The Sports Betting Situation Just Got Worse
A few months back I wrote a piece saying sports betting was dumb. I called it out for being an extraction machine, I said people bet on teams every weekend but won't bet on real businesses, and I meant it. Everything that's happened since then only proves that point even more.
This industry ain't an investment opportunity. It's a gambling business that learned how to talk like a tech company. And that became real clear in 2025.
The NBA Told You Everything You Need to Know
I'm a Pistons fan, so this one felt almost personal. But last October, at the start of the 2025-26 season, the NBA got shocked. Chauncey Billups, Terry Rozier, and Damon Jones were all arrested and indicted as part of a federal investigation involving illegal sports betting and rigged poker games connected to organized crime.
Think about that for a second, a Hall of Famer, current NBA player and the whole thing tied back to the mafia. They said Rozier tipped off his buddies before a 2023 game that he was going to fake an injury and leave the game early so they could put over $200,000 in bets on his under performance. He walked off after just nine minutes. The bets hit. Then he went home and counted his money.
And here's what makes that worse. The NBA had already investigated Rozier in 2024 and cleared him. The league that partnered with sportsbooks and helped normalize all of this couldn't even catch what was happening inside its own locker rooms.
The NBA wasn't alone. MLB pitchers, college players, and coaches across multiple sports got swept up in federal investigations throughout 2025. Congress is now writing letters and demanding answers. What was supposed to be a new era of sports entertainment is starting to look like it's rotting the game from the inside out.
I said it before and I'll say it again. The same folks who will bet hundreds on a parlay without blinking are scared to put money into a founder busind a business that solves real problems. But now even the athletes are losing everything chasing this thing; and thats not a coincidence.
The Business Itself Is a Mess
Now let's talk about the actual companies, because the financial story is just as bad.
ESPN BET is reportedly on the verge of shutting down in 2026 after burning through close to two billion dollars in losses. That's ESPN. One of the most recognized sports brands on the planet. Couldn't make it work. And they're not the only ones hurting. The whole industry spent years handing out free bets, paying celebrities, and flooding TV with ads, and now nobody can figure out how to actually be profitable.
FanDuel controls 43 percent of the market and DraftKings has about 25 percent. Two companies own basically everything and everyone else is getting squeezed out. Some people pitch the idea that the real opportunity is in the companies selling technology and tools to the sportsbooks. The problem with that logic is simple. When two giants own the whole market, they build their own tech in-house and stop needing outside vendors. That ecosystem doesn't really exist.
Look at How They Made Their Money
This is the part that should bother anyone still holding onto an investment thesis here.
Lawsuits have been piling up across multiple states claiming that DraftKings, FanDuel, BetMGM and others built their apps on purpose to be addictive, ran promotions they called risk-free that weren't, and deliberately targeted users who were already showing signs of gambling problems. This is not just angry customers trolling online. The city of Baltimore sued DraftKings and FanDuel in 2025 for going after vulnerable people already struggling with addiction.
One lawsuit says DraftKings used their own data to find the people losing the most money and then sent those same people even more promotions, and it gets worse. They wouldn't even close accounts when those users begged them to.
That's the business model. Find the people who can't quit and keep them going. The platforms are doing it to regular people in their living rooms, and apparently the culture around it got so normalized that it started pulling in athletes and coaches too. Kinda reminds you of social media huh.
The Rules Are Tightening Up
The laws were loosening up for this industry for a while but that's started to reverse.
A bill Trump signed in July 2025 changed how gambling losses get taxed, meaning people can now owe taxes on money they LOST, starting in 2026. Some estimates say that change alone could cost the industry over a billion and a half in revenue, with other projections going past four billion.
And prediction markets are now letting people bet on sports too, and if the IRS ends up giving those contracts better tax treatment than traditional sportsbooks, it could pull a lot of customers away from the regulated platforms entirely. The protection these companies thought they had from being licensed might not mean much if a competitor operating in a different legal category can offer better terms to the same customers.
The Original Point Still Stands
The thing I always come back to when thinking about where to put money is simple. What does this company do and who does it help. Angel investing works because you're backing founders building real things that solve real problems. The returns come from value being created. Sports betting is not creating anything; it's just moving money from people who might not be able to afford to lose it into platforms that are still trying to figure out how to turn a profit, while the culture it's created is now landing athletes in federal court.
I said it was dumb before that was a huge understatement. So stop betting on the game and start owning the people who build it.
If you've been sitting on the fence about angel investing because it feels risky, look at what sports betting is doing to people's finances, careers, and freedom, and ask yourself which one is actually the bigger risk.
Cheers,
~Abdul
About Our Chairman
Hey Hey… I’m Abdul I’m the chaiman of Ajo Angels and Shujaa Capital and I’m on a mission to introduce angel investing to 25,000 black folks over the next five years. I’m doing this with the goal of narrowing the racial wealth gap as well as trying to close the billion dollar funding gap for black founders.
This article reflects personal perspective and experience, not financial advice. Every career and investment path involves different risks and opportunities. Make decisions based on your own circumstances and goals.