The Normalization of Gambling
From Illegal to Unavoidable: How America Learned to Love the House
It’s been some time since my last post. As I mentioned previously, I have already published the most important advice on financial independence and I don’t want to remix my existing words pretending to offer new insights. Instead, I’ve been traveling extensively and having conversations with strangers as I mine for new topics. Recently, I found one. I met someone deep in gambling debt who had never been to a casino. Instead, the casino came to him.
In 2024, the American gambling industry generated $71.9 billion in revenue. That’s the aggregate amount American bettors lost. Seven years earlier, sports betting was illegal in 46 states.
This is one of the fastest wealth transfers in American history, and most people don’t recognize it for what it is.
Let me be direct: gambling is one of the most reliable ways to destroy your path to financial independence. Math doesn’t care about your “system” or how well you know football. The house always wins. Always.
This isn’t about morality. I don’t care if you drop $20 on the Super Bowl. This is about recognizing a wealth transfer from your pocket to corporations that have studied your psychology and designed products to exploit it.
Act I: Daily Fantasy Sports and “Skill Gaming” (2012-2018)
The modern gambling story starts with daily fantasy sports (DFS).
The pitch was clever: this isn’t gambling, it’s a skill game. You’re not betting on outcomes, you’re competing against other players by drafting the best lineup. A 2006 federal law had specifically exempted fantasy sports from gambling restrictions, creating a loophole big enough to drive billions of dollars through.
DraftKings and FanDuel emerged as the dominant players, controlling 95% of the DFS market by 2015. They raised enormous sums from major companies: DraftKings got $250 million from Disney/ESPN while FanDuel secured backing from Comcast and NBC Sports. NFL team owners Jerry Jones and Robert Kraft became DraftKings investors.
Then came the advertising blitz.
From January through October 2015, DraftKings and FanDuel spent a combined $206 million on advertising. In September 2015 alone, they spent $107 million on television ads, nearly half during NFL broadcasts. They were outspending Warner Bros. and AT&T despite having a fraction of the revenue.
The ads were everywhere. Between every series of downs. During every commercial break. At every stadium.
Here’s what the companies knew but didn’t advertise: a tiny group of sophisticated players was dominating everyone else. An ESPN investigation revealed that in some contests, 91% of winnings went to just 1.3% of players. Company executives admitted on message boards that they were spending heavily on advertising specifically to attract inexperienced players to be cannon fodder for the profitable “grinders.”
One FanDuel executive explained the strategy: recruit thousands of new players “presumably with less experience and expertise” to make the platform “attractive for those who profit.”
Translation: they needed fresh money to feed the sharks.
State attorneys general started investigating. New York effectively banned both platforms. The industry nearly collapsed.
It didn’t, because something bigger was coming.
Act II: Sports Betting Goes Mainstream (2018-Present)
For decades, federal law banned sports betting in 46 states. Only Nevada, Delaware, Montana, and Oregon were exempted.
New Jersey wanted in. The state spent years fighting in court, arguing the federal ban unconstitutionally dictated state law.
On May 14, 2018, the Supreme Court agreed. In Murphy v. NCAA, the Court struck down the ban 7-2. Justice Samuel Alito wrote that while sports gambling is controversial, “the choice is not ours to make.”
The floodgates opened.
As of November 2025, 38 states have legalized sports betting. Americans legally bet $149.9 billion on sports in 2024 alone.
DraftKings and FanDuel pivoted seamlessly from daily fantasy to full sportsbooks. The advertising intensified. In 2023, FanDuel spent $157.7 million on television advertising. DraftKings spent $123 million. Combined with BetMGM and others, the industry spent nearly $1 billion on marketing.
You cannot watch professional sports in America without being solicited to gamble.
The Human Cost
Let me give you some numbers these companies don’t put in their ads.
The National Council on Problem Gambling estimates that 2.5 million American adults meet the criteria for severe gambling addiction. Another 5-8 million have mild to moderate gambling problems. The annual economic cost (covering healthcare, job loss, and criminal justice) runs $6-7 billion.
But here’s where it gets alarming:
Gambling addiction risks grew 30% between 2018 and 2021. The increase is concentrated almost entirely in one demographic: young men aged 18-24.
According to the National Council on Problem Gambling, young males who bet on sports are at the highest risk of developing gambling problems. Nearly half of American men under 50 now have an online sports betting account.
Why young men? It’s partly physiology, The prefrontal cortex, which controls impulse regulation, doesn’t fully develop until around age 25. It’s partly culture. Sports betting has been normalized among friend groups. It’s partly design. The apps use techniques borrowed from social media to maximize engagement.
A former FanDuel employee explained the targeting explicitly: “Anybody under twenty-five they have their eye on... [those are] the guys that bring you all the money.”
The consequences show up in the data. Florida’s gambling addiction hotline saw calls increase 138% in one month. New Jersey’s gambling addiction prevalence is more than three times the national average. Almost one-quarter of gambling helpline calls now involve suicidal ideation. That’s a 50% increase from the previous year.
The average problem gambler enters treatment with $40,000 in debt. Some studies show that 19% of problem gamblers attempt suicide. That’s the highest rate of any addiction.
Act III: Prediction Markets and “Investing” (2020-Present)
Just when you thought we’d reached peak gambling normalization, allow me to introduce Kalshi and Polymarket, where gambling is rebranded as investing.
Kalshi received federal approval from the Commodity Futures Trading Commission (CFTC) in 2020, becoming the first federally regulated exchange for “event contracts.” Polymarket launched on blockchain.
The pitch: prediction markets aren’t gambling. They’re financial instruments that help “hedge risk” and produce “valuable price discovery.” You’re not betting on elections, you’re trading derivatives.
During the 2024 presidential election, Polymarket processed $9 billion in trading volume. Kalshi generated over $500 million on election contracts alone. These platforms called the election outcome more accurately than most polls, which gave them enormous credibility.
But here’s the reality check:
Sports now represents 75% of Kalshi’s trading volume. The company recorded $513 million in trading volume during March Madness and $728 million in a single week in September 2025, nearly matching its peak election week.
Kalshi is available in all 50 states because of its federal CFTC regulation, unlike traditional sports betting, which requires state-by-state licensing and typically a minimum age of 21. Kalshi’s minimum age is 18.
The company actively recruited college students in late 2025, seeking student ambassadors and starting Kalshi clubs at universities before backing off after scrutiny. Robinhood launched a prediction markets hub powered by Kalshi in March 2025. Google announced it will integrate Kalshi and Polymarket predictions into its finance tools.
Is there legitimate hedging use for prediction markets? Sure. A company could use them to hedge against adverse policy outcomes. But let’s be honest: the vast majority of users are gambling on sports and politics, and the “event contract” framing is regulatory arbitrage that lets the industry sidestep state gambling laws.
It’s the DraftKings “skill game” argument all over again, with fancier terminology.
Why This Matters for Financial Independence
Gambling, whether you call it sports betting, daily fantasy, or prediction markets, is a direct wealth transfer from you to corporations. The house edge varies by product, but it’s always there. Over enough bets, you will lose.
This is the opposite of investing. When you buy an index fund, you’re acquiring ownership of productive assets that generate earnings over time. When you place a bet, you’re paying for entertainment with a negative expected return.
The math is not kind:
If the average American spends $500 per year gambling (the current per capita figure) and invests it instead at a 7% real return, over 20 years that’s approximately $21,000 in wealth creation. Money working for you rather than against you.
But the dollar cost isn’t even the main problem.
Gambling hijacks the same brain circuits as drugs and alcohol. The variable reward schedule (sometimes you win, usually you lose) is the most addictive reinforcement pattern known to psychology. Once that pattern takes hold, rational financial decision-making goes out the window.
The pursuit of FI requires patience and delayed gratification. Gambling addiction destroys both.
And the industry is designed to create addiction. The apps use the same dark patterns as social media: push notifications, streaks, “risk-free” bets that psychologically minimize the stakes. These aren’t bugs. They’re features.
What To Do About It
I’m not going to tell you never to gamble. But I am going to tell you to be honest about what it is.
It’s not investing. The terminology of “event contracts” and “prediction markets” is designed to make gambling feel sophisticated. It’s not.
It’s not skill. Yes, poker and sports betting have skill components. The house still wins over time. If you’re not a professional, you’re the product.
The advertising works. You’re not immune to marketing psychology because you’re smart. The “risk-free bet” offers are customer acquisition costs. They know you’ll lose more than the bonus.
The apps are addictive by design. If you find yourself checking lines compulsively, feeling mood swings based on outcomes, or thinking about gambling when you should be doing other things, those are warning signs.
Personally, I treat all gambling purely as entertainment and assume I will lose anything I put at risk. That mental framing prevents chasing losses and keeps the budget fixed. If you must gamble, adopt the same mindset. When the money is gone, stop.
Better yet: take the money you’d spend on DraftKings and put it in VTSAX. That’s a bet where the house advantage works in your favor.
The Bottom Line
In fifteen years, gambling went from mostly illegal to unavoidable. Daily fantasy exploited a legal loophole. Sports betting went mainstream after the Supreme Court struck down the federal ban. Now prediction markets are rebranding the whole thing as “investing.”
Each phase made gambling more accessible and more sophisticated in its targeting. Each phase promised that this version was different: more skillful, more legitimate.
The house edge never changed.
Financial independence requires you to be honest about where your money goes and why. Gambling platforms are engineered to prevent that honesty.
If you want to reach FI, the smartest bet is not to play.
Until next time,
Max