There is a growing trend among Gen Z adults who consider sports betting as an investment strategy. Financial experts caution that gambling winnings do not count towards future Social Security benefits. A recent Betterment Retail Investor Survey sampled 1,000 investors between March 27 and April 3, 2026, revealing that 52% of Gen Z respondents used investment funds for sports betting at least once in the past year. Within this group, 14% made such investments multiple times a month.
In comparison, 31% of millennials surveyed redirected investment funds to sports betting at least once in the past year, as opposed to 10% of Gen X and 4% of baby boomers. Successful bettors must pay taxes on their winnings, but these are not included in the earnings history that determines Social Security retirement benefits.
“What worries me is what the betting money replaced,” said Michael Ryan, a finance expert and founder of MichaelRyanMoney.com. He explained that diverting funds from a Roth IRA, 401(k), brokerage account, or even an emergency fund means losing out on potential 30 or 40 years of compounding growth.
The shift is occurring amidst an already uncertain retirement future for young Americans. Social Security benefits are significantly based on a worker’s lifetime earnings record. Those who derive income from non-covered activities like gambling might receive lower retirement benefits. Gen Z’s embrace of online sports betting has surged since legalization across the U.S.
“This could be crucial, as money not invested in your twenties doesn’t vanish; it misses out on decades of growth,” stated Alex Beene, a financial literacy instructor at the University of Tennessee at Martin. “Research connects expanded online betting with reduced investment and increased debt.”
The IRS requires recreational gamblers to report winnings as taxable income, including sports-betting gains. However, the SSA tracks earnings differently. Social Security benefits derive from covered wages subject to payroll taxes and self-employment net income. Recreational gambling winnings do not fall into these categories. Thus, even large gambling winnings do not enhance a person’s Social Security earnings record.
If someone earned $100,000 from sports betting in one year, this amount would not contribute to Social Security retirement benefits. In contrast, a $100,000 salary from traditional employment would be factored into Social Security’s benefit formula. Benefits are calculated based on a worker’s top 35 earning years. Therefore, a $100,000 earning year could raise retirement benefits by about $36 to $76 monthly, contingent on the person’s earnings history.
“Gen Z is at an impasse, facing high living costs and structural unemployment. This prompts them to seek rapid gains and assume greater risks,” said Kevin Thompson, CEO of 9i Capital Group. “Gen Z’s main concern is potentially having diminished Social Security income, especially as many doubt the program’s future availability.”
When Betting Becomes a Business
An exception exists for professional gamblers who might report their activity as self-employment income. The IRS allows professional gamblers managing a business to file Schedule C. In this case, gambling income may be recognized as self-employment income subject to Social Security taxes, contributing to retirement benefits contingent on betting frequency and record-keeping.
“If Gen Z believes Social Security won’t last, entrepreneurship may rise along with strategies that blend W-2 wages and business distributions,” noted Thompson.
Advisers insist Social Security was meant to support traditional employment earnings taxed through payroll. Sporting bets may occasionally offer windfalls, but these do not equate to persistent earnings in building retirement security.
What Happens Next
With sports betting becoming more common, retirement specialists are increasingly aware of how younger generations earn and perceive finances. For now, Gen Z should realize that winning substantial bets may enhance immediate finances but is unlikely to boost future Social Security checks.
“Social Security wasn’t designed to be the whole solution. If younger generations retire with reduced private savings due to gambling viewed internally as ‘investing,’ they rely more on Social Security,” Ryan explained.