Warren Buffett explains sports betting in simple terms: "It's a tax on stupidity"

Few Americans in history have had more success in the financial world than Warren Buffett. And Warren Buffett, who's still going strong at 95, has a strong and simple opinion about sports betting.

"It’s a tax on stupidity," Buffett recently told CNBC, via Ben Horney of Front Office Sports.

By adding billions to the tax base, it almost makes it easier for the rich to pay less in taxes.

“To the extent that states raise money from people who — the dollar really means something to them — it actually relieves the taxes on me or other rich people,” Buffett said. “It’s not direct, but it’s the net effect.”

Buffett should like the fact that, in 2025 alone, sports betting raised $2.89 billion in tax revenue for the states that have legalized it. He doesn't.

“I don’t like things that make a sucker out of people,” Buffett said. “I don’t think the function of the government is to play its people for suckers."

The benefit to state governments is one of the rarely-discussed realities of sports betting. Yes, the sportsbooks are making billions. To the extent the states have justified legalizing sports betting by taking a piece of the action, they are, too.

It all comes back to the reality that sports betting (and prediction markets) don't make anything. They traffic in money. And the system was engineered to vacuum as much money as possible from bettors and, in turn, to redistribute as little as possible back to them. As a result, an enormous imbalance exists. And the bettors are the ones experiencing the wrong end of it.

If it wasn't a wildly popular business for the sportsbooks, there would be no incentive to be in the business. It wouldn't be marketed so aggressively, with so many "get rich quick" ads luring people to get poor slowly. And perhaps to develop an addiction along the way, one that can create financial challenges that potentially destroy the lives of gamblers and their families.

Before sports betting was legalized, it wasn't so easy. People had to first be willing to venture onto the wrong side of the tracks. They had to be willing to "break the law." They had to welcome the risk of placing bets with those who present a worst-case scenario far more physically dangerous than filing bankruptcy.

It all comes back to the mindset that gamblers bring to the table. They can't think it will pay their bills. They can't think it will make them rich. There is no system that anyone will develop to consistently beat the house. And, if they somehow ever do, they'll be cut off.

Yes, the sportsbooks will assuage their guilt by periodically whispering a message to engage in "responsible gaming." The more truthful and accurate label would be "responsible losing." And even though the notion of responsible losing comes from woefully insufficient governmental regulation of the industry, there's a compelling business reason to tell gamblers, "Don't lose everything in the short term, lose a manageable amount consistently over the long haul."

One of the arguments in favor of legalized gambling is that people will do it regardless of whether it's legal. In theory, that's true. But illegal gambling isn't as readily available as the apps on an iPhone. If I have a bowl of candy on my desk, I'll eat candy all day. If I have to go out and buy candy (especially if candy isn't legal), I'm less likely to spend all day eating some more and some more and some more and some more.

No one who profits from sports betting has an incentive to speak in plain, blunt terms. I don't, and won't, take money from sportsbooks. I do, and will, use my platforms to remind my audience of the risks.

You're not just playing with fire. You're letting the fire burn a small area of your house, and you're risking the possibility of stumbling into a full-blown conflagration.

Especially if you bet under the belief that you'll make money. Because you'll inevitably chase losses. And then chase those losses. And you'll keep on chasing until the bank chases you out of your house. Along with the other people who live there with you.

That's not to say, "Don't bet." But it always needs to be viewed as entertainment. You need to budget a specific amount of money and assume you will lose it. And, even if you somehow win, you can't let the dopamine rush delude you into thinking it will last.

Because it won't. In time, you'll lose everything you won. And then some.