Sports betting used to be a Sunday habit, but for a growing share of Americans—and an even larger portion of Gen Z—it is increasingly resembling a backup financial plan.

New research from the Bank of America Institute shows that across every generation, people see prediction-market contracts as even more investment-like than traditional sports bets. By tracking payments flowing to and from betting platforms, the bank found that customers of all generations recovered less than 75 cents for every dollar they sent in during each month this year. Gen Z recovered more than any other generation, with most getting back over 80 cents per dollar, but still fell well short of breaking even.

The bank found that one in five Americans view sports gambling as an investment tool, and among Gen Z, the figure is two in five. Betting has also become a habit rather than an occasional flutter: separate survey data cited in the report found that nearly a quarter of sports bettors wager daily, and another third do so weekly. Lower-income households made up the largest share of bettors by income group, at 37%, compared with 34% for middle-income and 29% for higher-income households.

First-time betting users in June and July ran more than three times January's level, which the bank attributed to the World Cup and a wave of new prediction-market products. Prediction-market activity jumped to 27% of all legal U.S. sports-betting volume during the World Cup, up from just 9% at the start of the year.

"More people are betting online, and adoption is being driven by younger generations," Bank of America Institute economist Taylor Bowley told Fortune. And for the first time ever, the findings show, it truly is the younger generation driving the change: Gen Z and millennials made up 88% of all betting activity in July, and Gen Z alone accounted for nearly half of that (48%), overtaking millennials as the largest generational share for the first time this summer.

The households doing the betting also have less money to fall back on. Median deposit balances for betting households in 2026 sat at just 59% of those of non-betting households. And despite that thinner cushion, betting households posted stronger card-spending growth in July than non-betting households, in both discretionary and necessity categories.

That also reflects a broader trend of spending growth picking up among younger and lower-income consumers generally, not just those who bet. But a recent Federal Reserve Bank of New York study found credit card delinquencies among sports bettors under 40 jumped 26% after legalization, even in states where betting remained illegal.

Aggressive Marketing

Prediction-market platforms have leaned into meme-driven campaigns built to reach younger users, and warnings from one Gen Z-focused commentator say these markets can "launder" outlandish bets into apparent legitimacy by wrapping them in the language of odds and forecasting.

"Despite our data showing that online betting is not a reliable source of income, 20% consider sports betting a type of investment and Gen Z is twice as likely to think so," Bowley added.

Regulators haven't settled the question either. The Commodity Futures Trading Commission argues that certain event contracts traded on regulated exchanges function as derivatives under the Commodity Exchange Act, placing them under federal oversight rather than state gambling law. States and tribal regulators disagree, insisting that contracts tied to sports and entertainment are gambling by another name—a fight that is now headed toward the Supreme Court as Kalshi tries to defend the industry's legal footing.

Kalshi shut down its sports injury betting markets this week after the CFTC asked it to, days before the NFL season kicked off. The company originally let users bet on the health status of stars like Luka Dončić and Malik Nabers before rolling out a broader set of NFL "player availability" markets. The CFTC had proposed rules in June saying companies shouldn't allow bets tied directly to injuries.

Congress has bipartisan bills in the works aimed at setting clearer federal consumer protections, including age verification. Young Kalshi users have traded an estimated $3.9 billion on sports and parlay-type contracts this year, exposing a loophole that lets bettors as young as 18 wager on sports outcomes years before they would be allowed to at a traditional sportsbook.

The backdrop is an industry that has expanded rapidly since a 2018 Supreme Court ruling struck down the federal ban on state-authorized sports betting, allowing most states to legalize and launch their own markets. That expansion has been fueled by heavy advertising from sportsbooks and, more recently, by prediction-market apps that market themselves with the look and terminology of financial trading rather than gambling.

Football season, which Bank of America defines as September through February, has historically driven the biggest jump in new betting activity—first-time users grew 22% year-over-year during the 2025 season. With college football underway and the NFL season starting on Wednesday, this fall will test how far the trend can run—and how regulators, Congress, and the courts respond as betting becomes further entangled with the language of investing.

This story was originally featured on Fortune.com.