In 2026, sports betting has evolved from a casual pastime to a perceived financial strategy for many Americans, particularly among Gen Z. New data from Bank of America Institute reveals a significant shift in how younger generations approach sports betting, often viewing it as an investment tool rather than mere entertainment.
The research highlights that while all generations are engaging in prediction-market contracts, they are seen as even more investment-like than traditional sports bets. However, the financial returns tell a different story. Across all age groups, bettors recover less than 75 cents for every dollar wagered. Gen Z fares slightly better, recovering over 80 cents per dollar, but still falls short of breaking even.
Gen Z’s Financial Habits and Betting Trends
One in five Americans now consider sports gambling an investment tool, but for Gen Z, this figure doubles. Betting has become a regular activity for many, with nearly a quarter of sports bettors wagering daily and another third doing so weekly. Lower-income households constitute the largest share of bettors, at 37%, compared to 34% for middle-income and 29% for higher-income households.
The surge in first-time betting users in June and July, more than triple the January levels, was attributed to the World Cup and the introduction of new prediction-market products. Prediction-market activity spiked to 27% of all legal U.S. sports-betting volume during the World Cup, up from just 9% at the start of the year.
The Economic Impact of Sports Betting
Gen Z and millennials are driving the change in sports betting, accounting for 88% of all betting activity in July. Gen Z alone made up nearly half of that activity, overtaking millennials as the largest generational share for the first time this summer. However, the households engaging in betting have less financial cushion. Median deposit balances for betting households in 2026 were just 59% of non-betting households. Despite this, betting households showed stronger card-spending growth in July, both in discretionary and necessity categories.
A broader trend of increased spending growth among younger and lower-income consumers reflects this behavior. However, a recent Federal Reserve Bank of New York study found that credit card delinquencies among sports bettors under 40 jumped 26% after legalization, even in states where betting remained illegal.
Regulatory Challenges and Future Outlook
Prediction-market platforms have employed meme-driven campaigns to attract younger users, but critics warn that these markets can legitimize outlandish bets by framing them in the language of odds and forecasting. Despite the data showing that online betting is not a reliable source of income, 20% of Americans consider it a type of investment, with Gen Z being twice as likely to think so.
Regulatory bodies are grappling with the classification of these prediction-market contracts. The Commodity Futures Trading Commission argues that certain event contracts traded on regulated exchanges function as derivatives under the Commodity Exchange Act, placing them under federal oversight. States and tribal regulators, however, insist that these contracts are gambling by another name, a dispute now headed toward the Supreme Court.
Kalshi, a prominent prediction-market platform, recently shut down its sports injury betting markets following a request from the CFTC. The company had allowed users to bet on the health status of stars like Luka Dončić and Malik Nabers before expanding to broader NFL ‘player availability’ markets. The CFTC had proposed rules in June, stating that companies should not allow bets tied directly to injuries.
Congress has bipartisan bills in the works aimed at setting clearer federal consumer protections, including age verification. Young Kalshi users have traded an estimated $3.9 billion on sports and parlay-type contracts this year, exposing a loophole that allows bettors as young as 18 to wager on sports outcomes years before they would be permitted at a traditional sportsbook.
With football season historically driving the biggest jump in new betting activity, this fall will test how far the trend can run. The 2025 football season saw a 22% year-over-year increase in first-time users, and with college football underway and the NFL season starting, the coming months will be crucial in understanding the future of sports betting as a financial strategy.
