The betting market is impacting discretionary spend, Nik Modi said at a virtual session at CRU. |Shutterstock
The betting market is beginning to affect discretionary spending, according to Nik Modi, managing director of Toronto-based RBC Capital Markets. Speaking March 3 during a virtual session for CSP’s Convenience Retailing University, Modi said the shift in consumer spending could be creating headwinds for retail categories.
“In areas where it’s legal, people are spending $1,100 incremental in states that have legalized online sports betting and they are decreasing household spend by 14%,” he said. “This gets to the whole point of they’re allocating their wallets to other things, that they were not prior.”
Modi told convenience-store category managers attending the virtual session that this shift could present a potential risk—even for categories not traditionally viewed as competing with betting.
“Young men in particular are allocating a lot of their capital and wallet to these incremental activities,” he said.
Modi said 22% of Americans—including 50% of men ages 18 to 49—have at least one online sportsbook app. Modi said that this gets a dopamine hit, similar to how drinking alcohol can deliver a dopamine hit.
“So, to some degree, the betting market has become a competitor to discretionary spend for young men,” he said.
That shift in spending priorities may help explain some of the pressures facing beverage alcohol sales.
Data from Chicago-based NielsenIQ shows that alcohol sales remained soft at the end of February across all retail channels, including convenience. Total alcohol sales in convenience reached $2.13 billion for the four weeks ending Feb. 28, according to NielsenIQ. Convenience stores experienced a 1% drop in sales during that period and a 3.2% drop in volume compared to a year ago.
Hispanic pullback
Another area of pressure on beverage sales is a slowdown from Hispanic consumers, Modi said. He said he expects elevated Immigration and Customs Enforcement (ICE) activity to weigh on Hispanic consumer sentiment in 2026.
“The Hispanic pullback is not a routine dip—it’s the collision of affordability pressure with the consumer group that drives the highest-frequency, highest-intensity beverage consumption in the country,” he said.
Hispanic consumers’ purchase frequency for beverages decelerated compared with other demographic groups throughout 2024 and has remained below other ethnicities, Modi said. Their buy rate for beverages is also softer than other groups.
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