Many Gen Z adults are increasingly viewing sports betting as an investment strategy. Financial experts caution that gambling winnings do not add to future Social Security benefits. A Betterment Retail Investor Survey conducted in early 2026 revealed that 52% of Gen Z respondents engaged in sports betting with investment funds at least once in the past year. Of these, 14% redirected investments to betting several times monthly.
Other generations show different trends. Among millennials, 31% admitted to using investment dollars for betting at least once last year. This compares to 10% in Gen X and 4% in baby boomers. Winnings from successful betting may be taxable, but they typically do not factor into the earnings history for Social Security benefits.
“What worries me is what the betting money replaced,” Michael Ryan, finance expert and founder of MichaelRyanMoney.com, told Newsweek. “If it was money that would have gone into a Roth IRA, 401(k), brokerage account, or even an emergency fund, the loss isn’t just today’s bet. It’s potentially 30 or 40 years of compounding that never happens.”
This shift occurs amid an unpredictable retirement landscape for young Americans. Social Security relies heavily on a worker’s lifetime earnings record. Those who generate income from non-covered activities risk lower retirement checks later in life.
With sports betting legalized across the U.S., Gen Z has engaged more than ever. “That could become incredibly important, as dollars not invested in your twenties don’t just disappear today,” Alex Beene, a financial literacy instructor, explained to Newsweek. “They could lose 40 or 50 years of potential growth.” Research links expanded betting to reduced investment and increased debt.
Tax Implications and Social Security
The IRS requires gamblers to report winnings as taxable income, which includes sports betting. However, the Social Security Administration (SSA) uses a different earnings category. Social Security calculations rely on covered wages and self-employment earnings subject to payroll taxes. Recreational gambling winnings generally do not qualify.
“Sports betting itself isn’t going to bankrupt Social Security,” Beene noted, “but a generation entering retirement with inadequate private savings would become even more dependent on a program already facing serious funding challenges.”
The Value of Traditional Earnings
If someone earned $100,000 from sports betting, none would contribute to Social Security benefits. In contrast, a $100,000 salary from regular employment would be included in Social Security’s benefit formula. Social Security determines benefits using the 35 highest years of covered earnings. Adding a $100,000 earning year could increase retirement benefits by roughly $36 to $76 monthly, depending on the individual’s earnings history.
For Gen Z, this could mean a noticeable impact. “Gen Z is truly at an impasse,” Kevin Thompson, CEO of 9i Capital Group, said. “They are dealing with structural unemployment and a high cost of living.”
Professional Gamblers and Social Security
Professional gamblers may consider gambling as self-employment income, allowing them to file a Schedule C with the IRS. In this case, gambling income could generate Social Security credits and future retirement benefits. The SSA might recognize earnings as self-employment income subject to Social Security taxes.
“If Gen Z truly believes Social Security won’t be around in the future,” Thompson stated, “you may see more people start businesses and use structures that combine W-2 wages with business distributions.”
Financial advisers emphasize that Social Security was designed around traditional employment. While sports betting can provide occasional gains, it does not replace the value of consistent covered earnings in building retirement security.
The Path Ahead
As sports betting becomes more mainstream, experts focus on how younger Americans perceive and earn money. Currently, Gen Z should understand that winning a large sports bet may improve today’s bank balance, but it’s unlikely to enhance future Social Security benefits.
“Social Security was never supposed to do the whole job,” Ryan said. “If younger people reach retirement with less private savings because gambling got mentally filed under ‘investing,’ Social Security doesn’t get weaker. They become more dependent on it.”
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