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Sports Betting is Legal in Colorado - Should You Wager Your Retirement Savings?

As you may have heard, sports betting is legal in Colorado. As of May 1, 2020, individuals over 21 years old can place bets with state-licensed and authorized sportsbooks and operators. The move has proven to be a massive revenue driver, with wagers hitting a record-breaking $408 million in September 2021, according to PlayColorado.  

If you’ve ever played fantasy football or pitched in a few bucks to the office Super Bowl pool, you might be curious about sports betting. The act can be fun and exciting, and the prospects tempting - but is sports betting a good idea for your retirement plan? 

Colorado Sports Betting Law Explained 

You might be wondering what the rules are for sports betting in Colorado. You can look up the full rules and regulations on Colorado’s Department of Revenue site, but here’s what’s important to know about the new law: 

  • You must be 21 in order to partake in sports betting.
  • “Licensed operators within the borders of the state of Colorado” include both onsite and online casinos.
  • Sports betting is taxed at 10% of casinos’ net sports betting proceeds, and revenues will fund various state water projects.
  • You don’t have to be a resident of Colorado, but you need to be within the state’s borders when you place a bet.

Unsurprisingly, pro football has been a main draw for Colorado’s sportsbooks. You can bet on all major sports, however, including NFL, MLB, NBA, NHL, college football and basketball, soccer, boxing, and UFC. This includes local teams like the Denver Broncos, Colorado Rockies, Denver Nuggets, Colorado Avalanche, or the Colorado State Rams, and more. 

Why You Should Think Twice Before Wagering Your Retirement Savings 

As fiduciary financial advisors committed to putting our clients’ best interests first, we want to make one thing clear - sports betting is not an investment in your future retirement plans. 

Making the right pick can result in a big payout, but there’s no such thing as a sure thing. And often, the risks outweigh the benefits. If you’re considering betting with money that should be going to your retirement savings - or worse - dipping into what you’ve already invested - consider some of the risks. 

Not Everyone Has the Skill  

Playing the lottery is simple - you buy a ticket and hope you’ll be lucky enough to win, despite the dismal odds. While you may have improved chances with sports betting, it requires more skill and there are multiple factors at play. 

Making a successful bet requires research into the teams’ scoring history, record of games played and won, who’s playing (plus each player’s personal records) and injuries. Then there's choosing the right bookmaker and bet type - there’s straight bets, total bets, point spreads, money line bets, parlays, and the varying commissions, or vigs, for each type of bet. 

There Are Things You Can’t Control 

No matter how well you’ve done your homework, there’s no accounting for the unexpected. Just because a team is on a six-game winning streak, it doesn’t make them a sure bet. Sometimes factors outside your control - like bad weather, an unexpected injury or a random 4th-quarter touchdown - can pop up and spoil everything you anticipated and hoped for.

Sports Betting Can Become Addictive

What starts as innocent fun can have serious consequences if not kept in check. Mayo Clinic says gambling can stimulate the brain's reward system much like drugs or alcohol can. 

People may get addicted to the rush of “having skin in the game” especially after an early win. What’s worse, gambling can become a cycle of trying to win back what you’ve lost - a strategy which rarely works, if ever. In severe cases, gambling addiction leads to accumulating debt, lying or hiding your behavior, and other destructive actions. 

Emotions Often Get in the Way

As with investing in your retirement portfolio, emotion is best left out of gambling. But that’s easier said than done. As humans, we tend to go on gut instinct and bet on our personal favorites, whether it’s our college alma mater, hometown team, or following what others do. Unfortunately, choosing your heart over your head doesn’t always yield the best results when it comes to sports betting. 

Protecting Your Financial Future - Gambling is Not a Retirement Plan 

If winning at sports gambling were easy, everyone would do it and the bookies would quickly go out of business. Trust us, if you dream of a comfortable retirement and enough money to enjoy the things you love in life - you’re much better off with a long-term financial plan backed by a solid investment process

We get that long-term financial planning may not be as thrilling as doubling down and trying to win the big one - but your future self will thank you for it. Before you decide to wager any part of your savings on a big game, ask yourself the following: 

  • Are your retirement savings where you want them to be? If not, don’t bet.  
  • How’s your emergency fund? If you don’t have money saved up to cover at least six months of expenses, don’t bet. 
  • Would a potential loss mean negative consequences to your short, medium and long-term financial plans? If so, don’t bet.
  • Why are you betting? If it’s for hopes and dreams of getting rich and living a life of luxury, don’t bet. 

If you feel you absolutely must bet or simply want to participate for entertainment, choose a number you can afford to lose and DO NOT go over it. As a rule, you should never wager money that would otherwise be going to household expenses or into your retirement accounts. 

If you’re considering betting because you’re behind on your retirement savings plan or you absolutely need a loan, consider other options first. For example, a financial advisor, such as a Certified Financial Planner can help. They’ll assess your current situation, discover your objectives for retirement, and help you build a plan to get to where you want to be. 

Want to be sure your retirement plans are on track? Download the Essential Retirement Guide to learn the seven things you need to do before you retire...it’s FREE!

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