Investors have been making money with stocks for centuries, ever since the Amsterdam stock exchange was created in 1611. Investors initially had access to only the Dutch East India Company, but financial markets have grown substantially over the years, offering more investing choices.
However, more isn’t always better, and there’s a new trend that is replacing the stock market. It’s not a good one for your money, according to money expert George Kamel.
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In a recent video, Kamel explained this new trend and highlighted how bad it can be for young investors.
Sports Betting Is Replacing the Stock Market
According to Kamel, sports betting is replacing the stock market.
Sports betting used to be difficult. You had to jump through several hoops and operate under the radar, but it’s now become legal in many states and very easy to access.
In his video, Kamel listed several concerning statistics about how sports betting has hurt investors. He cited a study that found net investments decreased by 14% in states that have legalized sports betting. Furthermore, people waged more than $120 billion in sports bets last year. That’s a large increase from the $6.6 billion that people waged five years prior, as reported by Money.
Additionally, sportsbook companies, like DraftKings and FanDuel, generated a combined $11 billion in revenue last year from Americans alone.
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Why Is Sports Betting Gaining Traction?
Kamel mentioned addictiveness, accessibility and the fear of missing out (FOMO) as three critical reasons sports betting is replacing the stock market.
Gambling is very addictive for people who get started. And that’s further compounded by its accessibility. Instead of having to drive to a casino, sports bettors can download an app on their smartphone. Plus, smartphones are also built to be addictive.
Sports betting combines two highly addictive things together, making it more difficult to resist or escape. Even worse, there is a FOMO element. Every time someone wins big with a sports bet, others may feel like they can be the next winner.
How Much Money Do People Lose From Sports Betting?
These factors can keep gamblers going even when their losses pile up. But lost bets aren’t the only losses bettors are facing.
Kamel pointed to a correlation between more sports betting and higher credit card debt. Sports betting also goes hand in hand with higher overdraft fees and a disproportionately negative impact on financially vulnerable homes.
While the total cost of sports betting varies for each person, it’s even worse when considering where your money could have gone. Half of online sports bettors are young men who are 23 to 34 years old, and Kamel used that age range to present a compelling case for stocks.
The financial influencer ran through an example of what would happen if a 24-year-old invested $200 per month into the stock market. He used this number since sports bettors tend to spend $100 to $250 per month, on average.
According to Kamel, investing $200 per month at 24 would leave the investor with more than $2 million in their portfolio by age 65. That’s the power of compounded growth. Starting with the same $200 per month contribution at 34 leaves the investor with a portfolio of roughly $600,000 at age 65. While investing early and often leads to the most compounding, the 34-year-old in this example still ended up with a respectable nest egg.
The breakdown of compounded returns demonstrates that the total losses from sports betting aren’t just the ones that appear on paper. They prevent bettors from accessing compounded returns from the stock market in addition to exposing them to credit card debt and overdraft fees.
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This article originally appeared on GOBankingRates.com: George Kamel Says This Trend Is Replacing the Stock Market — and It’s Not Good
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
