Despite Sports Betting's Popularity, it Shouldn't Replace Investing in the U.S.

It is unquestionably going to be remembered as the defining moment in the history of sports betting in the United States, including the first Super Bowl to feature two brothers, who are on opposing teams.

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In the week leading up to Super Bowl LVII, geolocation tracking firm GeoComply recorded more than 100 million legal wagers. As compared to last year's Super Bowl, this represents a new record.

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According to the American Gaming Association (AGA), more than 50 million American adults will bet legally on the Eagles-Chiefs game this Sunday, a 61% increase over last year. A total of $16 billion was wagered by betters.

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What is the reason for this? DraftKings, FanDuel, and other online sportsbooks are a clear contributors to the increase in online sports betting. More than 30 states plus Washington, D.C. have legalized sports betting since the Supreme Court overturned a 1992 federal law that banned it; several other states are debating its legalization.

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Stock declines predicted for the first six months of 2023 by a record-high percentage of Americans

Inflation and interest rates are increasing stubbornly, and people are disappointed with the stock market's performance over the last 12 months.

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It has been mostly unprofitable to bet on sportsbooks themselves. In the pandemic months, Roundhill Sports Betting & iGaming ETF rallied as locked-down households saved money eating out and attending live events, however, it has since receded since personal savings rates returned to pre-pandemic levels.

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Most Americans now believe that consumer prices will continue to rise this year, and nearly 50% anticipate stock prices falling in the first half of 2023, according to a recent Gallup poll. Since the firm began asking the question more than 20 years ago, this is the highest percentage of people expressing pessimism toward the stock market.

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Many people believe that betting on sports is the only way to grow their money right now. Market volatility and economic uncertainty have understandably damaged people's perception of traditional investing. Approximately 58% of Americans own stocks, which is still a much larger percentage than those who bet on the Super Bowl.

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The Super Bowl did not feature any cryptocurrency ads

Cryptocurrencies also had a turbulent year in 2022, with scandals and upheavals causing the Crypto Index to drop 70%. A number of crypto-related ads aired during last year's Super Bowl, which earned it the nickname "Crypto Bowl".

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It was a remarkable about-face for crypto firms not to advertise during the Super Bowl this weekend. It's amazing how much can change in a year.

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Instead, viewers saw ads for movie studios, food and beverage brands, and automakers.

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During this year's Super Bowl, 30-second commercials cost anywhere from $6.5 million to $7 million, a record. The price of ads has increased by more than 16000% since the first Super Bowl in 1967.

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Tighter lending standards are another indicator of a possible recession

Even though the U.S. jobs market is strong, recession risks are on the rise. According to Piper Sandler, a recession is preceded by three factors: 1) higher interest rates, 2) rising inflation, and 3) tighter lending standards, as the investment banking company pointed out in a recent research note.

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Inflation and rates have received the majority of attention, but tighter bank lending can be just as important. It has continued to increase since the third quarter of 2021 when banks in the U.S. reported tighter lending standards, and according to the latest survey, 45% of banks are slowing down lending rates to businesses.

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It has historically been the case that tighter lending standards coincide with economic downturns; Piper Sandler continues to predict a recession before the end of 2023.

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Thus, it is important to proceed with caution. To state the obvious, sports betting is not the same as investing, and it should not be viewed as a replacement for investing. It takes just seconds to lose your principal betting on a game, and you won't be able to get it back.

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Alternatively, if you refrain from selling at a loss, your stocks' value will decline, but at least you'll break even.