More than half of Gen Z investors redirected money for investing toward sports betting in the past year, according to Betterment's 2026 Retail Investor Survey released this week.
The survey, conducted in April 2026 among 1,000 U.S. retail investors across four generations, found 52% of Gen Z respondents had diverted funds they originally allocated for investing into sports betting. Twenty-six percent of Gen Z now treat sports betting as a deliberate part of their long-term financial strategy.
"When a prediction market or sportsbook starts to feel like a retirement strategy, we have a problem," said Sarah Levy, chief executive officer of Betterment, a robo-advisor RIA managing more than $70 billion in assets. "These products are designed to keep people seeking the next quick score, not to help them build toward the next decade."
Betterment's findings align with a separate January 2026 Northwestern Mutual study, conducted by the Harris Poll among 4,357 U.S. adults. That study found that among respondents who feel financially behind, 32% of Gen Z and 24% of Millennials are currently in or considering prediction markets or sports betting. Roughly 80% of those respondents said high-risk speculative investments would help them reach goals more effectively than traditional models.
"Younger investors deserve access to the tools and information that meet them where they are, but the industry also has a responsibility to be clear about the difference between participating in a trend and building lasting wealth," added Levy.
Betterment's survey found social media is now Gen Z's most commonly cited source for financial news, going from 45% in 2024 to 60% in 2026. That is nearly three-times the 21% of Gen Z investors who cited a financial advisor.
Schwab chief executive Rick Wurster voiced concerns about the blurring of gambling and investing as far back as November 2025. The brokerage giant then entered prediction markets for placing bets on the S&P 500 performance, with Wurster distinguishing between prediction markets on sports versus those that can track perception on inflation or employment figures.
"We'll leave the sports gambling, which constitutes 95% of the prediction markets volume, we'll leave that to the gambling houses— the FanDuels, the DraftKings and the Robinhoods,” Wurster said in a January interview with Bloomberg.
Robinhood has fully embraced offering prediction markets on sporting events. The company processed more than 16 billion event contracts through June 2026, generating $156 million in second-quarter 2026 revenue – up more than 10 times year-over-year. Robinhood now makes more revenue from prediction markets than from stock trades after the company's wagering transactions surged during the FIFA World Cup.
Prediction markets are only available to retail customers in the Robinhood app, they’re not available to RIAs on TradePMR, which is the custodian that Robinhood has owned since 2024. Ryan Frankel, an investor in his 40s, said during Robinhood's TradePMR Synergy Conference in June that he uses the Robinhood app for both investing and betting on sports via prediction markets.
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