Investing and Gambling

Published On: May 22, 2026

Written by: Ben Atwater and Matt Malick

Today, we address a timely and important money trend, the proliferation of gambling which can blur the lines between investing and speculation.

We have reached a curious moment. Since a 2018 Supreme Court decision that effectively ended a federal ban on sports betting, the legal sports betting market has become a behemoth, with a record $165 billion wagered in 2025—an 11% increase over 2024.

Simultaneously, the emergence of prediction markets has seen monthly transaction volumes surge from $1.2 billion in early 2025 to over $20 billion per month in early 2026. While proponents argue these markets provide “price discovery,” we see yet another distraction from fundamental wealth creation.

We often remind clients that the stock market is not a casino, provided you respect the time commitment necessary for success.

Gambling is a zero-sum game. In prediction markets, high turnover and the “rake” of bid-ask spreads create a formidable hurdle. Furthermore, the average sportsbook win rate reached a record 9.7% in 2025, meaning the house is more efficient than ever at extracting value from participants.

Investing is a positive-sum scenario. Historically, the S&P 500 has posted positive returns in 73% of all calendar years since 1926. More importantly, for the 20-year period ending in 2024, the S&P 500 returned 10.35% annually. Over such horizons, the probability of a positive outcome has historically approached 100%.

The danger of 24/7 gambling and prediction apps is that they hack the brain’s reward system, prioritizing an immediate payout over delayed gratification. This behavioral friction has a steep price: a 2025 DALBAR study showed that the average equity investor underperformed over the last 20 years due to emotional “market timing.”

Additionally, short-term speculation is a tax disaster. The government taxes gains from assets held less than a year – or winnings from bets – as ordinary income, with rates as high as 37%.

In contrast, the disciplined investor benefits from long-term capital gains rates of 20% or less, a structural advantage that compounds significantly over time.

Our role as your advisors is to function as a behavioral anchor. We are interested in the long term and in risk management. We are interested in the durability of your cash flow. By avoiding “casino fixation,” we stay focused on what drives wealth:

1. Diversification: Spreading our bets across asset classes, particularly ones that are significantly cheaper than the S&P 500.

2. Cost Control: Minimizing the headwind of high turnover, which leads to unnecessary taxes.

3. Behavioral Alpha: Refusing to treat a retirement nest egg as a stack of chips.

As the world becomes more obsessed with the “next bet,” we remain committed to the next twenty years. Thank you for your continued trust in our disciplined approach.

Disclosure: Regulators could view this communication as marketing / advertising. This commentary is written by Ben Atwater and Matt Malick and reflects only their opinions and viewpoints. Atwater Malick, LLC sources facts, figures, quotations, etc. from what they believe are reliable sources, but they cannot guarantee their reliability. In addition, this essay makes no claims as to investment performance – past, present, or future. For additional important disclosures, please click here.