March Madness is upon us. And people are ready to gamble on it. 

Sports fans will bet a total of $3.1 billion through legal means on this year's NCAA men's basketball tournament, according to an estimate from the American Gaming Association. 

With Cinderella teams, buzzer-beaters and double overtime nail biters, betting on the tournament — whether through your office bracket pool or on a mobile app — might seem like an easy way to earn extra cash and make the games more exciting. However, financial experts warn that one mistake can spell catastrophe for your finances. And many betters don't realize they're making it. 

The mistake is not having a budget for sports betting, says Jonathan Greeson, a certified financial planner based in Pikeville, North Carolina. If you gamble through an app, it's easy to feel like you're winning and losing funny money. But losses can be very real — and need to be accounted for just like any other expense.

"Your betting money should be included in your entertainment budget," Greeson says.

While you may expect — or hope — to win, statistically, it's more likely that you'll lose some or all of the money you bet, says Scott Baker, associate professor of finance at Northwestern University's Kellogg School of Management.

Without a budget in place, your betting losses can quickly spiral out of control. Unlike dining out or going to the movies, where spending is naturally capped, betting has no built-in limit. When things go downhill, sport bettors may try to "chase their losses," or win back the money they lost in previous bets.

In the absence of a self-imposed spending limit, chasing losses can lead to making risky decisions, Greeson says. "It's a perfect recipe for addiction."

Both experts agree that it's important to avoid comparing sports betting and investing in stocks or bonds. While both entail risk, the outcomes couldn't be more different. 

"The average sports bet is going to lose around 10% or more of your bet," Baker says. "The government wouldn't promote savings accounts with rates of negative 10%." 

Set a betting budget — and stick to it

To keep gambling from derailing your finances, Greeson recommends setting a firm spending limit for yourself before placing a single bet — and not exceeding it. 

"Like with investing, we should never bet more than we are willing to lose," he says.

You might deposit $200 in your gambling account at the start of the NCAA tournament. As long as you still have money in that account, bet away. But if your account goes to zero — even during the Sweet 16 — you have to be willing to walk away.

To that end, it's important to treat sports betting as a type of entertainment expense — not as a way to make money or get ahead financially. If your bet wins, great. If not, you'll have earmarked the money you gambled as entertainment, even if it doesn't work out.

Above all else, Greeson says it's important to quit if sports betting ever stops feeling fun. "That might be the best advice I have ever received," he says.

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