Just in time for football season to start, the state of Kansas legalized sports betting for both residents and non-residents alike this past week. Since this is a money column, I thought it would be only appropriate to speak on the topic of sports betting. I won’t comment on the morality of betting on sports in the column today. Only the wisdom of doing so.
According to the National Council of Problem Gambling, since 2004 the number of Americans that have placed a legal bet on a sporting event has quadrupled from 14 million to more than 57 million. With the rapid growth of online sports betting through apps like Fanduel or Draftkings these numbers are expected to grow even higher as more and more states legalize this form of gambling.
Sadly, according to this same group, the number of sports betters who meet the clinical criteria of someone with a gambling disorder are as high as 16%. With sports betting gaining in popularity, it is only reasonable to assume the negative effects that come with addiction will also increase.
The State of Oregon recently completed a study on the impact gambling addiction has on a variety of other social issues. It found that those with a gambling addiction are 15 times more likely to take their own life than the general population. The same study also found there is a strong correlation between gambling and crime with nearly 13% of those incarcerated reporting suffering from a gambling problem. It also found up to 20% of those who develop a gambling addiction will declare bankruptcy, and significantly increases the instances of divorce and domestic violence for couples where one or more struggle with gambling addictions.
I’m not saying placing a few bets on the Chiefs or the Royals is going to result in you divorced, homeless or worse. However, I am saying you need to recognize the potential danger these types of activities pose particularly if they start to become too habitual.
I know some people who gamble regularly, and one of the ways they justify their behavior is by saying it’s no different than playing the stock market. It is true that technology and no cost trades have led to an increase in those actively day trading within their accounts.
However, that type of extreme short-term buying and selling is not investing. I don’t know of any investment professionals that perform, or even condone that type of risk-filled trading inside of client accounts. Investing involves a long-term strategy in a well-diversified portfolio model that has a historically sound track record of success.
Is there risk in investing in the stock market? Of course. But that kind of risk is usually measured, intentional, and done in a way that has a significantly better than 50/50 chance of success.
In my opinion, any such comparison between these two activities is at best ignorant, and at worst fraudulent. These sportsbook companies know how addictive the services they provide are. That’s why this past Sunday the sportsbook industry was all over the TV offering hundreds of dollars of free wagers to entice the viewer to sign up for their app. They are betting you won’t stop once the free money has been used up, and soon they will have a customer for life.
My advice to you is to say no thank you to the sportsbook providers. Hoping your team wins is stressful enough without your financial future depending on it.