A growing number of Gen Z adults are treating sports betting as an investment strategy, prompting financial experts to warn that gambling winnings do not contribute to future Social Security benefits.
More than half of Gen Z respondents (52 percent) reported using investment dollars for sports betting at least once in the past year, according to a Betterment Retail Investor Survey of 1,000 investors that was conducted between March 27 and April 3, 2026. Of that 52 percent, 14 percent said they redirected their investments to sports betting multiple times a month. When it comes to other generations, the poll found that 31 percent of millennials surveyed have redirected investment dollars towards it at least once in the past year, compared to 10 percent of Gen X and 4 percent of baby boomers.
While successful bettors may owe taxes on their winnings, those gains generally do not count toward the earnings history used to calculate Social Security retirement benefits.
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“What worries me is what the betting money replaced,” Michael Ryan, a finance expert and the 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.”
Experts note that the shift occurs amid an already uncertain retirement landscape for young Americans. Because Social Security benefits are based largely on a worker’s lifetime earnings record, individuals who spend years generating income through activities that do not qualify as covered earnings risk receiving lower retirement checks later in life.
Gen Z has embraced online sports betting in record numbers following legalization across the United States.
“That could become incredibly important, as dollars not invested in your twenties don’t just disappear today,” Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek. “They could lose 40 or 50 years of potential growth, and research is already connecting expanded online betting with lower investment and greater debt.”
Why Gambling Winnings Don’t Help Social Security
The Internal Revenue Service (IRS) requires recreational gamblers to report gambling winnings as taxable income, including sports-betting gains. However, the Social Security Administration (SSA) tracks a different category of earnings.
Social Security benefits are based on covered wages from employment and net earnings from self-employment that are subject to payroll taxes. Recreational gambling winnings generally fall into neither category.
As a result, a bettor can owe federal income taxes on a large jackpot while receiving no corresponding boost to their Social Security earnings record.
“Sports betting itself isn’t going to bankrupt Social Security, but gambling winnings generally don’t build a worker’s Social Security earnings record, and a generation entering retirement with inadequate private savings would become even more dependent on a program already facing serious funding challenges,” Beene said.
What Would $100,000 in Winnings Look Like?
If someone earned $100,000 from sports betting during a single year, none of it would count toward their Social Security retirement benefits later on. However, if they earned a $100,000 salary from a traditional job, the income would be included in Social Security’s benefit formula.
Because Social Security calculates benefits using a worker’s 35 highest years of covered earnings, adding a $100,000 earning year could eventually increase retirement benefits by roughly $36 to $76 per month, depending on the worker’s earnings history.
And this sort of benefit hit could be especially felt by Gen Z, experts say.
“Gen Z is truly at an impasse. They are dealing with structural unemployment and a high cost of living, which leads them and others to seek fast gains and take on higher risks,” Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek. “The main downside for Gen Z is potentially having less Social Security income to rely on. Many already feel Social Security won’t be there for them by the time they retire, so the mentality becomes: Why bother?”
When Betting Becomes a Business
There is an important exception to these rules.
People who qualify as professional gamblers may be able to report gambling activity as self-employment income. The IRS permits professional gamblers operating as a trade or business to file Schedule C, and the SSA may recognize those earnings as self-employment income subject to Social Security taxes.
In that scenario, gambling income could generate Social Security credits and future retirement benefits. But whether a bettor qualifies depends on how frequently they bet as well as the records they keep.
“If Gen Z truly believes Social Security won’t be around in the future, you may see more people start businesses and use structures that combine W-2 wages with business distributions,” Thompson said.
Financial advisers have generally stressed that Social Security was designed around traditional employment and payroll tax contributions. So, while sports betting may generate an occasional windfall, it does not replace the value of steady covered earnings when it comes to building retirement security.
What Happens Next
With sports betting becoming more mainstream, retirement experts are paying closer attention to how younger Americans earn and think about money.
For now, Gen Z workers should know that winning a large sports bet can improve a bank account today, but it is unlikely to increase a future Social Security check.
“Social Security was never supposed to do the whole job. If younger people reach retirement with less private savings because gambling got mentally filed under ‘investing,’ Social Security doesn’t get weaker,” Ryan said. “They become more dependent on it.”
Newsweek’s reporters and editors used Martyn, our AI assistant, to produce this story. Learn more about Martyn here.
Contact Newsweek editors for this story: Jason Lemon and Anthony Murray.