As football season kicks into high gear, I know some of you here in Missouri may be chomping at the bit to place a wager on your favorite team, especially with sports betting set to become legal in our state on December 1.
It’s been remarkable to watch how quickly sports betting has entered the mainstream. After two recent announcements made within 24 hours of each other caught the attention of both Wall Street and Las Vegas, the lines are becoming increasingly blurred between what we once viewed as quantitative trading and what some might call degenerative gambling.
First, the investment trading platform Robinhood announced it would begin offering event contracts tied to college and professional football. Just a day later, FanDuel, one of the biggest names in sports betting, revealed plans to offer its users event contracts on financial products such as stocks, bitcoin, oil, and gold.
In other words, the stock-trading app wants to let users bet on games, and the sports-betting app wants to let users bet on markets.
These so-called event contracts, sometimes referred to as prediction markets, are simple yes-or-no wagers on specific outcomes. For example: Will the Chiefs win on Sunday? Will gold finish the day above $3,700 an ounce? Etc.
Each contract trades between $0 and $1, and the price reflects the market’s perceived odds. If a “yes” contract trades at $0.60, the market implies a 60% chance the event will happen. If it does, the contract settles at $1.00; if not, it expires worthless.
This push into event contracts represents a convergence of two fast-moving industries: retail investing and online betting. Both are chasing engagement from younger, app-based users who crave quick outcomes and fast money.
Since both Robinhood and FanDuel generate most of their revenue from transaction fees, the more people trade, the more they make regardless of whether users win or lose. While these new products may sound exciting, they highlight a broader cultural shift toward speculation over stewardship. Whether it’s betting on your favorite team or betting on next week’s oil price, the common thread is the temptation to make easy money quick.
This, in my opinion, is the antithesis of what true investing is. Investing is about purposeful decision-making and long-term discipline. Markets, like sports teams do have their ups and downs, but lasting success comes from patience, planning, and perspective; not guessing more coin flips right than wrong.
What concerns me most about these new forms of betting is that they add a sense of legitimacy to something that remains inherently illegitimate. At the same time, they risk undermining the time-tested principles of real wealth building. Don’t be fooled, gambling is still gambling, no matter what you’re betting on.
(Past performance is no guarantee of future results. The advice is general in nature and not intended for specific situations)