What percentage of your income is it OK to gamble? Less than you think

With online gambling on the rise, mental health experts and financial planners are warning that recreational betting can turn into a financial drain even when it doesn’t become an addiction.

Since Ontario opened its regulated online gambling market to private operators in 2022, the number of active online gambling accounts in the province has soared, reaching 1.4 million in September. That was up about 20 per cent from just a year earlier. Now, Alberta is preparing to follow a similar path.

Recent online gambling data from Ontario, as well as self-reported numbers from surveys, suggest Canadians are easily wagering more than $200 a month on average, a sum vastly above guidelines for low-risk gambling.

Even small, regular bets can add up over time, eating into savings and making it harder to reach long-term financial goals, experts warn. And because individual bets can seem insignificant, gamblers may underestimate how much they’re spending.

In September, iGaming Ontario reported that each active player account generated operators an average of $295 in revenue, up from $280 a year earlier. That figure represents the amount operators kept from players’ bets after paying out winnings that month. It doesn’t necessarily reflect how much the average individual gambler lost, since people can hold accounts with multiple operators. iGaming does not report the average number of accounts players hold.

A March survey conducted by polling firm Leger for British Columbia’s gambling regulator found that people who gambled reported spending an average of $211 a month, rising to $313 among those who gambled online.

For most Canadians, those amounts are significantly above the limits recommended in research from the Canadian Centre on Substance Use and Addiction.

In a report called Developing Lower-Risk Gambling Guidelines, researchers at the centre recommend individuals gamble no more than 1 per cent of their household income before tax each month. That works out to just $42 a month for a household earning $50,000 annually, $75 for one earning $90,000 and $125 for one earning $150,000.

“If they’re going to gamble above these guidelines, they should know that they’re gambling at risk levels,” said Matthew Young, chief research officer at the non-profit organization Greo Evidence Insights and co-author of the guidelines report.

Those risks can include financial challenges ranging from depleted savings to bankruptcy. Gambling can also take a toll on physical and emotional health and strain personal relationships, the report warns.

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The guidelines were developed by a team of researchers who analyzed data from more than 60,000 people across eight countries to identify the levels of gambling at which the risk of harm begins to increase significantly.

Karac Graham, an associate investment adviser at Moyle Rowley Wealth Management Group, said betting is coming up more in conversations with some clients, many of whom view it as another form of entertainment.

He said one client spends $50 a week on sports betting. That works out to $2,600 a year, or $26,000 over a decade, assuming the amount represents money spent and not recovered through winnings.

“The individual bet isn’t usually what concerns me. It’s just when these small discretionary expenses become a recurring habit,” Mr. Graham said.

For younger Canadians, those recurring expenses can carry a significant opportunity cost because they could be eating into early savings that have a long time to grow if invested, he said.

Another challenge with recreational gambling is that people aren’t always good at keeping track of small expenses, said Johanna Peetz, a psychology professor at Carleton University who studies personal spending.

A $5 or $10 purchase might register as meaningful spending for one person but seem insignificant to another. People may overlook such transactions when budgeting, but they can add up over time, she said.

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Gambling also differs from many other purchases because there isn’t a natural stopping point. Someone buying groceries, for example, will eventually have everything they need. But someone gambling can continue placing bets without reaching a similar point of completion.

“With gambling, there is always more you can spend,” Dr. Peetz said.

For Canadians who choose to gamble recreationally, experts say the first step is understanding how much money is actually going toward the activity.

Mr. Graham recommends that any amount set aside for gambling should be money one can afford to lose without affecting essential expenses, savings or other financial commitments.

Still, he doesn’t believe financial advisers should necessarily discourage all gambling.

“At the end of the day, this isn’t about telling somebody whether they should or shouldn’t place a bet,” he said. “It’s about making sure that they understand the financial trade-off they’re making when they do.”