The vast majority of financial advisors have no problem with clients enjoying a bit of speculation in their portfolios or perhaps on a Super Bowl wager, as long as the money at risk can be lost with little-to-no long-term financial impact.
That’s why it’s often referred to as “play” money.
But with betting hype ramping up before the big game, wealth managers say the bigger risk isn’t losing a one-time wager but letting gambling behavior creep into investing decisions thanks to the proliferation of sports betting apps and prediction markets.
Joe Harrish, financial advisor at Prime Capital Financial, says most of his clients in the top 1% of income earners rarely place large bets. Even at sporting events, they typically wager only a few hundred dollars per game. They also don’t chase losses or reload, instead setting conservative budgets and sticking to them, according to Harrish.
By contrast, he says he often sees prospects outside the top 1% betting far more than their income supports.
“Those are usually the same people who chase losses with live bets and only make things worse. My rule of thumb with them is simple: If you’d still be mad about losing this bet tomorrow, it’s too much,” Harrish said.
He adds that he is also very direct with clients and prospects in telling them that no one consistently wins at gambling.
“If it’s not fun, it’s time to stop betting and let me invest the bankroll instead,” Harrish said.
Julie Penwell, assistant vice president and financial advisor at Wealthspire, points out to clients that sports betting is high risk by design, and while social media highlights the wins, consistent profits aren’t the norm. In her view, the best way to think about Super Bowl betting is as entertainment or discretionary spending.
“An important question for someone engaging in sports betting isn’t how much they can win, but how much they’re genuinely comfortable losing,” Penwell said.
GAMBLING OR INVESTING?
Chasing gambling losses and panicking during market volatility stem from the same behavioral mistakes, according to Harrish. Those include abandoning structure, increasing risk at the worst possible time, and prioritizing emotional relief over long-term outcomes.
“In both cases, discipline breaks down precisely when it matters most. The irony is that people who manage money well tend to gamble small, while those who gamble recklessly often struggle with investment discipline,” Harrish said.
Wealthspire’s Penwell notes that what shows up in both loss-chasing and market volatility is how people react to the feeling of loss.
“With betting, a loss is real and immediate, once the bet is gone, the money is gone. Market volatility is different because it represents a point in time along a long-term journey. When emotions take over, people tend to shorten their time horizon and make decisions that don’t reflect their long-term intent,” Penwell said.
And while betting and prediction apps may advertise as being data-driven, Penwell points out they are still built around a very small set of potential outcomes tied to specific circumstances. Diversified investment strategies, by contrast, are designed to mitigate concentration risk rather than rely on any single outcome being right.
“The time horizon matters too. Betting plays out over minutes or hours, while long-term investing unfolds over years or decades,” Penwell said.
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