangerous.
Back to Eric’s post now. I have a few thoughts around this.
For one, Gen Z spans from 14-year-olds to 29-year-olds. This is quite the age range. We’re talking about someone married with a child versus someone in 8th or 9th grade.
I have no data to back this assumption, but I am sure many college aged kids who are now eligible to participate on gambling or prediction platforms legitimately do think these avenues may play into their financial well-being. There might be a maturity aspect at play here.
Secondly, we have to consider the nature of this generation’s investments. They may not even have 401(k)s yet. There is likely a large amount of people who are still figuring out that they are terrible at trading and trying to time markets. Looking to day trade, buy speculative options or the next meme stock is akin to gambling in my view.
If money is rotating from a speculative trading account into a gamble… has the strategy really changed? I’d argue it hasn’t.
I’d love to see where this money was directed from. Was it something like a Roth IRA? Or was this from someone’s “YOLO” trading account.
Finally, I have seen ample chatter around the fact that Gen Z is not drinking at the same pace their predecessors were. Yet, we’re also seeing that they are more inclined to gamble.
Is this swapping one vice for another? It just might be.
To my Gen Z peers, be diligent out there. Convincing yourself that gambling is going to be the avenue to your financial success can be misleading and can bring an enormous amount of risk into your life.
It may feel like you’ve been backed into a corner with the cost of rent and living lately. But accumulating assets and investing prudently is a time tested avenue to wealth.
This is for informational purposes only and is not intended as legal, tax, or investment advice or a recommendation of any particular security or strategy. The investment strategy and themes discussed herein may be unsuitable for investors depending on their specific investment objectives and financial situation. Opinions expressed in this commentary reflect subjective judgments of the author based on conditions at the time of publication and are subject to change without notice. Past performance is not indicative of future results.