Pod Insights Money Guy Show Financial Advisors React to INSANE Sports Betting Takes About this episode We've had SO MANY financial mutants sending us social media videos about sports betting. From astronomical losses to con artists selling courses, you want to hear Brian and Bo's take and now you can!
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Transcript 3,797 words · 11 speakers
Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:00 Speaker 00 I talked to my dad a little bit. I had to be like, I don't have any money. You know what I mean? Because I did genuinely lose a lot of my money I had.
0:10 Brian Preston? Hey, hey, hey. Welcome to another react show from the Money Guy Show. I asked the team, I said, what have you all put together for us? They said, Has to do with Spider-Man, I think. Hey, it's something to do with sports betting.
0:23 Speaker 02 Brent, I am so excited about this because sports betting has taken the world by storm. But is it a sound financial decision for you? Let's dive in and see what the internet has to say.
0:34 Speaker 03 For every dollar that you put toward sports betting, household reduces their investment or their investing behavior by $2.
0:43 Brian Preston? Is that real?
0:43 Speaker 03 You're wondering, okay, so why is there that doubling effect? $1 wager, but it's $2 out, right? That's because we spend more when we bet on sports. We spend more on streaming services. We spend more at the bar when we're watching games with friends. And so not only are you putting that $1 towards the sports wager, but you're also spending more money out of pocket. That study also found that you overdraw on your bank accounts more. And for financially vulnerable households, they increase their credit card debt and then they make smaller credit card payments.
1:18 Brian Preston? You will see people that are looking at this as a solution. When not entertainment, and if you looked at the odds, you'd know what a fantasy it is. But I can't, I can completely buy into the fact that there's a lot of negativity, that people are replacing good behavior with really bad habits when it comes to gambling.
1:39 Speaker 02 Yeah, if you're going to make bad financial decisions, bad financial decisions are going to have bad financial consequences. So naturally, if you're doing something like sports betting and you're going out to a bar to do it and you're buying drinks. Yeah, those things are going to cost more money. It just, it gets exacerbated when you're also gambling and something that's highly addictive. So I'm not surprised at all to see that those who participate in sports betting, spend more money. But I don't know that it's the spending more money that's the problem. I think it might be the gambling that is actually the problem.
2:10 Brian Preston? I always remind everybody, make the good habits as easy as possible. So that way you automate your investments and your savings. So you're actually paying yourself first. And then to make the bad habits that much harder, use vacation money, not your eating money. That's, that's the big thing I think people are messing up when they're putting this gambling money front and center. And that, not everything in life should be a Hail Mary where that's the only way you're going to win.
2:32 Speaker 04 Six days ago, I paid a pro sports better to make me rich.
2:37 Speaker 04 And for only $29, I can follow his bets for seven days. So let's deposit $1,000 into a betting account and see how much money we make. On day one, he sent me bets for NBA and tennis and we made a profit of $277. On day two, we made another 53 bucks, bringing our profit to $310. But on day three, we got drained all the way back to $1,010, which is basically where we started. On days four, five and six, we basically made no money. And just as I was about to give up on our final day, this happened. Okay, we just need Steph Curry to hit one more rebound to lock in a profit of $300.
3:10 Brian Preston? They're betting parlays and stuff.
3:18 Speaker 02 Emotional roller coaster.
3:19 Brian Preston? Good on whoever is out there selling their bets and there's a big enough market that people are willing to pay for that?
3:24 Speaker 02 That's what I'm, what I'm recognizing here is it's not that the better is so good at betting. It's that he's created this incredible business where he can convince other people that they should pay him just to follow the bets he's making. I would be willing to wager that he makes more selling your ability, selling your ability to watch him bet than he actually makes gambling his own money. He created a business around it, not actually doing the gambling itself.
3:51 Brian Preston? I think of all the intent, just being very intentional about the fact you go hire a monthly service to get these persons bets. You're actually taking the effort and the time to go follow these bets, to place the bets. There seems to be a law, a very high hassle factor involved with this. I would much rather use that time, use that money, use that energy towards things that I feel like are much more on the surefire way to build wealth. Then that that's speculating. I just, that's not my way. I know small decisions today can lead to big results, but you just gotta make sure that they're good, they're the healthy behaviors that are actually going to build the wealth for you. And that's why we love the Financial Order of Operations.
4:32 Speaker 02 It's a little unclear to me. He said that you paid him and you could follow his bets for seven days and the day before the last day, they actually lost all their money. It was only because they had one more day, one more bite at the apple, they might have their money back. What if their seven days would have started a day earlier? They would have been unlucky. It's all surprise gambling.
4:49 Speaker 05 When's the last time you've been to the casino?
4:51 Speaker 06 Three weeks ago.
4:52 Speaker 05 And when's the next time you're going to the casino?
4:54 Speaker 06 Like, I'll leave here and go.
4:55 Brian Preston? Oh, no.
4:56 Speaker 05 No. You're coming from this show and going to the casino. How much did you lose last time you went to the casino?
5:02 Speaker 06 My budget for the casino.
5:04 Speaker 05 Budget? You have debt?
5:05 Speaker 06 I knew you were gonna say that.
5:07 Speaker 05 How much did you spend last time at the casino?
5:09 Speaker 06 $1,000. It's not a lot. At the roulette table, they're like thousands of dollars.
5:13 Speaker 05 Who cares what other people are doing? A thousand dollars is a lot of money.
5:16 Speaker 06 I just put like $20 in slot machines.
5:18 Speaker 05 Yeah, but a thousand dollars is a lot of money.
5:21 Speaker 06 For the whole time.
5:21 Speaker 05 You thinking a thousand dollars is not a lot of money is why we're in $216,000.
5:26 Brian Preston? Goodness gracious.
5:27 Speaker 06 Have a little to do with it.
5:29 Brian Preston? So this is why I think casinos are very good at getting you to do is that you give them real money that fills, I mean, you see the bills, you know what it feels like, $100, $200, $1,000, and they give you these chips that feel disconnected from the reality of what you just gave them. So that way, when you start gambling and you're doing roulette, in her example, it just feels like you're throwing a few chips out there. But if you started thinking about in terms of, would I actually spent, put 25, would I put $50 for one spin of this wheel and what that could do? That could be a meal. That could be some groceries. I think if you actually brought it back to the reality of what it was, you would not
6:14 Brian Preston? Just be so carefree with, with the way you disconnect from what that money actually is.
6:20 Speaker 02 This is gonna sound cold and callous, but for the amount of debt that she has, she should be nowhere near a casino. Cause even though in her mind a thousand dollars was a very small sum of money, she is very much, at least in step three of the financial order of operations. Step three is high interest debt. And that's what she had going on. That thousand dollars ought to be used to satisfy that high interest debt, not be going to the casino. She is literally digging a hole that is deeper and deeper and deeper that she will never be able to get out of.
6:48 Brian Preston? But this is what desperate decisions make you do. You realize, hey, if I do normal behaviors of like using that thousand dollars to pay down the debt, it's not gonna do much in my $200,000 of debt. So it leads to the desperate decisions to say, but if I swing for the fences and I hit it, I will answer all my prayers. That's where they get you guys. Don't you see the mind tricks that are going on there? Is that you, and the odds of that happening are so just miniscule. And that's why they have these beautiful casinos. That's why you see all the advertising. They have built this charade for you and all of us keep falling in this trap.
7:25 Speaker 00 Liam and I are 21, so we can't use like FanDuel or any of these, but there are ways to bet when you are 18. I have a couple of friends who like use like their dad's email on FanDuel.
7:37 Brian Preston? But you see some downsides?
7:39 Speaker 00 Yes, there are definitely a lot of downsides. But do you remember when I was betting on Mexican league winner baseball?
7:45 Brian Preston? Oh goodness.
7:46 Speaker 00 Me and Liam were in the library once and I was like, dude, I can't study anymore. I have to do something else. And then I, I went to fliff and I bet on Mexican league baseball.
7:55 Brian Preston? You'll spend the presidency.
7:56 Speaker 00 I, I was this close to betting on, on who's gonna win the president. I talked to my dad a little bit. I had to be like, I don't have any money. You know what I mean? Cause, cause I did genuinely lose a lot of my money I had.
8:08 Brian Preston? This is a compulsion.
8:09 Speaker 02 This is sad.
8:09 Brian Preston? Well, it gets into addiction status when you see people making, just betting on anything. I mean, how many movies have you seen on gambling where you see that behavior? And this is why they always, at the end of any advertisement with gambling, they always have that 1-800 number is because there are, there is a group of people that just don't have the stop button. And that's, that's, that's an issue. And that's, that's something that is the dark side of this thing that we have made into in America is some fun behavior that you can go and just dabble in it and you'll be okay. There's a portion of the population that they just ruin themselves. And you have to realize that probably that's where the T total, you don't need to be doing it at all comes into play.
8:52 Speaker 02 Well, I would argue if you're in a position where in order for you to do an activity, you have to go with some nefarious behavior, like using someone else's email address or someone else's identity to even be able to participate in that activity, you should have red flags and sirens and spidey senses going off saying, maybe I should not participate in this. There are reasons there are age limits around certain activities. So if you're having to use your dad's email address, or if you're having to use someone else's identity, in order to be able to participate in this game that you're playing, you should recognize that you are doing something you should not be doing and you should run completely in the opposite direction.
9:30 Speaker 07 Bet on the weather? Day 199 of betting a hundred dollars every single day in the year.
9:36 Brian Preston? You can't really do that, can you?
9:37 Speaker 07 I'm going to my website that lets me bet on anything in the world. Gonna pick something in weather, something that's not super depressing. The temperature in New York City. All right, let's look at the options here. Let me quickly check what the weather's supposed to be like.
9:51 Brian Preston? This is, this has gotta be tongue in cheek.
9:53 Speaker 07 Ooh, with some rain. Let's go with under 88 degrees today. This is a long shot here, but with the rain, there's a good chance that it does.
10:02 Brian Preston? Is this real?
10:03 Speaker 07 I need people in New York to tell me if it gets above 88. If not, we're in the money, let's go.
10:08 Brian Preston? If you have to do basic life events, you have to bet on it to have fun at it or to make it make life exciting, I think you might need to unplug from all of it and let that path grow over a little bit in your brain because this has turned into a compulsion. It's turned into an addiction. It's one thing if you want to go bet on the weekend games for fun. Like I said, with vacation money, it's completely different if it's turned into a compulsion that is now occupying a good part of your life.
10:35 Speaker 02 Yeah, what are we even doing here? If you want to sports bet on something that you're going to watch, you're getting entertainment value, that's one thing. But if you're just randomly picking odd objects or odd things to bet on for the sake of betting, I would argue that that's problematic and that's something that you should certainly check yourself on because What is the best starting strategy for a beginner in sports betting?
10:59 Speaker 08 There's only one strategy is paper betting. Prove to yourself over four weeks that you can pick three to five games a day for an entire month, include the juice, include everything, that you can actually profit from sports betting. Don't start putting real money next to it until you prove to yourself you can profit. That takes a lot of discipline. And secondly, if you just can't do it and you're like, that's not fun, that's boring, it sounds like accounting paperwork, I would say bankroll management. You find the total amount you can afford to lose, you divide it by 100, and that's the amount you put on each game. Literally, if you bet a unit a day or even a couple of units a day on independent events, you'd be amazed at how long it takes you to lose an entire bankroll versus how people currently bet.
11:38 Speaker 02 I love it. I love both of those strategies. I think they're wonderful. Hey, if you want to get into sports betting and you think you have figured it out, just play it out on paper to see if you actually have the prowess to do that. Now, if you do, still be cautious. But if you recognize that you absolutely suck at it, man, it's so much better to do it on paper, not actually lose any money. And then he said, okay, define your bankroll, have a certain amount that you're never going to use and spread it out over 100 different bets. I love that because what it prevents you from doing is losing all the money today and then tomorrow finding a way to do it again and do it again and do it again. It actually spreads it out. I think if you're going to do it, those are two pretty responsible methods to be able to do.
12:19 Brian Preston? In my book, I talked about chicken or egg is what came first. I feel like a lot of people in like our personal finance space. You always have to be careful. Do they get wealthy because their system is good or they get wealthy because they actually used what they know and it built success for them. I feel like gambling might be the same way is there's a lot of people out there selling you systems and I think it's their systems that are making you wealthy. It's not necessarily the gambling is creating these great return. And I feel like there's a lot of content creators who focus on selling their system, creating content because it is entertaining. It's always, it's boundless and endless. Because there's always going to be another football season. There's always going to be a basketball season. There's always going to be a golf season.
13:03 Brian Preston? There's plenty of content to always build off of. The referral fees are incredible when you get into sports betting and priming the pump on with your audience. Just be careful. I mean, realize where is the money going and where is it? Who's it benefiting? And then have a responsible relationship with it. If you're doing this instead of funding your Roth IRA, start over, full stop. Get your financial life in order.
13:29 Speaker 09 This guy makes multimillion dollar bets, but actually profits on them pretty much every time. He's called Mattress Mac and everybody says he's a gambler, but he's actually the opposite. This furniture mogul is famous for placing these huge bets. He lost like 9.5 million dollars last February betting on the Bengals to win the Super Bowl. I think he lost 13 million on the Houston Astros in 2019. But the truth is his huge bets are just a hedge against his furniture store promotions to reduce his downside. Hedging means that you reduce risk by betting the opposite side of a wager, but Mattress Mac runs season long promotions at his furniture store
14:03 Speaker 09 that refund all his customers with purchases over 3K if the Astros won the World Series. So he had a downside of 25 million dollars for this promotion if he didn't hedge against it. So he said, I'm going to make a bet on the opposite side. The bet actually protects Mattress Mac and then he gets a ton of free press.
14:21 Brian Preston? Great marketing. I give him credit for.
14:25 Speaker 02 So a lot of people will say the Mattress Mac is this crazy degenerate gambler, but he's Actually not. He really understands.
14:30 Brian Preston? Sounds like he's a genius marketer.
14:31 Speaker 02 He understands arbitrage and so he offsets the promotions he does through his, his actual business with these big gambles, with these big bets, and then he gets tons of press, tons of promotion because he will bet millions upon millions upon millions of dollars and everyone wants to say, oh, is he gonna win? Is he not gonna win? Well, at the end of the day, he has already calculated what his maximum drawdown, maximum upside, and he figures out the differential. So he knows exactly what he's doing.
14:56 Brian Preston? Don't assume that's always going to be for you. Well, you know, because I just, that's the thing I don't like about what's happened with sports betting is that it's become so prevalent then in young people's lives that I think it is replacing with just good financial management. Do you have an emergency fund? Are you funding your Roth IRA? Do you have enough to where you're not making desperate decisions because you're using your credit card? These are the things that I want Americans to focus on, not just swinging for the fences, hoping that their bet and their parlay hits and creates their financial independence.
15:28 Speaker 10 Sports betting and investing are not the same.
15:29 Brian Preston? They're not.
15:30 Speaker 10 Contrary to popular belief, investing is not gambling. Sports betting, however, is, and turns out you're not as good at it as you think.
15:36 Brian Preston? Exactly.
15:37 Speaker 10 Only about 3% of sports bettors are profitable long-term, and I'm gonna hold your hand when I say this, but you're not that guy. Investing, on the other hand, if done correctly, is almost a sure thing. Researchers at NerdWallet ran a Monte Carlo simulation, essentially testing the probability of losing money on a diversified portfolio. And you know what they found? A diversified investment portfolio over four years had at least a 99% chance of maintaining the initial investment, and a 95% chance of nearly tripling it. The study went through 10,000 simulations and not one lost their initial investment.
16:05 Brian Preston? That, I mean, I couldn't say it better. I mean, investing is completely different than speculating, and so many people think that when you buy into the investment marketplace, that you're gambling. No, it is rigged the opposite way. You are the house versus when you're placing the wager, you are essentially the fish. You know, that's what, that's the mark. If you ever watched that, that, the poker movie Rounders?
16:29 Speaker 02 Yep.
16:29 Brian Preston? And they say you sit down at a table and you can't spot who the mark is, you're the mark.
16:35 Speaker 02 Yep.
16:35 Brian Preston? And that's why when you think about all the gambling promotions or all the apps that are saying first wager is free. Why? How can they afford to give you $100 here, $200 there? It's because you're the mark. Act accordingly.
16:49 Speaker 02 Investing and gambling are not the same. They do not arrive at the same place. Don't miss here. So we're not saying that there's anything inherently wrong if you want to do sports betting or if you want to go to a casino, but make sure that you're not doing it to the detriment of your financial life. You've already said it once. That should be money that is your vacation money and your play money. It should not be your saving financial future money. Do not mis-equate the two. Investing is investing. Gambling is not investing.
17:17 Brian Preston? And know thyself. If you don't have that discipline to say no, just don't do it. This is one of those things, you can be happy, you can be successful, you can be wealthy without it. There's nobody that says... We have yet to have our first person come through the doors and says, "You know what made our multiple seven-figure wealth? Gambling."
17:38 Speaker 02 Nope.
17:39 Brian Preston? We haven't had it. I mean, I've had lottery winners that have sniffed around becoming clients, but I've never had somebody say, "This is definitively what made me wealthy and made me fulfilled." So guys, plan accordingly. This is the reason we're loading you up with all this free information. Go to moneyguy.com, moneyguy.com/resources if you want more free stuff. I'm your host, Brian Preston, Mr. Bo Hanson, Money Guy team.
18:04 Speaker 02 The Money Guy Show is hosted by Brian Preston and Bo Hanson. Brian and Bo are partners with Abound Wealth Management. Abound Wealth Management is a registered investment advisory firm regulated by the Securities and Exchange Commission in accordance and compliance with the securities laws and regulations. Abound Wealth Management does not render or offer to render personalized investment or tax advice through the Money Guy Show. The information provided is for informational purposes only, may not be suitable for all investors, and does not constitute financial, tax, investment, or legal advice. All investments involve a degree of risk, including the risk of loss.
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