Financial personality Dave Ramsey regularly educates people on how to make good money decisions, but he isn’t afraid to share brutal truths. His recent X post took aim at sports betting companies and the people who place those bets.
Ramsey said that sports betting companies are paying for some of the most expensive ad placements on the planet. However, that money isn’t coming from their savings accounts. Instead, the sports betting companies invest ad dollars that they receive from people who lost bets. Ramsey called this out while putting the mirror in front of bettors.
“You lose your money to them. That makes you a loser,” Ramsey said.
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Sports betting has made a large enough ripple for Ramsey to dedicate an entire post to discouraging people from participating in the industry’s apps. It won’t be the last time criticism around sports betting goes mainstream, either.
The Downward Spiral Of Betting On Things You Cannot Control
Sports betting apps allow customers to make bets on a wide range of outcomes across various sports. The companies then make a percentage of each bet, and with millions of people placing bets, the revenue can add up quickly.
However, that also means a bettor’s losses can grow quickly. Betting on things you cannot control can lead to several troubling scenarios. Bettors who pile up losses early may make more aggressive bets in the future in an attempt to recoup their losses. However, bettors who win early may feel like they are lucky and make more aggressive bets in hopes of repeating their luck.
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This amount of aggressive betting can cause people to fall behind on rent, watch their credit card debt balloon higher, and neglect their retirement accounts. These are three of the many negative outcomes that can sprout from the seed of sports betting.
How Sports Betting Is Different From The Stock Market
Although Ramsey is critical of sports betting, he is an advocate of buying stocks. On the surface, the two routes may look similar. Sports betting and stock investing both involve betting on a particular outcome and making money if you are correct.
However, the similarities end there. Investors can look at a company’s fundamentals, assess if they like the core parts of the business, and stay put for several years or decades before selling. Sports bettors don’t have time as a luxury. The desired outcome must take place immediately, similar to an options trader who is riding a call into earnings that expires on the next day.
Sports betting doesn’t even give you any of the tax breaks that you can get from stocks. The wins from sports betting are treated as ordinary income, which results in a less favorable tax rate than a stock’s long-term capital gains. Stock investors can also defer their taxes indefinitely if they simply hold on to their shares. That option doesn’t exist for sports bettors.
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The House Always Wins
Sports betting companies can only stay in business if they make more money than they spend on advertising. They only do that with sports bettors who regularly place bets and lose a percentage of every bet to the sportsbook.
Ramsey alluded to a well-known truth in the gambling industry that the house always wins. Many sports bettors think that they are the exception to the rule, but most people end up losing. Researchers from the UC San Diego Rady School of Management recently concluded that 96% of gamblers lose money in gambling, and this came from a study of 700,000 gamblers.
The study went on to mention that some households spend more than 10% of their income on gambling and that low-income households are especially vulnerable. Most people know that sports betting isn’t the best place for your money. A concrete look at the numbers highlights this fact and explains why Ramsey went off on sports bettors.
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This article Dave Ramsey Lashes Out Against Sports Betting And Its Participants: ‘You Lose Your Money To Them. That Makes You A Loser.’ originally appeared on Benzinga.com
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